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Why suppliers lose deals: 5 common errors

October 3, 2012

Yesterday I participated on a panel at the ISG EMEA Sourcing Conference. One of the ISG presenters talked about the advisory firm’s experiences in reviewing supplier bid submissions, highlighting a number of easily avoidable errors. I thought it would be interesting to share the list and to add my opinions on what this means to contract management and legal teams.

  1. Lack of insight: sales teams often display a limited view of opportunities, which means a consequent lack of planning, failure to understand the real reasons behind client need (instead they sell to stated reasons) – and as a result answer the wrong questions. This will be a familiar syndrome to many contracts and commercial teams, which often sense the sales opportunities that are purely speculative (often cast as ‘strategically important’). If Sales cannot answer basic questions, or refuse to engage in discussions around value-add that goes beyond the scope of the obvious, there should be alarm bells ringing – and generally these ‘opportunities’ are a waste of scarce resources.
  2. Bringing the wrong sales team; failing to involve the right skills at the right time, in particular excluding subject matter experts until late in the process, failing to ensure alignment between the skills at the table from the customer with those from the supplier. This is one of the biggest complaints by contract management and Legal – ‘if only we had been involved earlier’. Well, the customer-side clearly feels the same; failure to get term and condition issues or contract structure discussed at an early stage frustrates the customer, results in extensive delays and – of course – can often result in the wrong deal.
  3. Spreading efforts too thin: there is a need to focus on things you can win. Qualify opportunities, don’t chase too many. Match prospects with capabilities. This obviously has some similarities with issue 1 above, but it goes further because it also addresses the point about ‘matching capabilities’. This tendency to over-commit is one of the top reasons for claims and disputes. Customers are becoming more alert to this – and thankfully they often throw out such bids. But once more, it is a waste of supplier resources and it damages reputation.
  4. Have a robust process – research tools, consultancy-style workshops. The mature and reliable supplier is often obvious because of the nature of the data they possess – and also for the methods they propose. For example, executive alignment sessions, requirement definition workshops, approaches such as IACCM’s ‘relational contracting’ workshop – these are things that distinguish the experienced, mature provider from the also-rans.
  5. Poorly prepared responses: sloppy, generic or irrelevant material. Failure to grasp and address issues. Often linked to 1 or 2 above. Many companies have a professional proposal management group – and hopefully they eliminate this problem. But in my experience, it often takes the rigor of a contract management or legal team – people who care about words, spelling, precision – to bring real discipline and quality to a proposal document. It is certainly crazy to be losing business just because you can’t produce a professional response.

GOOD PRACTICE

The presentation concluded with this advice for pursuit teams:

Listen to client objectives

Avoid prescriptive solutions

Empowered sales team – ability to make commitments through involvement of experts

Show responsiveness throughout process

Concise response that addresses issues

Getting this right is a collaborative activity. How confident are you that your organization avoids these common sources of failure?

2 Comments
  1. Zarina permalink

    Deals may fail but the Solicitor who was orchestrating the deals never gets paid as the buyers and suppliers are too busy ‘licking their wounds’!

    • Zarina
      There are some who argue that if the deal turns out badly, the solicitor or adviser who orchestrated the deal doesn’t deserve to get paid! As rewards and incentives begin to focus more on satisfactory outcomes, this may be an increasing trend.

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