Your client’s decision not to change the status quo is now a significant “competitor” in many selling situations. According to a 2013 CSO Insights study of companies’ win/loss ratios, 26.1% of all deals were ending in a no-decision. As recently as 2002, the rate was only 17%.
A few years ago, those numbers wouldn’t surprise many people given the effects of the economic turmoil. Surely more projects were abandoned, postponed, or brought in-house in the face of shrinking budgets and headcount. But most businesses and budgets have rebounded to the point where one out of four deals ending in a no-decision is excessive.
Which Is Worse, a Loss or a No-decision?
Losing a sale to a competitor is probably worse because it indicates that you were beaten on price, scope, reputation, quality, personnel, implementation, delivery time, or some other variable. And it means that the revenue and business that could have been yours is now going to your competitor.
But no-decisions aren’t anything to cheer about. You’re investing time and resources without a return. Yes, something may pan out down the road, but that’s in another sales cycle — you need to eat today.
Root Causes: What’s Going On?
With the “do-nothing” or “no-decision” choice prevalent in more than a quarter of the deals studied, it is vital for salespeople to understand why a client is considering making a purchase and the business logic behind that decision to buy at this time.
Either before or while engaging in a dialogue to position your insight to a client, ensure that you gather as much information about the client’s situation as possible. Assess the current situation and the pressure the issue is creating. Consider the potential impacts the issue is creating now and perhaps the worsening impacts over time. All of this can be used to reinforce the impact of making no decision. Whenever possible, try to quantify or monetize the impact.
Some common causes for no-decisions are:
- Just browsing — The client wasn’t really intent on buying now or in the immediate future.
- Lack of budget — They might be serious about buying but didn’t appreciate how much of an investment it would cost.
- Insufficient internal buy-in — Your client wanted to move forward but perhaps lacked approval from higher up or support from colleagues in other departments.
- Not ready — Perhaps the client realized that they need to sort out where they are internally before proceeding.
- Never intended to buy — This circumstance is perhaps the worst because, let’s face it, you’ve been used. The client wanted to get smart by having you and some of your competitors present your suggestions, capabilities, and ideas to them, thus validating that, “Yeah, we can do this in-house and save some money.”
At a bare minimum, make sure that you can answer the following questions:
- What is the compelling reason or business case to change (from the client’s point of view)?
- Which decision makers or influencers are the driving force behind the change?
- Which decision makers or influencers are hesitant or resistant to the change?
- What are the possible outcomes and gains from making the change?
- What are the possible impacts and consequences of not changing?
Addressing a No-decision
If the client responds to your insight by not taking action, try to understand the underlying reason why the client is stalling and explore the reason for the no-decision. Has something changed? Is there something else that has taken on a temporary level of urgency? Use “CCBANT” (Compelling Event, Competition, Budget, Authority, Need, Trust) to explore any changes from the original state and any changes that might explain the stall.
- Is the issue something you can address? Attempt to reintroduce the insight, especially focusing on the implications of taking no action.
- Find the connections between the insight, taking action, and avoiding a potential negative impact. Use the insight as a motivator to show the consequences of doing nothing.
You don’t want to nag or appear desperate, but these steps and efforts might get the sale back on track.
Preventing Future No-decisions
If you find that your sales team is suffering too many no-decisions, you need to determine the cause and stem the tide.
- Better prospecting — Take measures to more accurately ascertain the client’s level of interest and intent to purchase before you throw too many resources at the sales pitch. Responsibility for this should be assumed by both marketing (before handing off leads) and sales.
- Help your buyer influence internally — If you’re trying to sell a web project to marketing, you would expect them to involve colleagues in IT, sales, accounting, and perhaps other groups who have a stake in the project. As you go through the sales process and no one beyond marketing appears on the radar, that’s a red flag that your contact lacks internal influence or that they’re not a serious buyer.
- Train your sales reps — Are your sales reps having trouble closing deals? Consider whether a training offering to develop or improve skills and techniques could benefit your sales reps and avoid no-decisions.
- Evaluate your offerings — This is a long shot, but maybe the problem is what you’re selling. Especially if you are in a position to have no direct competition against which to compare, you may be offering too little (“We can do this ourselves.”) or too much (“That’s too complicated. We don’t need all of that — we’ll stick with what we have.”).
- Keep tabs on those undecided clients — As with most things, communication is key. If you don’t ask the client why the project stalled, you’ll be left with assumptions. Especially for those mystery situations when a sale stalled, follow up after a few months to see if anything has changed. You might learn that they’re finally ready or that they’ve undertaken the project themselves, but it will give you some insight into what happened and will keep you positioned for future work.