Never waste an opportunity to learn from a lost deal.
While each win-loss analysis is unique, over the years, we’ve found many common themes that keep costing B2B tech companies customers and deals. From inflexible pricing, to misguided messaging, to bad sales strategy, we’ll talk you through some of the most common B2B blunders and how to avoid them.
These insights have been distilled from more than 200 recent interviews with B2B buyers, decision makers, influencers, and product/service evaluators.
Rigid Pricing Models We found that inflexibility in pricing models was a major deterrent for B2B tech buyers.
There isn’t a one-size-fits-all pricing model. Some buyers prefer CAPEX pricing models with large sums paid upfront and depreciation and amortization as favorable accounting practices down the road. However, most customers favor OPEX models born of the cloud and as-a-service offerings. Others want something in between. Even within these two models, there’s room for named user pricing, concurrent user pricing, and add-on module pricing.
Choice is key. One product manager told us, “We started with an investigation of a transactional price, and all the vendors were able to do that. But then we wanted to move away from that and get an all-you-can-eat model. That was a real challenge for some of the vendors.”
While you don’t want your pricing to be super complicated, you want enough flexibility to be able to have a pricing structure that matches customer needs and can win the deal.
Whose problem is this?
- Pricing teams developing which pricing models to offer.
- Marketing teams positioning the pricing models.
- Sales reps when customers ask, “How much does this cost me today and tomorrow?”
- Enterprise vendors caught between on-prem and cloud business models.
- Start-ups and SaaS technology pure-plays with inflexible pricing models.
Strategize how you can be flexible without being complex. Consider how different CAPEX and OPEX pricing models may complement corporate spending cycles. For instance, we found that offering quarterly pricing in addition to annual and monthly has tipped the scales on some deals.
Customers often switch vendors when a big contract is up for renewal. Take away that trigger by offering OPEX pricing options or an early renewal incentive. This is becoming commonplace even for on-prem offerings.
Research buyer personas, customer satisfaction with your pricing models, and competitor pricing models to determine the options that would be most appealing to target customers.
Company leadership usually wants sales teams to pitch the suite or even the entire platform to customers. This is often much more than B2B buyers want.
In our research, we heard many complaints about upselling or being forced to buy more than was needed. “I feel like you’re always in a sales environment where they’re trying to sell you their next solution even though you haven’t figured out how to use what you have,” one B2B buyer told us.
All-in-one is an appealing concept, but many customers are cautious whether such a pitch is too good to be true. Concerns are raised about integration, customization needs, lock-in, and lower adoption due to the replacement of favored tools.
A platform that does too many things at once can scare buyers away if they aren’t ready for the seismic shift of ripping and replacing critical systems.
Buyers also get annoyed when they sense that sales reps are more concerned with making another sale than they are with making sure the customer gets the solution they need. This ruins all possibility of strengthening the relationship with the buyer.
“As soon as you get on the phone with these guys, they’re ready to upsell you,” another customer complained to us. “They’re ready to [say], ‘Well if you get this tier, you can get this. If you get this tier, you can get this’…[But], I really wanted something specifically tailored to do what I want to do.”
Vendors should make sure they have offerings that match buyers’ requirements, not just expensively exceed them. Don’t let short-term goals cloud long-term strategy. Being pushy about closing this deal, now can cost you lasting relationships with buyers.
Whose problem is this?
- Sales leadership when setting sales strategy.
- Sellers when pushed to “sell the suite” to the detriment of lasting customer relationships.
- Product leaders needing to build solutions that can be used piecemeal when necessary.
- Marketers failing or neglecting to show how each piece works independently of the other.
- Marketing teams determining the minimum SKUs.
Recognize that some customers simply don’t need everything you have to offer right now. Have offerings that let customers bite off what they can comfortably chew.
Our research indicates that land-and-expand models tend to win more deals than pushing a top-down sale from the get-go.
Technology buyers increasingly want partnerships instead of transactional relationships. Our research indicates that vendors who prioritize land-and-expands sales are getting more wins than those that are driving for all-in-one.
Researching key buying criteria, buyer personas, and go-to-market strategies can uncover how sales and marketing can best speak to buyers’ specific use cases and how product teams can build solutions that can accomplish customers’ “jobs to be done.”
Sales Not Doing Their Homework
B2B buyers notice when sellers are not up-to-speed on their company and use case. Customers can easily spot a canned demo, especially when requirements have been shared via RFP or similar.
If a sales rep doesn’t do their homework on target buyers, there are many tells. To name a few examples: a noticeable lack of the buyer’s industry context, not knowing customers’ “jobs to be done,” or offers that wildly miss the mark of buyers’ needs.
For instance, a marketing manager told us about sitting through a sales pitch where the seller clearly should have realized that the pricing model they were offering wasn’t feasible. “My total marketing budget is only about $700,000. For everything. That’s all my mailings, all my postage, all my creative, all my digital. So, obviously, a 50 or 80 thousand dollar spend just doesn’t make sense,” the marketer told us.
Another word of caution: sales reps, don’t assume your product or service is superior to the competition. You have to listen to your customers to know how they are evaluating potential solutions. Humility and curiosity about the customer’s needs are sure-fire methods for shedding the superiority complex.
Whose problem is this?
- The C-suite when setting sales goals. Focus on long-term relationships not just end-of-the-quarter deal-closing.
- Sales leadership hiring sales talent and setting best practices for engaging with customers.
- Sellers during client conversations and initial engagements.
Sales needs to do their homework on buyers’ particular use cases and specific business contexts. Prepare for the sales pitch and listen to what customers say throughout.
Post-pitch follow-up calls and questionnaires gather important feedback from customers who said “yes” and those who said “no.” Win/loss market research studies uncover candid customer perspectives on sales performances.
Ignoring the Customer’s Existing Environment
B2B purchases don’t happen in a vacuum. Except in an unusual extreme overhaul, each new B2B purchase will have to interact with the products and services the buyer is already using. Hence, “How well will this solution play with our existing environment?” is an inevitable question in the B2B buyer’s journey.
In the words of a CIO we interviewed, “We can’t get past that roadblock. In our minds, it was like, ‘We can’t get to how it’s going to integrate with our system because you can’t demonstrate you can do it.’”
Of course, it’s not always obvious how a new product or service will fit in with existing solutions. In these cases, buyers need to know how much customization and configuration is in their future.
Product managers, remember that customers shy away from solutions that require months of coding, specialists, and other customization hoops. Whenever possible, buyers favor integration that can be accomplished with configuration rather than development.
Also, product managers, make sure integrations won’t break every time a vendor rolls out an update.
Marketers, avoid messaging that says the product can do anything for everyone. Instead, demonstrate how the solution can be used within the context of what particular customers are trying to accomplish. Targeted marketing and customer referrals are helpful here.
Sales, promising there will be no integration headaches is usually disingenuous. Just because you sell it doesn’t mean the customer won’t bail when implementation turns into an unexpected disaster.
Whose Problem Is This?
- Product managers when prioritizing the goals and attributes for a new product or service.
- Marketers when crafting messaging about use cases.
- Sellers when explaining to the buyer what customizations and integrations they should anticipate.
Don’t overpromise seamless integration for everybody. Set accurate expectations for customization and integration in the buyer’s specific context.
Strive to make customization a process of configuration. Avoid code-heavy methods of customization. (Unless your target persona is a developer, in which case, go nuts!)
Messaging Is Speaking The Wrong Language
Messaging that focuses on the technical aspects of a product when targeting business users is a common B2B misstep. This leads to poor awareness of the product’s business capabilities and may influence the buyer to believe the product is too complex for their case.
A business process improvement specialist shared their frustrations about sellers assuming that business users are also IT experts. “The business user pops in there and says, “Wait a minute, this feels like that IT mumbo jumbo that IT typically speaks at us. That makes no sense to us and we just shut down,” they said.
The same problem can appear when marketing overemphasizes the business angle when they should be targeting IT buyers.
Whose Problem Is This?
- Sellers during sales pitches.
- All facets of marketing.
- Marketers tasked with lead gen especially.
- Vendors entering a new market (vertical or solution-specific).
Talk to buyers in a language they’ll understand.
Messaging and positioning testing, buyer’s journey mapping, buyer persona, and go-to-market studies are specifically designed to inform customer targeting efforts. These research efforts explore all facets of the B2B buyer’s purchasing experience.
Star-Crossed Use Cases
Sometimes it’s just not a great fit.
Ideally, your sales team spends their time pitching to buyers whose needs match the solution’s key features and core competency. But that isn’t always the case.
Yes, it can be hard to retreat after investing time and effort in a target buyer. However, it’s much smarter to leave a doomed deal and refocus your energies where they will be more successful.
As one IT manager told us, “The partner was really wanting to get into customizations and how we can make this work for our business. We were taking the approach of, ‘Well, we want this product to work for us in a way that it’s designed for [rather than] trying to make this product work for us by forcing [it] to use our processes.’”
It’s essential for sales to recognize a doomed deal early in the relationship with a potential customer. That way, sales can refocus on buyers that would benefit from the solution’s core competency and features. You know, deals they might actually win.
At the same time, don’t make the buyer feel ditched. Be honest that you’re not a fit, leave them in a good place, and re-engage with other products down the road that are more in the sweet spot.
Success comes from fitting the product to the customer, not the customer to the product or service.
Whose Problem Is This?
- Product teams during the design process. It’s best to design for specific “jobs to be done” rather than just shooting for the moon.
- Sales when deciding which customers to prioritize. Devote the most time and effort to buyers that benefit from the product’s core competency.
If you’re building a product for a particular buyer persona, make sure you have a firm grasp of their “jobs to be done” that need to be accomplished via your solution.
Target buyers that have a need that can be met by the core competencies of your product or service.
Customer journey mapping, key buying criteria and market opportunity assessments uncover why buyers are looking for a product or service in the first place. This research determines the functionalities needed to accomplish buyers’ “jobs to be done” along with the features that customers prioritize the most.
Turn Loss Into A Strategic Gain
Each lost deal, when properly analyzed, yields useful information to hone your product, sales, and marketing strategies.
It all boils down to understanding buyers’ wants and, more importantly, their needs. This insight gives you the ability to:
- Determine which customers to target.
- Strategize ways to expand existing customer accounts and form lasting relationships with new customers.
- Build products that satisfy buyers’ “jobs to be done.”
- Create solutions that don’t give and charge buyers way more than they need or want.
- Use messaging that speaks to buyers in terms they understand.
- Offer pricing model options that will appeal to target customers.
- Recognize use cases that aren’t a good fit and devote sales efforts elsewhere.
Want to turn your lost deal into an insight gain? Get in touch.
Research for this analysis was conducted by Jacob Dittmer, Tyler Honsinger, and Scott Swigart. Learn more about our research for B2B technology companies.