Why did that customer reject your quote?
By Bernard Jansen
One of my blog’s regular followers recently emailed me:
“I am struggling with quoting/costing. My potential clients mostly complain that I am expensive, and that’s how I lose 9 out of 10 jobs.”
I know many business owners have this same challenge. You submit a quote, and nothing happens. Or the only feedback you get is a short “no, you’re too expensive”.
Interestingly, when you sell direct to the public such rejection happens everyday. People look at your product, pick it up, check the price and 9 times out of 10 put it back and walk away.
But in a B2B environment each lost sale hurts personally. Effort goes into meeting with the client, crafting the offering, costing it out, writing a proposal and sending it off. When all of this comes to nothing, it is a major blow. Your business depends on making that sale!
In my experience the issue of unsuccessful proposals and quotes is so common that I decided to do some reading up on the topic.
In short, how can a business improve the odds of making the sale?
The first article that caught my eye was from the strategy consulting firm, McKinsey, entitled: Do you really understand how your business customers buy? The second article, from a marketing blog I follow, is called: The Proposal Formula That Gets an 80% Close Rate.
Here are three takeouts that should help you improve the success rate of your quotes:
Understand the customer’s purchasing process
Before you try to sell anything to a prospective customer, you need to understand how they make purchasing decisions. Often the person with whom you have direct contact is not the key influencer in the final decision. In fact, you may find that they have very little influence.
The key is find out who will be involved in making the purchase decision and who among them is the key influencer.
Ideally you should try to map out the customers’ decision making structure. Who are you talking to? Who do they report to? Who else needs to see the quote? Who will be signing it off? Who’s buy-in is critical?
Once you have a clearer picture of who you are really dealing with, the trick is to craft a proposal that talks to everybody’s needs, and more especially those of the key influencer. You must go much further than only meet the requirements of your direct contact.
Provide multiple sources of information
Presenting a well structured quote is only half the battle. The customer will almost certainly do their own background research into your business. They’ll visit your website, look through you sales brochure, reference check your business with partners, other suppliers and even your competitors.
They’ll ask: “Do you know of so and so? What have you heard of them? Are they any good?” They’ll check if your marketing material looks professional. They’ll cross reference what you are saying with what’s written in your sales brochure and on your website.
Your quote is only the tip of the iceberg. In today’s business environment companies are focused on mitigating risk. You need to provide a convincing case that backs up your quote.
In short, if your story doesn’t stack up, you are going to get found out, and don’t be surprised if the only response you get is a simple: “no, you are too expensive”.
Understand the purchase journey
It often happens that someone will say “just send me a quote” when in actual fact they are nowhere near ready to accept quotes yet. What they are really saying is “sounds interesting, let’s talk again”.
What you should be doing at this point is not sending them a quote but rather engaging with them again and finding out more. What is it that they really want? What is the budget and timeline? Who is involved in the project?
Only if the prospect is willing to engage with you further do you know that they are serious about potentially doing business with you.
This leads to my biggest insight: Most quotes get sent way too soon.
In reality a formal quote is only the end of a thorough process of discussion with the customer in which you get a deep understanding of what they need and they get a deep understanding of what you offer.
Next time someone says to you:” just send me a quote”, don’t. Rather offer to meet with them again.
Based on my readings I suggest business owners do 3 things to improve the odds of a quote getting approved:
- Become far more customer focused and understand how purchase decisions are really made.
- Everything you do should support your sales efforts through consistent marketing and quality references.
- Don’t quote too soon. Rather slow the process down and start a real two-way conversation about what the customer really needs.
You should only send a quote once you already know what the answer will be.
Image source: Flickr