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Why Customers Buy the Wrong Solution

Posted by Philip Kreindler on 17-Nov-2014 09:00:00

The project is a disaster – whose fault is it?

wrong-solutionThere is an increasing concern among customers that they are being sold the wrong solutions and there is plenty of evidence to back that up. The best known problems have been in IT, you will have heard of multi million dollar failures hitting Obama care and the Bank of England among others. But there are many less well publicised failures across all industries and the public sector.

This raises some important questions. Firstly, are customers being ‘sold’ the wrong solutions or are they insisting on buying the wrong one? And is it the fault of the customer or the vendor?


The top 3 ways Customers are getting it wrong and how you can help

For a whole series of reasons, customers are managing the process of buying a solution in such a way that they get the wrong result. The top 3 reasons I see are; not involving the right internal stakeholders (especially business leaders), pre-conceived solutions and looking for solutions to the wrong problem.


The problem starts at the top

Going back to IT for a moment, in his book, Business Leadership for IT Projects, Gary Lloyd says “The major cause of IT project failure is not poor IT leadership or difficult-to-use technology; it is poor business leadership.” The truth is that in many industries, not just IT, business leaders are not stepping up to the plate and taking responsibility for the solutions purchased – they rely on their experts.

A striking example of this was the collapse of the BBC’s Digital Media Initiative; it cost over £98M and delivered nothing. The project was approved in 2008 and millions were spent with Siemens and Deloitte as well as internally, but it took until 2013 before the Trust who runs the BBC realised it was a complete failure. The BBC’s leaders should have been involved from the outset. You need to make sure business leaders are involved in the Buying Centre when you are selling to ensure the organisation gets the right solution.

Let me give you another example. We work with a client who provides failsafe computer systems. They recently sold a solution to a large European telecoms company. The Buyer had a clear idea of what he wanted but didn’t adequately involve key stakeholders in the definition of the requirements. Our client delivered what was agreed but the project was a failure because the other stakeholders refused to adopt the solution.  

Now our client always encourages Buyers to include all the relevant stakeholders in the Buying Centre before choosing a solution.


The pre-conceived solution

If the customer thinks they already know the best solution, they won’t see potentially better alternatives. We see this happen quite often when we work with a client who sells a very competitively priced CRM system. They will often see an RFP that has clearly been written to bias the buying process in favour of a particular CRM system that the RFP writer is familiar with. Frequently the customer organisation does not get to see our client’s solution that could deliver everything they need at a lower cost.


The wrong problem

Another real cause of problems is that customers often ask you to provide the solution to the wrong problem. For instance, a client will contact us saying his team are failing to close deals so they need training on Negotiation and Closing. But if we dig deeper we may find the real problem is very different. For example, Sales People are failing to close deals because they should never have submitted a proposal in the first place – the real problem is at the Qualification stage.


Start by saying no

Forget about the customer always being right – they’re not. Saying no to a customer may not sound like the best way to win new business but done well it can be a really positive differentiator.

So what do you say no to? Things like suggesting a solution before the needs of all key stakeholders have been defined or making a final presentation without top management or key stakeholders being present – in fact anything which could lead to the customer making the wrong decision.

The key concepts to use if you think the customer is trying to buy the wrong solution involve a best practice Engagement Model, expanding the Buying Centre, and using a Business Case.


Introduce your Engagement Model and expand the Buying Centre

The best place to start is by introducing your Engagement Model. Show that it is effectively a project plan that will help the customer to manage the buying process effectively and move seamlessly into the implementation phase of the project. You could use a sample solution to demonstrate how the best practice Engagement Model led to an effective solution that was better than one the customer initially envisaged.

A key stage of the model involves defining all key stakeholders and their individual requirements. But what if it still looks as though they are setting themselves up to buy an inappropriate solution? It may be that the Buying Centre itself is too limited. Sometimes it’s too narrow; often it lacks senior management or key stakeholder involvement. As a result the customer runs the risk of choosing a solution based on an incomplete Needs Analysis. That’s when you need a Coach who has the power to make changes in the evaluation process.

But what else can you use to persuade a Business Leader to really think hard about a different sort of solution?


The Business Case

The people we need to influence (Business Leaders) will respond positively to a well argued Business Case. Your Coach will see a good Business Case as a way to improve their standing in the organisation. And experts like Gary Lloyd are encouraging influential buyers – your customers – to make the Business Case the basic Management Tool they use in choosing solutions and managing implementation.

The key to a good Business Case is the Return on Investment (ROI). It has to be better than the pre-conceived solution and it has to be credible - especially to the CFO. Credibility depends on you not just factoring in the purchase price but all the client resources that will be involved in implementing and maintaining the solution over the lifetime of use. Of course you have to make some assumptions but as long as they are realistic and clearly indicated that won’t detract from credibility.


A Business Case that won business for us

Just as important is to put a value on the benefits of an alternative solution. Let me describe an example based on our business. We were asked to provide Training to a large Sales Team. We knew from experience that providing just training would achieve around 20% adoption. We had an alternative solution that we knew was likely to achieve 80% adoption - but of course it would cost more. The training budget was insufficient for the additional cost so we produced a Business Case.

Working with the client – based on data they supplied about the number of projects closed per year, project size and the resulting revenue increase from decreasing the average discount rate by a conservative 1% the annual profitability increase would be in the region of €470,000. A great deal more than the increased cost of our alternative solution!

Our Coach was able to present this Business Case to the CEO and CFO (expanding the Buying Centre) who immediately saw the benefit of investing a little more in training to gain much more revenue. And the Coach won kudos for suggesting the alternative.

It took a bit of time working with our Coach to build the Business Case but because we could draw on previous Business Cases and Case Studies it was both easier to do and carried considerable credibility.


Ask yourself these questions

  • Does doing what the customer asks me to do result in a good solution?

  • Could I add value and differentiate myself by proving an alternative approach that would be better?

  • Could I win support for my solution by using a Business Case in my pitches?


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