Lost an order or a customer...?

... here's what to do!

It happens to even the best: you lose a customer or an order that you were close to getting. How should you react? You could fret about it, or try to forget it, or you could investigate and find out why.

Surprisingly few business people really approach the issue seriously and investigate it properly. Most are content with a chat with the sales person who then explains that price was to blame. "We're just too expensive". Going by this feedback alone, there's no other remedy but to lower your prices -- and thereby your margins.

What happens next? Do orders start flowing in? Not necessarily.

Price is too easy an excuse
Price is an easy and convenient excuse, not just for the sales team (or channel), but also for the customer who just selected another supplier. Once the customer says "it was the price", it's almost guaranteed that the case will be closed with no further digging into the real underlying issues. Conversely, the sales person will be left with the misconception that price really was the reason for the lost order.

Once you dig a little deeper, though, it's often revealed that, whilst price was a factor, it was certainly not the only one, let alone the main one.

Very often, customers appreciate that the declined vendor makes an earnest, professional effort to understand what went wrong and what to do next time around. This sincere approach can actually open the door for a sale at a later stage.

However, it can be very tricky for a "rejected" vendor to get behind the price masquerade; the buyer will often interpret this as a renewed sales attempt. It's much easier for an independent to reach a detailed understanding of the customer's choice.

The real reason behind a lost order
Price is an easy explanation. Most exporting companies have tried to lose orders - or market shares - for "unexplainable reasons". It was thought you had the best product, a competitive price and a high level of service, yet you're hit with the sad news anyway.

The buyer's statement that the price is too high is an easy way out; it is, on the face of it, a rational, easy-to-grasp explanation. Your sales colleagues (or channel partners) will also tend to see price as a convenient reason for lost orders, since it practically liberates him or her from responsibility for it.

Naturally, your price may not be competitive but in most cases other factors, including "irrational" and emotional factors are the key points that sway a customer's decision. Quite often, professional buyers do not fit the assumption that industrial purchases are solely made on the basis of rational decision making. A buyer does not leave behind his or her personality before entering the office.

Soft factors and vendor image can also be hugely important in markets for very complex products, e.g. capital goods, enterprise software, machinery, or service oriented "products". A declined order can indeed be based partially on the sales person's style, false rumours about your company, its reliability or financial situation, etc.

Yet it is difficult for a buyer to point to these factors as the motivation for the declination, so the buyer hides behind what we call the price façade.

So how do you find out the truth about the real reasons for the rejection. There's really only one way to go about it: ask the lost customer again, and also ask some of your current customers. By interviewing a small handful of your latest lost orders and a similar small handful of recent won deals, you can identify what you have done right and wrong in the two groups.

When you compare the two groups' responses, you'll get a much clearer picture of the real reason, and you'll be much better prepared for future prospects.

Be prepared, though, that it can be difficult for yourself to get behind the "price façade". In all likelihood, the prospect will see it as a renewed attempt by you to sell. You should therefore consider conducting the interviews in a situation and in a manner that does not seem like a new sales attempt -- meet a neutral place for example.

If you undertake interviews yourself, we recommend you arrange for doing it at sales director level, as a minimum, and even then it can be tricky to uncover the truth. You should consider using external consultants who, in your prospect's eyes, will not have the same aura of suspiciousness about them.

More info about sounding out your "lost" customers?

For further information about this, or if you have any questions or comments, call us now at 0870 745 6899, email, or use the form.

Go to overview of LEC Techniques

Go to LEC Cases in point

T:+44 (0) 870 745 6899 E: