A strategic slip.
Abstract: ProNet, subsidiary of a large and well-connected business Group, was bidding to set up a wide area network for an Indian State. A prestigious project, it was one of the first of its kind in the country. ProNet’s parent Group was in the good books of the Government for their sizable investments in the State. Their lobbying had been successful. None other than the head of the ruling party had instructed the Chief Minister to consider the company with a kindly eye. When the tender was opened, the company’s bid was declared the lowest. The champagne, as it turned out, was uncorked too soon.
First published in Business Gyan, India
ProNet, subsidiary of a large and well-connected business Group, was bidding to set up a wide area network for an Indian State. A prestigious project, it was one of the first of its kind in the country. ProNet’s parent Group was in the good books of the Government for their sizable investments in the State. Their lobbying had been successful. None other than the head of the ruling party had instructed the Chief Minister to consider the company with a kindly eye. When the tender was opened, the company’s bid was declared the lowest. The champagne, as it turned out, was uncorked too soon.
The State Government had appointed a qualified and competent public sector company as consultant for the project. This firm had prepared technical specifications, tender documents, and supervised bidding and evaluation. They were now required to make purchase recommendation to the Government. In the weeks that followed ProNet’s sales people followed up regularly to find out when the decision will be taken. Each time the consultant replied, “We are looking into it.” Several weeks later the contract was awarded to the next lowest bidder and ProNet’s quote rejected.
What went wrong is an object lesson in B2B selling. The sales manager pursuing the business became over confident after the Chief Minister reiterated the Party Chief’s assurance and their bid was adjudged the lowest. Worse, the company made the grave error of underestimating the role of the Consultant.
The satellite-based network was designed to cover the entire State. It would enable distance education and a variety of other vital government functions. It was one of the first such projects of any State Government. Its success or failure would greatly impact the Government’s prestige and functioning. The only people who understood the technical aspects of this vital piece of infrastructure were from the consulting company.
Perhaps they were ‘taken care of’ by the competitor? Or, they genuinely felt the other party’s offer was technically superior? ProNet’s failure to discover in time what was going wrong and why, cost them the business. When asked why they did not recommend the lowest bidder, the consultant told the Chief Minister ProNet’s network wouldn’t do the job. If the Government wished to award the contract to them, the consulting firm would not be responsible for any malfunction. The Government had little choice but to agree. To go against the consultant’s recommendation would have entailed risking a mission critical network. If the Government had sought another opinion, it would have delayed the project by months.
ProNet’s sales manager made the error typical of most sales people in B2B business. They do not get to know all those who influence the buying process, and fully understand their perceptions. The process of B2B buying is distinctly different from the way trade and individuals buy.
In most business buying situations four sets of people are involved on the customer side. They can be broadly categorised as Approving Authority, Users, and Gatekeepers. The fourth role is hidden and can be leveraged only by the seller. She is the Mentor who wants the seller to succeed and in their win perceives a benefit for the customer and herself.
The Approving Authority is the most important decision maker. By formal and informal means, he obtains inputs from Users and Gatekeepers and reaches his decision independently. Usually a senior person, he looks for economic benefits such as cost saving, productivity, and impact on the organisation’s business. He is responsible for the budget and cash flow to finance the purchase. In this case, it was the Chief Minister and the company did well to ensure he was in favour.
Users are interested in how the product will be used and impact their work. They desire ease of handling, how it can enable them to do their jobs more quickly and productively. Some of the users of this project might have been principals and vice chancellors of government colleges and universities. District Magistrates, senior revenue officials and Secretaries would be other users. Since it was the first project of its kind, and because users were numerous and disparate, each individual’s influence was marginal.
The consulting firm was the Gatekeeper. Their role was to disqualify unworthy bidders and select the offer that best matched the specifications they had written. In technically complex projects serving mission critical applications, the role of the Gatekeeper assumes great importance. Their recommendation is harder to overrule. That is precisely what happened in this case.
The Mentor might have been able to warn the company of trouble ahead, but she was never identified. She may have been found from among the Principal Secretary, Finance Secretary, or even the Chief Minister’s Personal Assistant.
B2B selling is complex. Many people shape the course of a sale. Some have strong influence, others weak. Some form favourable impressions about certain sellers, others have neutral or negative feelings. Their impressions and influence change during the course of the sales cycle. That makes business-to-business selling even more difficult. Sales people tend to work in their comfort zones. They call more often on people who appear friendly, convenient, and accessible. Most don’t make the effort to find out who else may affect purchase decisions and what their points of view might be. They miss out on persuading key influencers.
In B2B business one needs to adopt a methodical process of developing sales strategy. The process should identify people who play each of the four roles. Sales people should map each person’s influence, perceptions, beliefs and attitudes with respect to each sale as they change over time. Only this dynamic information can be useful for formulating effective strategies for B2B selling. Such a toolkit is available and is being used by savvy companies and their sales personnel. Sadly, ProNet was not one of them.