Spoiler: true story.
“We won the deal!” You’ve either sent this email or received it. I did.
The large deal you and your company have been pursuing is in, and it’s time to communicate the win.
Especially since you’ve involved a lot of internal resources, including senior management, who have kept a close eye on the opportunity since it first appeared in the CRM.
Communicating a win is a motivating moment. But is it always good news?
Or is it a Pyrrhic victory?
You know, King Pyrrhus, the ancient Greek king who fought the Romans and won at such a cost that the victory wasn’t worth it.
Such companies are not necessarily failing organizations.
All it takes to end up in this situation is a few decisions that seem reasonable at the time.
Going after the deal in the first place
- Internal discussions mention the deal at its full value, assuming the entire scope will be rolled out. The client might roll out only 50% of it, but there’s no need to worry yet.
- Treat the deal as a must-have. Why? Because of the client’s name, the total value, the commitments made to senior management, or the gap to target.
- Be more flexible than usual on Go/No-Go decisions. Take shortcuts. Ask senior management for exceptions. Skip some qualification criteria, including financial ones, and focus on technical capabilities.
Margin? The focus was on revenue.
- Every decision focuses on revenue. Margin is forgotten, neither assessed nor measured.
- Discounts and special prices are based on the full potential scope. If the actual scope delivered falls short of that potential, the deal can become a money pit.
- The numbers look great, but only if the entire scope is rolled out. Margin starts in year two, and only if the client orders everything included in the original deal.
Deal construction? Read the fine print
- There’s an exit clause after 12 months (the contract is for three years but the client can decide to terminate, without penalties, after 12 months) and an automatic downward price revision every six months. The client has no commitment to take up the full scope.
- Nothing allows upward price revisions to account for inflation affecting the resources and services needed to deliver the project. This was never negotiated.
- Negotiations were conducted solely with procurement. There was hardly any pushback against the familiar argument: “It’s our policy, take it or leave it.”
Hidden costs that appear nowhere in the opportunity assessment
- The cost of sales has not been calculated, despite the significant resources invested in the deal.
- The process has diverted valuable technical and financial resources from other projects.
- Not to forget: the full sales commission has been paid on the potential value, not on the actual revenue.
👉 So, how do make sure you prevent it? Start with this
- Apply your Go/No-Go process, or revise it if it needs improvement.
- Train your sales teams to negotiate face-to-face with professional procurement teams.
- Assess and measure the hidden costs.
You won the RFP. But did you win a good deal?
Not all deals are worth winning.
How do you make sure you ask, and answer, this question before committing to a deal?
Let’s talk.
