WINNING growth projects
Apr 1, 1999 12:00 PM, Alan Kruglak
Whenever I think about a historical event or remember something memorable, I usually associate it with a one-liner. One of my favorites is from a recent Star Trek movie called First Contact. It is at the end of the movie when Data (the android) tells the head of the Borg (an alien race), "Resistance is futile." I like that one-liner because it brings out every raw emotion of victory. It describes my feelings about face-to-face combat with my competitors on the sales battlefield.
Although all the aforementioned one-liner may be nice to know, there is really only one that counts when it comes to systems sales for low-voltage contractors, "Failure is not an option." Of course, by now, you are reading this line and thinking that this is a no-brainer. What else is new? Everyone wants to win in sales, right?
Unfortunately, most systems integrators who read this line do not really understand its power. This one-liner is not addressed to the line-level sales personnel; it is targeted directly at management. Futher, the failure to truly understand its power can have severe ramifications on your profitability.
An important example Let me explain what I mean when I talk about the power of "failure is not an option." Several years ago, my company submitted a bid on a complicated integrated system at one of the local airports, competing against seven companies. In examining our costs, we decided that we would lower our margins a little to be more aggressive. Of course, throughout the pre-bid process, the client continued to bang his hand on the table, stating in an assured tone that "we want quality, and will pay for quality."
When all of the bids were submitted, we were in for the shock of our lives. Six of the bids, including ours, were clustered around the $1 million threshold. However, there was one that was at the $500,000 mark. Our brain turned sideways. Our costs were higher than that. How could anyone bid that low? Besides, the client wanted quality, right?
The low-bid competitor took exception to almost every condition in the specification, reducing his costs and, in turn, winning the project. Despite the client's insistence on quality, price became the overriding factor. My first mistake was believing that price would not be the primary issue. The second mistake I made was misjudging my competitor. I thought their low price meant that they were incompetent and were going to go paws up. Unfortunately, that is not what happened.
The pain and lessons learned from this loss become deeper. All of the change orders over the next five years, which totaled more than $4 million, went directly to our competitor. Although our intelligence indicated that our competitor's service performance was below average, the client refused to allow us to bid on changes or take over the service work. This continued for five years, until a new operations manager came to the airport, and decided to replace low-performing service providers.
Why failure is not an option There are many reasons why it was difficult for our company to penetrate the account. First, how could the airport trust our word that we were the best thing since sliced bread and could solve their problems? Maybe we would be worse than the current contractor. Then, there were concerns about voiding existing warrantees and transition trauma that would upset the daily operations of the airport. There was simply too much risk to allow another company to become involved with the airport's system.
Of course, it really does not matter why it took five years for the airport to open up the competitive doors. What really matters is the power of that one-liner, "failure is not an option." Winning is extremely important. If you fail to win the initial phase of a long-term growth project, chances are that you will be excluded from bidding on any additional work. The winner of the original project will perform the work and be there forever unless that company self-destructs by providing poor service. Even then, it often takes a good amount of time before the patience ofthe owner wears thin.
Long-term growth: who and how? If you believe in the power of my one-liner, then the next question is to identify which prospects fall into this category. For most corporate prospects, the answer is probably all of them. Most corporations continually grow and expand, representing fertile ground for this approach.
As a manager or owner of a systems integrator, if I recognize that "failure is not an option," how do I ensure that we never lose? There is no way to ensure that. The best approach, however, is through the strategic use of aggressive pricing on those projects that offer the highest long-term growth. Once you have captured your account, you become the winner, and all additions and changes can be accommodated at your standard margins.
The "failure is not an option" one-liner is a challenge to management. It requires a vision of the future, and an understanding of the long-term dynamic relationship between sales growth and existing clients. So, for all of the owners and managers that are reading this article, I will quote another line from Star Trek that will change the future course of your profitability. It always comes from Captain Picard, when he commands an ensign to plot a course to a new galaxy: "Make it so."
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