The majority of deals aren’t lost because of price, competition, or even lack of features; rather, 40-60% of deals are lost because of no decision, according to The Jolt Effect by Matt Dixon and Ted McKenna. This makes no-decision deals extremely costly. Not only are you losing out on the potential revenue from that deal, but it also costs you wasted time and effort that your team could have utilized elsewhere.
In a recent Customer Value Community Webinar on The True Cost of Doing Nothing: How to Combat Status Quo, Ecosystems brought together Alex Schrager, VP of Sales at Ecosystems, and Jen Allen-Knuth, Founder of DemandJen. These speakers combined have over four decades of experience in sales when it comes to no-decision deals.
They shared:
- A new framework for discovery
- How to identify no decision earlier in the sales process,
- Specific strategies for turning no decision into closed-won.
The following article is a brief summary of the webinar where Alex and Jen shared their strategies for combating status quo deals. If you’re interested in the full discussion, you can watch the recording here.
Two Types of No-Decision Deals
To understand why so many deals result in no decision, you must first look at the different types of no-decision deals (Source: Matthew Dixon & Todd McKenna, Stop Losing Sales to Customer Indecision, Harvard Business Review (June 2022):
1) Status Quo (44% of no-decision deals are status quo). Status quo no decisions usually result from a prospect underestimating the true cost associated with doing nothing. They may realize they have a problem to solve but what they don’t realize is that their current problem is costing them more than they believe.
2) Indecision (56% of no-decision deals are indecision). Indecision deals usually stem from complexity. It’s a result of analysis paralysis. Your prospect is presented with so many options or choices (your solution, your competitors, whatever they are currently doing, etc.) that they overthink or overanalyze the situation, making it difficult for them to move forward and make a decision.
While indecision deals can typically be overcome by helping your prospects reduce their options, status quo deals require a more significant change in how you’re selling.
Traditional Sales Processes Don’t Address Status Quo
Traditionally, sales strategy teaches sellers to focus on the features and functions of your product/service, jumping right into selling on why it’s beneficial. But the problem with this is that it skips two crucial steps:
1) Identifying if the problem is worth solving now. If the prospect doesn’t believe that their high-priority problem is worth solving now, then they will never feel motivated to explore alternative solutions.
2) Sizing and prioritizing the prospect’s current problems. If a prospect doesn’t realize how significant their current problem is, they are never going to find the motivation to seek alternatives.
For example, you may have a crack on your car windshield and consider it a problem but only from an aesthetic perspective. And if a minor blemish on your windshield doesn't bother you, then you may be okay leaving it as is. But what you may not realize is that a cracked windshield can lead to many issues over time.
In fact, a cracked windshield can be quite dangerous. It can disrupt a driver’s field of vision, significantly increasing the chances of a costly accident. Car windshields are also integral for the structural integrity of the car, and a crack can weaken the car's structure, making it more susceptible to damage in an accident. From the latter perspective, being okay with the cracked windshield and deciding to do nothing could be quite costly. But unless someone alerted you to these costs, you may have been fine leaving it as is.
This is where your sales team comes into the picture by quantifying the cost of inaction. In the next section, you’ll learn step-by-step how you can help prospects understand the true cost of inaction.
Calculating the Cost of Inaction
Pretend you’re selling a raincoat. If you were to adopt the traditional selling approach we mentioned above, you might tell your potential customers that with our raincoat, you are 10x less likely to get wet on your commute to work. This is called an inverted ROI.
But this inverted ROI calculation might mean very little to the potential customer if they don’t believe their rainy day problems are severe enough. From their perspective, they might already own an umbrella and think this is good enough (status quo). Why pay money for a costly raincoat when I already have an umbrella? However, the problem might be more costly without them even knowing.
Research shows only 5% of consumers bring an umbrella with them to work. If you use a city like Chicago, where it rains 100 days a year, that means that the vast majority of the time, your potential customer likely won’t have their umbrella. And what do you typically do when you don’t have an umbrella when it’s rainy? Call an Uber. And with surge pricing, your potential customer might be spending upwards of $40 on an Uber every single time it rains. That adds up quickly. Even if this only happened to your potential customer 50% of the time (well below the average of 95%) that still equates to $2,000/year spent on Uber.
Establishing the true cost of inaction allows your prospect to truly size up their problem and determine if it is worth making a switch or trying something new. In this example, it might be investing in your $100 raincoat. By investing in your raincoat, your potential customer is saving hundreds if not thousands of dollars on Uber. That’s the power of the cost of inaction.
Conclusion: Transform No-Decision Deals into Wins
No-decision deals are not just lost opportunities; they are costly drains of resources and time. By understanding the two primary types of no-decision deals—indecision and status quo—sales professionals can strategically address the underlying causes.
As we've learned, the key to overcoming status quo deals lies in shifting the sales focus. Instead of solely emphasizing the value of your solution, prioritize identifying high-priority problems and quantifying the cost of inaction. By uncovering the hidden costs associated with the status quo, prospects gain clarity and motivation to explore alternative solutions.
Interested in Incorporating the Cost of Inaction into your Sales Approach?
Don't let status quo be the default outcome. Take charge, calculate the cost of inaction, and guide your prospects toward informed decisions that drive both their success and yours. Ecosystems SaaS platform equips you to demonstrate and quantify the cost of inaction through best-practice business cases that allow you and your customer to collaborate together on value.
If you'd like to learn more about how top SaaS companies are effectively quantifying status quo to increase pipeline and expand accounts with Ecosystems, schedule some time with us to chat.
