What I Learned From Losing A $10 Million Sale

I’ll never forget the time I answered the phone and heard this: “Hi, yes, my client is looking for five million t-shirts to be packaged with their product and sold in stores.  Can you handle that type of order?”

Long, confused pause…

“Excuse me, how many shirts?”

“Five million. It’s for a major promotion.”

Ha! Well let’s nominate this lady as the Queen of Obvious. Yes, I agree, 5 million shirts is a pretty major promotion! In 13 years as a supplier, I sold a dozen or so deals that topped $1 million, and probably another two dozen that eclipsed $500,000. This would be the one and only time I ever discussed an 8-figure deal.

“Oh and they want them for $1 a piece,” she said. Of course they do. And with that, my work began.  As any Supplier will tell you, most deals take a month or so to close, much longer for larger deals. For the next six months, yes, SIX months, I worked on this project.

I sourced and negotiated the blank shirts from several different manufacturers and convinced them to commit to abbreviated production schedules. I worked on our internal printing schedules, found additional printing presses to run the job, looked at new space to expand our capacity, lined up additional labor and made partnerships with back-up print companies in case we fell behind. I worked with our internal production team to develop new ways to increase the speed and efficiency of packaging. I contracted shipping companies to schedule offbeat pick-up and delivery times. I worked on financing options relentlessly. Then I presented pricing to my distributor client. More than $2 per piece. Unacceptable, of course.

So we altered the imprint design to be less complicated and have fewer colors. That saved some money. Then I negotiated with the blank shirt manufacturers. VP’s of sales flew in from all over the country to meet with me. I figured out how to work within their production parameters to reduce stress on their system, thereby lowering their cost. I figured out how to schedule our production to minimize overtime while still maximizing output. We discovered an even better technique for packaging to further increase speed and efficiency. I negotiated better financing. Then I presented new pricing to my distributor client. This time it was $2.00 even.

Meanwhile, the client was looking at other sources, mostly China, and/or involving the t-shirt mills directly, desperately trying to meet a target price of $1.00. Well, between their hunting and my figuring, it became clear that $2.00 was the best price they were going to get, and that my company was going to be the best source for production. After 5 months of planning and negotiating, we were going to get the deal!!! You can believe I had already spent the commission in my head. This was long before I was married with kids, so there was the speed boat, the hot tub, the trip to Australia, the bitchin’ sports car, the brand new wardrobe, the “drinks are on me!” nights at the bar. Oh yeah, this was going to be the time of my life!

And then…

This was in the early 2000’s, and did I mention that the client was a major cigarette brand? Well, just when the deal was about to be finalized, something happened far beyond my control. A $28 billion (with a “b”) legal judgment against the client. Screeeech! Then the call from my distributor: “We’re going to need a few more weeks to figure this out.” Okay, well, I’ve spent nearly half the year on this, I can wait a few more weeks.

A month later, the client (who also owns several major food brands), threatened bankruptcy, which would have been a major disruption to food distribution in the United States. So the judge changed the settlement to $28 million (with an “m”), and then the client decided to halt all “major” promotions, thinking it would be bad form. And just like that, my deal went up like a puff of smoke. The speed boat was not going to float, the hot tub would stay empty and drinks were definitely not on me.

But I got over it. I mean, hey, it’s only taken me more than 10 years to actually discuss it publicly. I was reminded of this story when a friend of mine from another industry recently lost a big deal. “What did you learn?” I asked upon hearing the news. That’s when the phone went silent and I was thankful that it was not an in-person conversation, or I might have been on the receiving end of a knuckle-sandwich.

“Look, it obviously would have been better if you had closed the deal, but you’ve learned some things along the way, and they will prepare you for the future,” he said. I then recounted the story of my big loss, and shared what I learned:

• No matter how big the deal, you better have more eggs in your basket, more irons in the fire or any other metaphor for diversifying your client base. Nothing like spending six months neglecting your standard business to drive this point home.
• Get some help! One smart thing I did was to hire a capable sales partner to handle my other business during this process. I trained her as best I could and then I let her run free. If I hadn’t found a trustworthy partner, I would have been completely screwed.
• Establish real relationships with your vendors and treat them with respect because you are going to need them to do some heavy lifting at some point during your relationship. When I presented this potential deal to my vendors, they could have ignored it as a pie in the sky and sent me packing, but they didn’t. They worked as diligently as I did to give us the best possible chance to make it happen. Calling them to say the deal was dead is still one of the toughest things I’ve had to do in my career. After that, I made it a point to push business their way whenever I could.
• Realize that nothing is impossible, and do everything in your power to turn “possible” into “real.” Obviously there were things in this situation that I couldn’t control, but I worked diligently to address each and every detail that I had the power to affect. If the timing had been different, this deal would have happened, and that diligence would have been the reason why.

Based on everything I learned from this situation, I was significantly more prepared in my career for both big deals and small. Tough lessons to learn, but valuable. Still, I would have looked really cool in that boat!