Of all the various pieces of information that sales reps are expected to log on each account or opportunity they are working on – who the contact is, the expected close date, the value of the opportunity, e.t.c – one of the most critical Salesforce reports from a sales management point-of-view is closed lost reasons. Closed lost reasons refers to the reasons why an opportunity did not closed won and become a successful deal for your sales team.
Proactive sales managers with an eye toward improving their team in the near future need to diagnose historical performances to figure out where they can literally learn from their past mistakes. Bucketing your opportunities by their closed lost reasons will allow sales managers to do a deeper dive and see if there are any blatant trends emerging. These trends could reveal a leak in the performances of their reps, a focus on the wrong industry or the need to better identify and tighten the ideal customer profile.
At many sales organizations, the closed lost reason should be simply another step in Salesforce data entry. Most companies opt to set up a picklist of lost reasons in Salesforce, which can be easily done. Once that has been set up, your reps can easily select from one of the lost reasons that are commonly cited as to why prospective customers decide not to buy.
Additionally, creating a culture where tracking closed lost reasons is essential also bolsters the culture of transparency that you desire among your sales force. Sales reps will not have anywhere to hide when opportunities move to the lost stage. If the closed lost reason cannot be directly attributed to the rep, then the onus is on the sales manager to solve the broader issue. However, if the closed lost reason is the sales rep’s fault? Then he or she will have to explain why that occurred and how they plan to move past this.
Closed lost reasons could run the gamut, depending on what industry you are servicing or what customers you are talking to. Some common ones include:
Timing – the prospective customer might be a great fit for your product…in the near future. For whatever reason – a management overhaul, a spate of layoffs – the timing just isn’t right at this moment in time.
Need – this prospective customer simply has no need for your product and are doing fine without you. Move along.
Price – in theory, all your products and services would be a great fit for this prospective customer. However, they simply cannot find the room in their budget to accommodate such a purchase at this point in time.
Competition – they opted to go with your competition instead. This is naturally a tough closed lost reason pill to swallow. Ask these prospective customers what led them to go with your competitor to see what separates you.
Poor qualification – maybe this prospective customer should never even have been interacted with in the first place, due to the fact that they don’t come close to fitting the traits of your ideal customer profile.
This is but a small sample of the many closed lost reasons that prospective customers could cite. The key then is to draw actionable insights from these closed lost reasons and act accordingly. If many prospective customers suggest that they would have bought if only your product had that one extra feature, suggest to your product team to add that one extra feature. If ‘poor qualification’ is often cited, your reps might need extensive coaching into qualifying prospects more stringently. If ‘pricing’ is an issue, maybe you need to lower your prices across the board to better fit market expectations.
It is imperative that for every opportunity your reps don’t close, they ask for a corresponding closed lost reason. Most customers will happily divulge that information, as long as your reps are proactive in seeking out that answer. Once you have set up lost reasons in Salesforce and coached your reps accordingly, you can effectively diagnose a key aspect of your sales process and implement improvements. If you don’t track closed lost reasons now, you’ll hate yourself for later for not doing so.