“Closed Reason” is one of the most valuable, yet underutilized, pieces of data that a sales organization can collect about its opportunities. Understanding the reasons why opportunities close, especially when they are lost, allows your sales team to adapt their strategy, provide targeted training, and better communicate with R&D about prospect demands. If your organization isn’t tracking Closed Reason, you’re not alone. It slips through the cracks in many sales departments. To help you take advantage of this trove of intelligence, we’ve compiled some interesting results based on how our customers employ Closed Reason data.
Before we get into the reasons themselves, it’s worth taking a moment to understand why we care about this in the first place. Understanding why opportunities are being closed can help you modify your sales approach, product positioning, or even the product itself. While most organizations focus on reasons why opportunities are lost, there’s no fundamental reason why you can’t also track this data for won deals. You’re tracking Opportunity Type, right? Is “price.” for example, more commonly a reason why you lose or win a deal?
Sales operations pros who track “Closed Reason” typically focus on loss reasons, so let’s dive into what you can do with that information.
- Modify sales strategy: If the reason you’re losing opportunities is because of competition, it may be time to rethink the way you position or sell. This can take a variety of forms, and may involve working with R&D or marketing to shift product perception. Price is another example in this category.
- Focus training efforts: Reasons like “Unresponsive” or “No Decision” may indicate that a rep (or a team) is struggling to engage with prospects, and this is an area where managers can focus their training efforts. Similarly, “Timing” or “Poor Qualification” suggests there’s a need for training on your frontlines or with your business development reps.
- Better communication with R&D: Understanding that opportunities are being lost because of “Features” or “Functionality” gives the sales team leverage in conversations with R&D. When coupled with a field that allows your team to capture additional details and training that encourages them to capture specific needs your product doesn’t currently meet, you can provide clear signal to the R&D team to help the business capture more deals.
One final note before we look at the reasons. “Reason Closed” needs to be a single picklist; no ifs, ands, or buts. Multi-select picklists and free-text fields are a nightmare for data analysis. Feel free to have those fields in addition to the single picklist. This may require some training and clear definitions for the sales team as to when a reason should be selected and how to decide which reason was the “primary” reason. However, at the end of the day, that’s the data you need, and a single picklist is the best way to capture it.
When looking across the InsightSquared client base, these 10 reasons appeared on opportunities for the greatest number of clients. In other words, most of our clients give their sales reps these options:
- Poor Qualification
- No Decision
Different from above, these 10 reasons appeared on the greatest percentage of opportunities:
- No Decision
- Poor Qualification
- Lost Momentum
In the two lists above “Other” appears as #1 and #2 in the lists. It’s present in most clients’ Salesforce.com instances and when present it’s used frequently. In fact, when present, it is the most frequently selected option for more clients than any other reason. It is the top reason for 25% more clients than the next most frequently used reason (which happens to be “Unresponsive”).
“So what?” you might be asking. Well, another way to interpret this data is that when given the option to select “Other”, sales reps will chose it more frequently than any other option. Essentially, when given the opportunity to cop out, users take it. “Cop out” may seem like a harsh way to put it but, from a data analysis perspective, “Other” is a completely useless data point and allowing users to use it means you are allowing them to throw away the largest portion of your data set.
There are two solutions to this:
Don’t allow “Other” as an option: This solution forces users to select something else. However, this can also be less dynamic; it may encourage users to select a reason that isn’t truly the “primary” simply because they don’t have the option they need. In this case, it’s necessary to have a clear process for users to surface their need for a different reason. Typically in this case the burden falls on sales operations to field these requests and make decisions about what to implement or ignore.
Use “Other” with a review process: This option allows reps to select “Other” when they don’t have the option they feel they need. To ensure good data, consider:
- Manager review: When “Other” is selected as an option the rep must justify the selection to their manager. In this way, opportunities where a different option would be more appropriate can be caught, and so the usage of “Other” will not represent laziness on the part of the sales rep.
- Data backfill: If coupled with a free text field where reps can store additional details, along with a process for ensuring it is filled out when “Other” is selected, the free text can be reviewed on a regular basis. If in this review there are clear patterns for reasons, those reasons can be added to the system and the opportunities adjusted accordingly.
Notes on Methodology
The information above was sourced from the InsightSquared client database. At the time of writing, over 500 clients in the database were using a Reason Closed and had recorded at least one reason on a closed lost opportunity. The top 100 most frequently used reasons were inspected and 67 of those were normalized into 13 potential reasons (e.g., ‘Competitor’ and ‘Competition’ were normalized into ‘Competition’), with the remainder passing through unmodified. “Most frequently available” is defined as appearing at least once in the data of the greatest number of distinct clients. “Most frequently used” was determined by comparing the number of opportunities with each reason to the number of opportunities closed lost with any reason recorded, and then summing that frequency across all clients. In this way, clients with a high number of opportunities do not skew the data.