Talking about loss cycles sometimes gets us thinking about the Disney movie Dumbo. You know, the one about the baby elephant with exceptionally big ears:

I’ve seen a horse fly.

I’ve seen a dragon fly.

I’ve seen a house fly.

But I’ve never seen an elephant fly!

We feel the same way. We see people talk about their sales cycles, their win cycles, even their marketing cycles…so why don’t we ever see people talking about their loss cycles?

Probably because of that one jarring word that stands out: loss.

Nobody likes talking about losing, losses and losers. It is negative, defeatist and just plain bums people out. People prefer to gloss over losses while highlighting their victories and triumphs.

Pollyannas – full of rose-tinted optimism (read: naivete) – don’t make effective sales managers. Hardened realists who aren’t afraid to embrace failure and learn from their mistakes do.

And that type of realistic, inward-facing soul searching and constructive criticism starts with an analysis of your loss cycle.

What is your Loss Cycle?

Your loss cycle refers to the average amount of time your Closed-Lost opportunities spent in each particular stage of your pipeline. Losing opportunities tend to spend a longer time in these sales pipeline stages, especially earlier ones. Non-customers enjoy stringing sales reps along, leading them on to believe that they will buy from you before giving you a final “No thanks!” at a later time. After you’ve expended lots of time and effort trying to close them, of course.

Take a look at this example above. For this company, Closed-Lost opportunities hung out in the Qualifying Stage for an average of 16 days, compared to just 3 days for opportunities that were eventually Closed-Won. This holds true at the next stage as well; Closed-Lost opportunities averaged about 8 days in the Demo stage, while Closed-Lost opportunities were only there for 4.

Learn More About Sales Pipeline Management»

Why should I care about this?

Most reps will tell you that time is their most valuable asset; with all the time in the world, they would be able to vet opportunities more closely, craft more effective selling strategies and effectively close more deals. Unfortunately, it’s not always easy to give reps more time back in their days. The alternative, then, is to be more efficient with their time.

The first step toward improved efficiency? Stop wasting time chasing losing opportunities.

And that means knowing what a losing opportunity looks like. By measuring your loss cycle, you will gain a better understanding of and clearer insight into what these losing opportunities look like, based on how long they spend in your early sales pipeline stages. If an opportunity has lingered in Qualifying for 12 days, you can safely assume that it will not convert and either put your foot down when talking to the prospect, or just move on.

How can I implement these insights into my sales coaching?

Again, it all goes back to helping your reps avoid chasing bad deals and managing their time better, figuring out which opportunities to prioritize. Given the option of spending an hour on the phone with an opportunity that has been in Qualifying for 11 days or an opportunity that has been in there for 3 days, the sales rep can apply this knowledge to determine that the better use of their time would be the latter.

It’s all about quickly identifying those unlikely-to-convert opps, and staying away from them. The flipside of knowing your loss cycle and identifying stay-away opps is intimately knowing your strike zone; identifying and chasing the opportunities that you are more than confident you can win.

Another element to consider in your sales coaching is how to talk to those languishing opportunities to get real answers and to halt the stringing-along. There’s a certain level of aggressiveness and put-your-foot-down determination to say to those prospects, “Listen guys, I need to know if you’re actually serious about buying or not,” without putting them off and permanently ruining the relationship. Those are the tactical tips you should provide after you’ve measured your loss cycle.

How does my loss cycle stack up against benchmarks?

Depending on your industry and your sales process, your loss cycle might not accurately compare to those of others, but there will largely be reliable commonalities reflecting the difference between Win Cycles and Loss Cycles.

In a recent benchmarking study, we analyzed the loss cycles for more than 50 inside sales teams and confirmed what we hypothesized: that there is a distinct difference between Win Cycles and Loss Cycles. In fact, losing opportunities spent an average of 2.7x as many days in the pipeline as winning opportunities. That’s a lot of time your reps could have back, if they only knew your loss cycle.
Instead of brushing over your losses and focusing only on your wins, you should be keenly measuring and analyzing your losses, and your Loss Cycle. Knowing what that metric is – and coaching accordingly to those insights – could save a great deal of your reps’ time, and create more wins for your team.

[contentblock id=18 img=html.png]
Recent Posts