If your sales process isn’t concrete or isn’t working, it’s pretty clear you need to change it. Same goes for your sales team – if your sales team isn’t hitting their sales objectives, you probably need to either hire new reps or restructure the team.
But once you implement these changes, how do you know whether it’s working?
Every big change must be paired with a solid plan of action and a strategy for how to measure its success. Win/loss analysis helps you measure the effects of those changes on your win rate.
What is win/loss analysis?
Win/loss analysis means identifying and analyzing all won and lost opportunities in your pipeline over a period of time. It helps you track and measure your win rate over time by answering questions like:
How many of our opportunities do we win? How many do we lose?
Where is our win rate changing? Does it look different if we filter across different segments, like by product?
As we grow our number of opportunities, is it affecting our win/loss rate?
When we make changes to our sales process or sales team, is it affecting our win/loss rate?
Analysis like this involves cohorting data, which means gathering specific data points and closely monitoring that group over time. Cohorting can be done by time (by created date or close date) or you can select groups by other dimensions like lead source, employee, customer. Lessons in cohorting are applicable broadly, but I’ll focus on sales opportunity management in this post.
To track the success of changes to your sales process or team, cohort sales opportunities both by created date and by close date. You can cohort the data right out of Salesforce – to give you an idea of what these win/loss reports look like, here’s how we do it in our product:
Win/loss by created date:
Each column groups all opportunities that were created during a given month, and then breaks them down by whether they were won (green), lost (red), or are still open today (blue). The green line represents the win rate over the months.
Win/loss by close date:
The graph by close date is similar, except each column groups all opportunities that were closed during a given month. This excludes all currently open opportunities.
So, what’s the difference?
Let’s say you made a change to your sales process or sales team, effective at the start of January 2014. It’s been almost 4 months and you’re checking in on whether your win rate has been affected – positively, negatively, or at all – since making the big change. Here’s how you would use each cohort.
Cohorting by created date
This is the first report you’ll want to look at when you make a big change because it gives you the most relevant data. The other report, “by close date,” mixes in data from opportunities that were open at the end of Q4’13 into January 2014, when your changes were implemented. By cohorting data by the time you actually made the change and what happened to your win rate thereafter, you avoid mixing newly created opportunities with the opportunities that remained open during the transition.
For example, let’s say you implemented a new set of nurturing campaigns aimed to help the sales team work their open pipeline, and you want to evaluate close rate for the past month since you made the change. If your sales cycle is more than 30 days, the opportunities created since you made the change will likely not be closed yet, meaning they won’t show up on the “by close date” report. But in the “by created date” report, you’ll be able to check in on how these new opportunities are panning out. For this reason, this report can be a good early-stage diagnostic tool.
But the issue with cohorting by created date is that there is a lag for the cohort to see its way through the system (i.e. for all opportunities to close) because of your sales cycle. You don’t have to wait to see how things fully play out to get a strong early indication, but remember that the analysis isn’t concluded until all the opportunities in the cohort are closed. What if the win rate goes way up because the change you made affects opportunities late in the stage cycle, versus early? You won’t be able to see that until your opportunities are closed or close to closed.
Cohorting by close date
This report cohorts opportunities by when the final decision to close them was made. The data here is conclusive – all the opportunities in this data set were definitively closed-won or closed-lost. Because this report covers a finite sense of time, it is more intuitive and straight-forward than the “by created date” report.
The “by close date” data is less lagging, but it is more difficult to correlate it with changes to your sales process. You lose the ability to instantly evaluate and course correct if needed.
Because close date cohorting is less lagging, you can also use it to evaluate your sales team performance in real time – but only for highly functional sales teams that use a consistent process.
The issue with close date cohorting is that the data can be manipulated by your sales reps because they can control their open pipeline and close rate. For example, if you tell your rep you’re going to evaluate them by their closed-lost number, then your reps might game the system by simply keeping dead opportunities open instead of labeling them as closed-lost.
To combat the risk of data manipulation, look back at the “by created date” report and dig into open opportunities. Why on earth are there still 7 open opportunities that were created a year ago in April 2013?
When you dig into those open opportunities, you’ll see that 6 out of the 7 of them were created by Andrea Matlin. Next time you meet with Andrea one-on-one, ask her why those opportunities are still open and talk about why she needs to purge them to keep her pipeline clean.
(InsightSquared customers: Like I did in this example, you can triangulate pretty much anything using InsightSquared. Combine your knowledge of your sales cycle and your desire to keep your sales reps honest and your forecasts accurate by looking at that “by created date” view, while still getting real-time statistics by looking at the “by close date” view.)
You need both reports, cohorting by created date and by close date – they answer different questions. With an understanding of the merits and flaws of each report, you can track how changes in your sales process or team affect your wins and losses over time.