Analytical sales managers and Sales VPs have one thing in common: instead of accepting things at face value, they like to ask why. Figuring out why something happened is a great way to ensure that it happens – or doesn’t happen – again. By learning from our past mistakes, we will be much more likely to avoid them in the future. This is the crux of any win/loss analysis, but asking why is even more critical when conducting a win/loss analysis by lost reasons.
This is Part 2 of our blog series on the importance and best practices of a sales win/loss analysis. We explored conducting this analysis by lead sources. Now, we’ll touch on the impact of a win/loss analysis by lost reasons.
Why look at lost reasons?
There’s no such thing as an undefeated sales rep, one who has never experienced the bitterness that comes when a prospective customer tells you, “No thanks.” The key, then, is what the sales rep does after they hear that. And, after the proper last-ditch efforts have been made to change the potential customer’s mind, the best thing to do is figure out why the deal was lost.
Deals get lost for any number of reasons, depending on what type of business or industry you’re in. Some potential lost reasons include:
Need – “I just don’t need your product, sorry.”
Timing – “Now’s not a good time for us. Maybe next year?”
Price – “Your product is waaayyy too expensive for my budget. We’ll have to go to your more reasonably priced competitors.”
Competition – “I like your product, but I think your competitor’s version offers more for us.”
Feature – “Your product is mostly great, but there are a couple of features we really need from this that you don’t offer.”
Poor qualification – “Your product and company sound great…but I’m not remotely interested. Why are you talking to me at all?”
The reason that effective analytical sales managers should conduct a win/loss analysis by looking at lost reasons is to get actionable insights to better guide the sales team going forward. After setting up lost reason functions in Salesforce and teaching your reps the best practices for maintaining stringent data quality here, you can begin your win/loss analysis. Rank your lost reasons in descending order from the ones that crop up the most frequently. If there is one, or a handful, of lost reasons that are dominating the field, this should be a an alarming red flag.
For instance, what if more than half of your lost opportunities cite price as their primary lost reason? This is a pretty clear indication from the market that your product is too expensive for its perceived value. Conducting some marketing research and bringing your price down to a more amenable tier, or a price that is more in line with what your competitors are doing, might see a sudden spike in deals won. After all, your opportunities seem to be generally pleased with what your product is offering – they simply can’t afford it.
Or, let’s say that ‘feature’ is cited as the most common lost reason, suggesting that your product is more-or-less there, save for a few key features that are in-demand among your prospective customers. This is great customer or market research – passing this on to your engineering or product team will provide the valuable insight they need to keep tinkering with the product and making it better, according to what customers want.
A win/loss analysis by lost reasons can also be an eye-opener into your sales process or the performances of your sales reps. If ‘poor qualification’ or ‘authority’ are commonly cited lost reasons, your reps are doing something wrong. They are either wasting their time speaking to opportunities that are poorly qualified – and perhaps don’t even belong in the sales pipeline – or having trouble breaking through gatekeepers to speak to people with real decision-making authority. These lost reasons require a strategic huddle between sales and marketing or better sales coaching – without the win/loss analysis by lost reasons, these problems would not have been brought to your attention.
Don’t simply accept your losses at face value. Dig deeper and ask the necessary probing questions that come with any win/loss analysis. Answering why will take you to the next step in your sales optimization: how to fix it.
Have you ever conducted a win/loss analysis by lost reasons? What insights did you turn up?[contentblock id=18 img=html.png]