We’ve all been there: your team goes through the painstaking process of qualifying a lead, researching a company, negotiating pricing and then POOF! The deal is gone. Losing deals at any point in the sales cycle is frustrating, but nothing is worse than when it happens just before the finish line.
Yet despite the frustration, there is a lot you can learn from a lost deal. Rather than closing the books and moving on to the next opportunity, leading businesses take the time to compare won and lost deals to identify the key differences between the two. If done correctly, this exercise can reveal major opportunities to improve your sales performance and processes. So, how can this be done and what can you learn?
Use Consistent Process Measures
To accurately understand the differences between deals won and deals lost, you must consistently evaluate all deals using a set of key sales process measures. As shown below, process measures are used to understand how leads and opportunities flow through your sales pipeline, allowing you to pinpoint bottlenecks, inefficiencies and untapped opportunities in your process.
Once you are able to pinpoint discrepancies like most lost deals dropping out at the qualified opportunity stage, or having a smaller average qualified opportunity size than those that close, you can begin asking why.
Isolate Key Dimensions
Measuring sales data consistently across key conversion points using process measures uncovers the key factors, or dimensions, impacting your performance. Dimensions include industry vertical, sales team, stage duration and much, much more. In doing so, you will uncover underlying trends, patterns or variabilities that provide actionable steps to increase wins.
For instance, to find out why deals are not converting from opportunities to qualified opportunities, you can compare and contrast various dimensions between deals that have been lost at that point in the process and deals that have been won. In measuring these deals by the dimension of lead source, you might discover that deals from Channel A are less likely to close than those from Channels B, C or D!
Now that you understand how to effectively measure lost deals, let’s take a look at three key sales insights you can uncover that will improve your win rate in the future.
1. Identify Your Best Contacts: Comparing won and lost deals by the dimension of contact will unveil a series of actionable insights to help guide you when it comes to sales outreach as well as the types of marketing leads you should accept. What level should the contact be to give you the best chance of securing purchase authority? What function makes the best champion – i.e. sales, marketing, finance?
2. Refine Your Exit Criteria: Structured sales processes require reps to take particular steps and provide certain information before moving a deal from one stage of the sales pipeline to another. When comparing lost and won deals, it is helpful to reevaluate this criteria. For example, you may discover that reps who sent a lead a particular piece of marketing content had a higher opportunity to qualified opportunity rate than those who didn’t. You could then make it mandatory for reps to send opportunities this content before marking them as qualified.
3. Know Your Competition: If “competitor” is one of the lead or opportunity fields your reps are required to fill out, you should be able to measure won and lost deals by the dimension of competitor. Soon, you will know exactly which competitors’ customers you should be going after based on your win rate, as well as those that may require you to rethink your pitch.
As you uncover the factors that separate your wins from your losses, you will develop the ability not only to go after more of the right deals, but also to know when a deal is headed in the wrong direction before it’s actually lost, making it possible to correct its course. For more insights you can glean from lost deals and how to take a more scientific sales approach, check out our Sales Science Academy.