Losing a sale never feels good, but it’s a natural, recurring event in any salesperson’s job. That said, if you’re losing sales consistently, you need to take action.
Lost sales analysis (sometimes called by different names, like “win-loss analysis”) is a process that helps you identify not just how a prospective sale went wrong, but how you can improve your strategy in the future. It requires attention to detail, a reliable system of measurement, and an ample investment of time, but if you apply your insights correctly, you can greatly improve your sales strategy.
Here’s how to do it.
Where Was the Sale Lost?
Looking at an individual sale, you’ll first need to determine where the sale was lost. At which point in the sales pipeline did this person lose interest?
- Lead generation. Problems in the lead generation phase tend to occur because you’re not finding the right types of customers, or because you made a bad first impression.
- Initial conversations. At the initial conversation phase, any number of problems could arise. Your customer could find out that your offerings or prices aren’t what they’re looking for, or they may get cold feet when they get to know your organization.
- Proposal review. Assuming you get started on the right foot, a proposal can make or break your sale. If the deal falls apart at this level, it could mean you need a better proposal template, you need to tailor your templates more specifically to individual customers, or that you need to present your proposal in a different way.
- Follow up. After the proposal, did you follow up? Did you get a response from those follow ups? Many deals fall apart at this stage due to inconsistent or poorly executed follow ups.
- Some deals fall through at the last possible moment. Did something happen to change your prospect’s mind? What new information emerged?
It may seem like the stage in which the sale is lost is responsible for the lost sale, but this isn’t always the case; necessarily, the loss must have occurred during or before this stage. But it might have started in the earliest stages, gradually manifesting as the stages progressed. Keep this in mind during your analysis.
Why Was the Sale Lost?
You’ll also need to consider why the sale was lost. Comparatively, this is a more subjective question. You can study hard data or rely on your own understanding to figure out what went wrong, but the best method is to simply ask for feedback. Conduct a survey or ask your prospects directly: why didn’t you buy from us?
These are some of the most common reasons:
- Customer fit. Is this prospect within your target demographics? Are they the right fit for this product or service? If not, you probably have a lead qualification or lead generation problem.
- Customer needs. It could be that this customer simply doesn’t have a need or desire for your product. If this is the case, you may need to revisit your market research, or better understand common objections.
- Sometimes, the timing is just off; the prospect likes the product, but isn’t ready to buy. Better targeting strategies and follow-up strategies can often correct this.
- Expensive pricing can turn otherwise interested people away. Is there a way you can offer lower pricing? Are there other perks or features you can offer to sweeten the pot? What would it take to close this kind of sale?
- Competitor issues. Did this customer go with one of your competitors instead of you? Why? What do they have to offer that you don’t?
Individual and Collective Analysis
You can study lost sales on an individual or collective level, and it’s important to do both. At the collective level, you’ll be able to study broad patterns that seem to occur throughout your entire organization. At the individual level, you’ll get to know your customers better and take a closer look at outliers that might not be fairly represented in your collective data sets.
The Importance of Actionability
One of the most important principles in lost sales analysis is actionability. In other words, do your insights and conclusions allow you to take action in some meaningful way? Otherwise, all you’re doing is satisfying your own curiosity. Whenever you conduct a lost sales analysis, ask yourself how you can apply your findings to your processes in the future. What is it that needs to change?
A single lost sales analysis isn’t going to be enough to completely overhaul your sales department, or triple your company’s revenue. It’s a practice you’ll need to undertake consistently if you want to make gains. Keep measuring your effectiveness and applying new tactics; eventually you’ll see the results you want.