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How We’re Growing Our Business Through Lost Deals
ike most CEOs I know, I take an active interest in our sales pipeline. In fact, if you ask our sales team, they might say a little bit too much interest for their liking!
I want to understand which deals in the pipeline are likely to close and if we are going to hit our targets – all the standard forecasting information you might expect.
Why aren’t opportunities moving forward?
But I’m also keen to understand why opportunities don’t move forward. In my experience understanding the dynamics of lost deals can help identify issues, which if addressed, can dramatically improve your sales success.
If you ask salespeople why they won a deal – they always talk about how well they ran the sales process. If they lose, it’s always something to do with the product, the company or pricing – it is never down to their execution.
The above was said by the Sales Director of one of our clients and I think it is a great statement. The nature of sales people is that they don’t generally like to dwell on their losses and they really don’t want to believe it might have been their individual performance that was the problem… But we all know that not every salesperson is a rockstar.
Extending your sales process & reviewing deals
However, by just adding a few simple steps to your sales process and reviewing why deals didn’t progress, you may unlock some really valuable insights.
So let’s look at how we do that here at Workbooks…
The approach we take is to firstly define what happened to the deal at a high level. Did we:
LoseWhich means they selected another CRM solution and spent money elsewhere. (unfortunately, it does happen!)
Qualify-outWe decided to stop progressing the opportunity because the sales person didn’t feel it was a good use of time.
DeferIt remains in our pipeline but isn’t going to happen anytime soon.
These three outcomes are very different and depending on which of those three categories the opportunity falls into, we want to ask very different questions…
Analysing each outcome
If we lost: I want to know why. Was it price? A feature? Did the customer want a well-known brand like Salesforce.com? Did we get to the right people? Was it poor sales execution?
If we qualified out: I want to know – was that the right decision? Did we put enough effort into the opportunity or was the lead just the wrong type? Was it too small or too big or their requirements didn’t match our capabilities?
If it was deferred: Understand – was it qualified correctly in the first place? Have we done a good enough job of building value? Or has some other business priority gotten in the way?
The value in understanding underlying issues
Understanding these reasons is incredibility valuable for the business.
To give you an example: We once used a marketing agency to run a Google Adwords campaign.
They did a great job of generating leads – but nearly all the leads were qualified out because they were too small and only suitable for the free version of Workbooks.
From the agency’s perspective, they thought they had done a great job – but in reality, there was no ROI on the campaign; so after trying a couple of different tactics we decided we could spend our marketing budget more effectively elsewhere.
Unfortunately lost and qualified out analysis just isn’t done often enough in most companies, but I would argue it’s a key tool in building a more successful sales and marketing operation. For marketing leaders, it really helps them understand if they are delivering the right leads or not.
Practical next steps following review
Sales leaders can review the execution of individual reps and provide coaching where required. And for product management, it can help them identify features that are lacking or competitive pricing issues that need addressing.
Knowledge and understanding help refine the sales approach and make better decisions across the business.
So how do you get started?
We would recommend adding a simple three step process:
Additional CRM fieldsAdd additional CRM fields to your CRM for salespeople to complete when a deal is lost or qualified-out, capturing the category and key reasons.
ReportingReport on all deals that are deferred (by Date or Stage).
Sales reviewHave a sales leader review the deal execution to evaluate the sales person’s analysis and see if they agree or if the sales person needs additional training.
Just following one of the above steps can increase your business growth – implement all three and you can expect dramatic long-term changes.