Sales is a losing game. Especially in B2B. Depending on the industry and various studies, If you are doing a pretty good job in sales your closing rate should be between 15-22%. This means that 1/5 deals are a win! 1 in 5, shocking right? This week I will try to help you understand the “magic” behind losing. And how it can actually benefit your business greatly.
Table of Contents
Understanding lost sales opportunities
What exactly constitutes a lost sales opportunity? In essence, it is an instance where a potential sale that appeared to be progressing towards a close is unexpectedly (or maybe even expectedly) terminated or lost to a competitor or because of other reasons. Such losses are not merely statistical negatives; they are rich with insights that, if properly analyzed, can drive strategic improvements. I led teams that had a closing rate similar to the ones mentioned in the linked article. I was also able to increase these closing rates in some cases to over 40%. It means a significant increase but still less than half of the deals were won.
Common reasons for lost sales opportunities
Lost sales opportunities can stem from a myriad of factors, each pointing to different vulnerabilities within the sales process:
• Misalignment with customer needs: Often, sales are lost because the solution being pitched fails to align with the customer’s strategic requirements or budget constraints.
• Competitive disadvantages: Losing to a competitor can often reveal a product or value proposition that is perceived as inferior.
• Sales process inefficiencies: Long response times, inadequate follow-ups, or poor lead qualification can all lead to potential deals slipping through the cracks.
• Economic factors: Sometimes external economic conditions can derail potential sales. This might suggest a need for more flexible pricing strategies or value offerings during economic downturns.
Each of these reasons not only suggests a specific fault (or at least room for improvement) in the sales strategy. It also impacts the overall business by reducing potential revenue, affecting market position, and potentially increasing customer churn.
Monitoring and analyzing lost sales
So the natural question that comes to mind when you already face the brutal reality is “How can I increase the win rate?”, “How do I make my sales more efficient?”.
To effectively leverage lost sales opportunities, a systematic approach to monitoring and analyzing these losses is critical. Try to look at your numbers not as failures but as opportunities. They can help you better understand your customers. By looking at the reasons that your customers provide you can act on them. They can help you assess the performance of your sales team. Moreover, they can help you make informed decision. Who knows maybe your average number is negatively affected by one individual that requires some training or maybe even letting them go?).
Improvements begin with a robust CRM system where details of lost sales are meticulously recorded. Sales teams should categorize losses by reasons. It could include price, product features, competitor’s offer, lack of follow-up, or customer’s internal changes. Do not hesitate to also include the reasons that might be specific to your industry or business context.
Advanced analytics can then be applied to this data to identify patterns or trends. For instance, a spike in losses due to pricing in a particular quarter might indicate a market shift towards more budget-conscious buying behaviors, prompting a reassessment of pricing strategies. Try to generate reports (most CRM systems will allow you to do that). Moreover, look at these reports critically: “What have we done wrong this month?” “What was different?” “How can we improve?”.
Utilizing lost sales rates to enhance sales processes
The insights garnered from analyzing lost sales can be transformative:
• Process improvements: Understanding where prospects drop off in the sales funnel can help refine sales processes, perhaps by introducing better qualification criteria or improving engagement strategies.
• Strategy adjustments: Data on why deals are lost to competitors can lead to targeted improvements in product development or marketing.
• Training opportunities: Analysis of lost deals can highlight specific areas where sales training is needed, such as negotiation skills, product knowledge, or handling objections.
Do not hesitate to discuss these with your sales team. Ask them what in their opinion is affecting the process. Oftentimes you can uncover the things that otherwise elude your attention. For example: I was able to increase the win rate by more than 10% at one of our customer’s businesses. How? By just providing the sales team with a list of FAQ questions that were read out loud during the proposal presentation and answered. Questions were drawn from the actual conversations with the customers that did not proceed with the company further. Furthermore, they included things like “We were not sure If we will have ongoing support after agreeing to collaboration” or “We were not able to understand how exactly module X works and it seemed pricy”. By addressing these directly on the proposal presentation and writing answers to them on proposals we were able to effectively address customers doubts. A 10% increase in this customer’s case meant hundreds of thousands of additional revenue yearly. Without spending a dollar more on marketing activities.
Conclusion: embracing losses as learning opportunities
In B2B sales, the reality is that losses are commonplace, but each lost deal is a repository of potential learning. By adopting a strategic approach to understanding and analyzing lost sales, you can turn every defeat into a stepping stone toward improvement. Remember, every loss, whether one of many or one of a few, offers a unique insight into how to better meet the needs of your customers, refine your sales strategies, and ultimately increase your win rate. Each failure, dissected and understood, paves the way for future successes, making it crucial for sales teams to embrace losses not as setbacks but as opportunities for growth.
