Chronicles of a Sales Leader: Learn From Losing July 11, 2008 What sales and marketing leaders can learn from losing a deal
By Bill Golder
Everyone who has ever been in sales can remember the feeling of winning their biggest deal. In business, there aren't many things like winning a big deal that can create that kind of excitement and triumph to an organization. But when it comes to the deals that got away, most individuals—and organizations—seem to have amnesia. In fact, it's amazing how quickly we all move on without another word on lost deals, as if they never existed. The irony is that these deals typically took longer and used more resources than the ones we won.
I'm in a fortunate position to be able to see how some very good organizations capture and learn from both won and lost deals. It's safe to say that far fewer have put a real discipline to understanding the latter. Those that do tend to be higher performing organizations and are learning things that are helping them sustain performance.
These organizations aren't just talking about lost deals—they are incorporating a loss review process into how they execute. The outcomes are helping sales and marketing take away key nuggets that shape overall client acquisition and relationship management strategies.
So what does a loss review process look like and what are companies learning from it?
Let's start with the meaning of a lost deal. We all tend to think about losing a deal in a very linear way—the deal moves all the way through the funnel and the customer makes a decision. In fact, most lost deals don't work out that way at all. It's surprising the number of deals that fall out of the funnel long before they reach the proposal stage and how often they are "lost" to other factors—such as competing priorities or internal resources vs. a true competitor. Companies who get this want to learn just as much about those that fell out of the funnel early as those that follow the stereotypical stages. It's important to get everyone on the same page as to what lost means. It may also help to create other definitions, such as "no interest" or "on hold" to begin understanding and categorizing what happens when you don't win.
Once everyone is on the same page with defined funnel stages and the definition of a lost deal, you can put the process into motion. The best examples of clients we see executing a loss review process typically incorporate the following elements:
• Criteria for deal sizes that will be incorporated into the process.
• A standard format for capturing the attributes for each deal, and some sort of scoring system to evaluate the strength of each attribute in comparison to scenarios when you win.
• Involvement of both sales and marketing in the process: there are key findings that can impact how you attract new opportunities as much as how you manage them.
• An environment of discovery vs. blame: candor will be critical in having meaningful findings that help to improve overall conversion and effectiveness.
• A mechanism to cascade key findings that can benefit both sales and marketing.
Important adjustments in both marketing and sales strategy are being made by those organizations deploying a loss review process with the above elements. My observation has been that organizations with this in place seem to be much more effective in the following areas:
• A well understood value proposition that better aligns sales and marketing. They are learning through a deal review process what resonates—and when it resonates—with potential clients in regards to their solutions. Sales feels better supported by marketing when this is dialed in and marketing can see their lead creation efforts making an impact—a rarity in most organizations.
• A more strategic prospecting plan that focuses the organization around ideal or best fit profiles of potential clients. This is especially impactful when evaluating potential investments of time and money for the pursuit of new business.
• Results. A clear impact can be made on both conversion percentage and velocity through a diligent deal review process.
• Operational efficiency and customer satisfaction. It's amazing what happens when you engage with better fit prospects. The organization leverages strengths more frequently and avoids attempts to make round pegs fit into square holes. Loss reviews help you understand whether or not you are chasing bad business and potentially draining resources needlessly.
• Organizational alignment. It becomes much easier to make decisions on segmentation strategies when you know your ideal customer and prospect. Loss reviews become a critical component of understanding the types of resources and talent that is needed to win business that is a good fit, and how to avoid investment on resources on business that is not
Certainly, loss reviews alone aren't the answer, but these reviews are an important part of a much larger approach and strategy that is centered around understanding the customer. However, it is an often forgotten, or even avoided component that I've seen deliver terrific value when incorporated into the rigor of your sales and marketing organization.
Bill Golder is a monthly online columnist for Sales & Marketing Management online. As EVP of sales at Miller Heiman, Golder has a reputation for taking on tough assignments and successfully turning around difficult situations. He has extensive sales and operations experience, especially in leading business-to-business sales of professional services and multi-unit operations management. Available for keynote speaking opportunities, Bill can be reached at bgolder@millerheiman.com. In addition, Bill contributed to Miller Heiman's recently published Sales Management Guide, which provides career transition advice to new and seasoned sales managers. To request your copy call 877-678-0397 or order online.
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