Closed Lost Analysis- What you can gain from understanding your losses
You can learn more from the business you didn’t win than from the business you did- analysing why and implementing your learnings can make a big difference to your future sales conversions.
Why you should analyse your loses
Imagine you could see the in data you lose a certain number of sales every quarter because you lack a certain type of product in your offering. If you could see you’d lost six sales over the course of a year, a quantifiable loss of gross profit equating to, say, £32,000 you could be identified. Imagine the cost of establishing a relationship with a new supplier was £8,000 including display costs. Addressing this one issue could generate you a return on investment of 4:1.
It could be product, lead time, price, warranty, payment terms, or maybe you just don’t ‘click’ with some clients. Whatever the reasons, if you identify and understand them, then just like in the example above, you can do something about it.
Self-analysis versus client feedback
Ideally, you’ll conduct an honest self-appraisal every time you lose business, and whilst useful, it is no substitute for direct client feedback. You should always aim to undertake both, and crucially collate the information over time, and cross reference them. Let look at each of the components.
Self-analysis
Ask yourself these questions every time you lose business and record them in a spreadsheet so they can categorise and tabulated.
- Why did we lose the business?
- Is there anything else that could have been done to win the business?
- Who did win the order, and why?
- If it was price, by what percentage would we have needed to discount to win the order?
- Would the prospect still recommend us?
- At my best, would I have won it?
Record each order you lose like this with the date, the value, the product type, and the number of design versions you did.
Customer feedback
First, you aren’t the right person to ask the questions- your relationship (or lack of it!) with the client can influence the honesty of the answers. Either a colleague needs to ask or you can use software. We recommend Survey Monkey for this purpose.
Design a questionnaire that is quick to answer, groups questions together thematically (price/ design/ product/ people) etc. Send the invitation by email to every client you lose without exception.
Over time you’ll generate enough data to classify and interrogate; what is the most common reason you lose business? What is the percentage of the total number of quotes you do? Is the percentage increasing or decreasing?
When you understand why you are losing business, you can make informed decisions as to what you need to change to prevent it happening again in the future.