Performing Loss Reviews: A Look in the Mirror
5/18/10
Many companies take the time to reflect back on their key sales wins; however, few companies have a consistent process in place to learn from their losses. That is, achieving a true understanding of why recent deals were lost, what were the root causes for these losses, and what actions can be taken from a strategic and tactical perspective to minimize these types of losses in the future. Based upon IDC’s recent Buyer Experience Study, it was found that over 2/3 of IT buyers switch vendors due to a poor relationship with the sales teams or due to a better relationship with another vendor. This type of information is important to gather to not only understand what went wrong, but to also ensure that losses like these do not happen again. Within IDC’s Sales Advisory Practice, we recently spoke to a handful of large IT companies to understand what they’re doing regarding loss reviews. Here are just a few of the responses we received:
Loss reviews conducted directly by the sales organization:
- All lost opportunities over $100k get looked at on a weekly basis through their standard CRM. Specifically, management picks 2 wins and 2 losses weekly directly from the CRM. Management then goes in to extract and populate header data from the CRM and sends a questionnaire directly to the sales reps to fill out. Some of the questions on the questionnaire include: 1) What were the reasons for the win/loss? 2) What were our competitor’s top advantages/disadvantages for selling against us? 3) What can we improve upon in the future? On a weekly basis, this data is then provided to the CEO. The challenge, as with most data collected directly from the sales teams, is to interpret what are in many cases very biased responses. (Source: Multi-Billion Dollar Telecommunications Company)
- When a loss occurs, the rep marks an opportunity as lost in the CRM system. They are also forced to specify a reason. Each week, there is a report that is published outlining significant deals that were lost that goes up to the VP of Sales Ops. The VP of Sales Ops relies on Sales Managers to inspect the information for accuracy. Once a quarter, the VP of Sales Ops has a meeting with the sales leaders to go over the larger losses in detail. By utilizing the sales leaders, the VP of Sales Ops can decrease the subjectivity of the responses. (Source: Billion Dollar IT Services Company)
- Loss reviews are performed formally in an internal quarterly business review (QBR). Each rep prepares a slide to discuss a key loss in the previous/current quarter. This allows for open dialogue between participants in the QBR. Participants may include Sales Managers/Directors, Technical Personnel, and other sales team members. (Source: Multi-Billion Dollar HW Company)
Leveraging an independent group (i.e., outside of sales) for loss review of large opportunities:
- Internal Group: The Competitor Analysis Group at one company we spoke to has several responsibilities, including understanding what the market is all about, how effective internal products/services are in the market, benchmarking themselves against their competition, as well as understanding the customer decision making process. This internal group is responsible for getting on the phone and talking to customers about recent losses. All output is documented and goes into a report that is produced monthly. (Source: Multi-Billion Dollar Telecommunications Company)
- External Group: A best practice would be to perform loss reviews by not only gathering data from the sales teams, but also having an independent third party interview customers regarding recent losses. This would help reduce the challenge of trying to interpret sales’ biased input (e.g., no budget, no real need, wrong timing, etc), and thereby help the company with identification of root causes and development of a better improvement plan.
We were pleased to see that the companies we spoke to have a strategy in place to review key sales losses. While the losses may be unfortunate, learning from these losses can help prevent their recurrence in the future and improve the sales teams’ overall productivity. [Michael Gerard and Irina Zvagelsky]
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