Why and how to love lost deals?

You lost a deal. That happens. The more you try the more lost deals (in absolute numbers) you may have. It doesn't matter whether the lost is to a competitor or a prospect decided simply to freeze the deal - you didn't get a sale. How do you react to it on a practical level? Do you see it as an unfortunate even or as an opportunity to learn? Are you waiting for loses or afraid of them?

Lost deals are inevitable and they're only the symptoms of a disease that can fall out of the blue. You have if not to love them but at least be ready for them. A few ideas on how to organize a lab of studying infections on early stages of diseases.

• Don't let emotions prevail pragmatism. When a deal is lost squeeze all productive information out of this sad fact. Naturally, human  beings rush to forget sad stories and sales folks are not an exception. But from a pragmatic standpoint it's a huge opportunity to see what's going wrong.  Talk to the prospect or offer an option to leave feedback. Find out motives and reasons of the lost. Whether you do it in personal meetings or online have a system in place to collect and later analyze the data. Will Hermann has a distinct blog on how to make a lost analysis in direct sales.
• Found a system to research the collected data. Be ready not just emotionally to collect the data but technically too. Have a system with questionnaires, guidelines on how to collect interviews, metrics to measure, aggregate, and analyze the information. Measure not for the sake of numbers but seeking for answers - adjust the system as the company's experience grows, add/clarify the questions to better address reasons, incentives, and circumstances of lost and won deals.
• Collect win data too. Try to minimize questions you should guess to answer. The more complete and accurate your data from the fields the better.  If you know why you lose don't you deserve to know why you win? Besides this merely practical factor there is a bonus here - collecting information about won deals is a much more attractive task.
• Measure everything. It's not actually about lost deals or a practice in the sales department. The sales folks have an obvious advantage over a group professional services,  R&D, marketing, operations, or any other. The advantage is it's clear what to measure when a patient is death (read - a deal is lost). Although lost deals happen in consulting too they're less natural and typically a real failure. Hence you should research and analyze the situation in other departments on much earlier phases by still conducting interviews with various groups crossing with the analyzed group. Any repetitive activity can be measured, recorded, and monitored.
• Assign a lost manager. When you sell as planned, studying lost deals is a kind of a side activity: it's always great to check on what to polish to sell more. But if the situation is worse than expected finding trends and tendencies is not enough. You should get an analysis with concrete recommendations, and probably a resolution. Here a lost deal manager with enough authority and power to change the situation should be assigned. Of course, it's applicable not to sales but to all the groups we mentioned above.

Interesting how rare management sees "lost analysis" an activity worth to invest time, resources, and money. But when a clear picture is desperately needed it's usually too late to come up with metrics to measure, systems to track, and experience and knowledge to analyze.

Comments

[Dharmesh Shah]

This is an interesting an complex issue. A few additional thoughts:

1. Part of what makes this hard is that customers can be lost at various points in the process. Some may visit your website and decide that your product isn't a fit (even thought it is). Or, it could be someone that actually makes contact, does an evaluation and doesn't buy. The challenge is that a large portion of lost business never contacts you in the first place.

2. For prospects that you do know about (they go through an evaluation or engage a sales person), there is a psychological barrier to giving you the information you need. It's not pleasant to have to explain to someone why they didn't get picked. And, there's no incentive to the prospect to tell you. They simply walk away.

3. When customers do give you feedback as to why they didn't buy, it's not always accurate. For example, it's possible that they weren't able to install/understand/use the product, but rather than tell you that, they'll claim some other reason. It may be uncomfortable for them to share their real reason.

No real good answers here. Something I'll try and write about and analyze more deeply later.