loss reportsAfter gaining a degree of competence in my first sales job with IBM, I preferred not having my manager involved with my accounts for a variety of reasons. The mantra at the time was that IBM should win all the business all of the time and for significant losses, loss reviews were conducted. I learned early that it was fine to win alone, but as soon as it looked as though we wouldn’t win the business, I passed the gun around to at least get my manager’s fingerprints on the gun. In some cases he did the same with his manager. Loss reviews where the three of us discussed why we lost were far better for a career than the salesperson having to answer all the questions.

In theory, loss (or sometimes win) reviews can provide meaningful insights so that mistakes won’t be repeated. In reality many companies conduct loss reports in a way that finds an acceptable reason for the loss if the seller has a good track record or establishes blame for a seller who is struggling. Many loss reports amount to going through the motions, but few changes are made. The result is status quo and a feeling that overall we’re not so bad.

The most common reasons I see on loss reports fall into three (3) categories and the validity of each is questionable:

1. “The buyer said that if we had been X% lower, we would have gotten the deal.” This is a wonderful reason because nobody is to blame except for a competitor who was willing to “buy the business.” Before accepting that reason, the manager should ask the seller if he or she was given an opportunity to do something about the price (either match or come close). If the seller was given that chance and the company decided it could not offer that pricing, then I’m willing to accept price as a reason for a loss.

Most people however, would agree that if the seller had established him or herself as the vendor of choice (Column A), the buyer would have talked with them before finalizing the decision. Would you also suspect that Columns B, C and D would have been given price as the reason they lost, likely right after being told they came in second! In my 35 years in selling, I’ve yet to meet Column C.

A follow up question could be for the seller to show what value had been established in the buyer’s mind. A higher price can be justified if a buyer perceives that offering will deliver a better return on investment.

2. “If only we ran on Linux.” The second reason cites some feature or capability that the losing salesperson doesn’t have. In short sales cycles it is much less painful and more possible that this would be a valid reason for a loss. Think for a minute about a 6 month sales cycle. My question for the seller would be how much of the 6 months did it take to realize the buyer wanted to run on Linux and how long did it take him to realize that our offering doesn’t? Were you anticipating that we’d make a product announcement?

There is neither a good nor acceptable answer when a seller had adequate time (and spent a lot of the company’s money and resources while competing) despite having an offering that wasn’t a good fit. One of our core concepts is that bad news early is good news. As soon as an opportunity isn’t winnable, it’s time to respectfully withdraw.

I would also suggest that executive buyers don’t usually make vendor decisions based upon a single feature. Is the feature an excuse the buyer offers to let the seller down easy, or did the seller fail to get to a high enough level to establish value based upon improved business outcomes? Going the distance and losing is a painful and expensive proposition.

bad sales call3. “The customer didn’t like me.” Please be assured that I’m paraphrasing here and the actual words that come from a seller’s lips usually include an unflattering noun. A variation on this reason is that some person in the prospect organization liked another vendor better. Often this person was not the decision maker.

In our sales training workshops we say that in order to earn trust a seller must be perceived by the buyer as sincere and competent. In my personal life, I’ve made unimportant buying decisions with sellers that were sincere, but not especially competent. If I ever need critical surgery rest assured that I’ll choose the doctor that demonstrates the highest level of competence even if they are absolutely unlikeable.

If you feel that a significant percentage of reasons on your loss reports were mentioned above, I’d like to offer some ways to get better information during buying cycles and after decisions are made. My suggestion is to consider doing quarterly analyses of significant losses, but also significant wins as valuable information can be reaped from both reports.

Qualification of opportunities in a pipeline should not be a one-time event. Managers should monitor significant opportunities on an ongoing basis with an eye toward disqualifying them as most salespeople are unlikely to take anything out of their pipelines. The basic debriefing questions for each buyer (goals/reasons they can’t achieve them/capabilities needed/value/access to power) should be documented and reviewed by the manager. Negotiating a Sequence of Events (SOE) with the buying committee is a strong indicator of commitment and of being Column A.

If managers are active throughout the buying cycle in disqualifying opportunities, they can reduce the times when their sellers go the distance and lose. As the CFO of a company, I would much prefer the reason on a loss report was the seller deciding to walk (withdraw) after a month because they couldn’t gain access to Key Players, rather than a loss after eight months of an expensive sales campaign.

In the times when you do go the distance and lose, at least try to salvage some information so that you can avoid repeating mistakes. My belief is that effective loss reviews should:

  • Be done at least 3 months after the buying decision has been made so that there is no appearance of trying to change the buyer’s mind.

  • Be done by someone outside of the sales organization or even by an outside consultant.

  • Start by explaining the vendor is trying to improve buying experiences and wants to learn from opportunities that don’t end in favorable outcomes.

  • Ask which vendor was chosen and the major reasons for that choice.

  • Ask what things your company could have done differently or better.

As mentioned previously, I believe the same basic principals apply and that you should consider analyzing opportunities where you enjoy significant wins.

Nobody likes to lose. Everyone experiences losses in their selling careers. Rather than going through the motions and making it not feel so bad, wins and losses can improve your buyers’ experiences and help you to drive win rates higher. Unless you compete on the PGA tour, it is difficult to pay your bills if you come in second all the time. Or were you actually third for fourth?

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