4 Ways to Avoid Losing Deals
Even the best salespeople on earth will lose deals sometimes. It's a fact of life that many prospects either fail to understand what you're selling them, lack the budget to buy, or go for a competitor's product. Not everyone who could get value from your product will do so. The key to success in sales is recognizing as early as possible when a deal is doomed so that you can focus instead on the deals showing promise. Countless factors affect every deal; some you can see coming, and some blindside you.
We wanted to see if there were common patterns to lost deals that could be detected early, so we charted thousands of deals over the course of their time in CRM systems, from opportunity creation to deal close. We found four categories of lost deals, listed below. More important, we've come up with ways to help you save these doomed deals—or at least help you to know when to cut them loose before they waste too much of your time.
The Diver (29 percent of lost deals)
The Diver is, essentially, a bungled deal. Divers start as well-qualified, well-engaged leads. They're handed off from a marketing or sales development team, and the transition appears to go smoothly. The sales rep and the prospect begin conversation, and an active dialogue ensues. Judging by all signs, everything seems to be going great. But then the conversation skids. Engagement takes a nose dive and eventually hits rock bottom as the prospect goes dark. Most of the time, the rep will attempt to resuscitate the deal, causing a late-quarter spike of engagement. But the opportunity is lost. The prospect has moved on, and what could have been a closed deal has now become hours of wasted time. Divers are tough morale hits to the teams that lose them, because time and potential has been wasted.
The Fix: Identifying Divers before they completely die is the best opportunity for sales teams to recover lost revenue. Divers are often caused by an incongruent sales process, where the handoffs between team members cause errors in qualification or gaps in communication. Ironing out an airtight sales process, in which every team member understands their role and the proper actions required of them, will go a long way toward preventing Divers.
The Roller Coaster (23 percent of lost deals)
Roller Coasters occur when sales reps act on deals only in reaction to team pressure, reaching out to prospects when the quarter is ending or when their manager is hounding them for updates, causing multiple spikes in engagement. They don't effectively keep up the conversation, which leads to a prospect disengaging.
The Fix: Roller Coasters often have more salvage potential than Divers, because the repeated spikes in engagement show that the customer has not been turned off by the lack of engagement. But preventing Roller Coaster losses is harder than preventing Divers. Divers can be solved by improving the way a team is structured and managed, oftentimes only requiring slight tweaks to the sales process. But Roller Coasters often indicate problematic sales reps. While sales coaching and individual performance management may help here, these techniques can't transform a bad work ethic. Roller Coasters can really only be prevented with excellent hiring and onboarding practices.
The Engaged-but-Lost (11 percent of lost deals)
Sometimes a team executes their sales process perfectly and a deal still falls through. The prospect could be well-qualified; smoothly transitioned from marketing to sales development to account executive; and engaged throughout the conversation. But you simply can't control every influencing factor, and any deal has the potential to fall through. Thankfully, this doesn't happen very often; only 11 percent of deals that are properly engaged fall through.
The Fix: A closed lost deal doesn't always mean the prospect is gone forever. It's always important to determine why a deal fell through, especially when everything appeared to have been going splendidly. It's possible a competitor won out, in which case you should follow up in a year so that you're in conversation during the renewal negotiation. It's also possible the prospect made no decision and bought nothing; follow up four months later. Your sales process might even be out of sync with your ideal customers' buying process. If that's the case, you'll need to go back to market research and find out how to realign to prevent these missed opportunities in the future.
The Dead-on-Arrival (37 percent of lost deals)
Despite our best efforts, we'll all inevitably end up with poor leads sometimes. Whether it's through shoddy lists we've purchased, outdated or erroneous contact information entered in lead-capture mechanisms, or simply bad prospecting, every pipeline contains some empty leads. Throughout its lifetime in your system, this bad data will create enormous drag on your team. But most companies don't realize how bad the problem really is. As much as companies try to expel duds from their pipeline, more than a third of the leads in the average pipeline are dead ends, inflating forecasts and wasting time.
The Fix: Cleaning out bad data is a huge challenge, one that often falls far down the priority list for sales teams trying to keep up with the pressure to close as many deals as possible. But the more this problem is left to fester, the worse it gets. Sales teams can avoid DOA leads altogether by establishing high standards for data management. Typically enforced by sales operations managers, data stewardship is becoming an increasingly important element of running a sales team. The sales operations manager of each team must communicate concise rules around how leads and opportunities are categorized in CRM and create a cohesive environment of tools to help keep track of the chaos of data created by modern sales teams.
Ray Smith is the CEO of Datahug, a leader in predictive sales acceleration solutions.