No sales representative enjoys marking an opportunity as “closed-lost.” After days, weeks or months of working with a lead, the lead reports that they have decided to go with another option. While sales reps may be frustrated with the lead, closed-lost deals are an important part of the sales process. From another perspective, a closed-lost opportunity is a valuable source of information about what has gone wrong in the sales cycle.
Interviewing the closed-lost lead about what went wrong can provide valuable insight. While one client may not provide enough information to make major changes to the sales funnel, surveying all recent closed-lost deals may illuminate a weak part of the sales process. Identifying where and why leads are lost can help managers find solutions. Although it may feel awkward at first, it benefits the business to work through a closed-lost interview.
The Art of Interviewing a Closed-Lost Opportunity
A sales rep can take many approaches to conducting a closed-lost interview. However, the best approach depends on the business’s situation. For a small business (or one that sells in low quantities), it may be beneficial to conduct a detailed interview. Sales reps often have an idea where the closed-lost deal went sour. They can use these hypotheses to craft a series of ten or less questions to test which guess was correct. In the best case scenario, a third-party can contact the closed-lost lead to conduct this interview. However, sometimes companies don’t have those resources and may have to conduct the interview through a sales rep. A detailed response can be a boon to smaller companies because it provides a lot of information from a single closed-lost lead. This method is recommended when a company doesn’t sell in high enough volume to benefit from an approach that aggregates data from multiple closed-lost deals.
However, a larger company (or one that sells less expensive products at high volume) may benefit from another, less intensive, interviewing approach. Sometimes a sales rep’s time is better spent talking to new leads, rather than crafting questions. Instead of conducting a detailed interview, businesses can send out a survey asking why the lead chose not to continue through the sales process. One tactic is to send a list of common reasons why the lead decided not to purchase. While one response may be helpful, this approach is often more insightful in aggregate. Once 20 or more closed-lost leads have responded to the survey, the business can get a pulse on where the sales cycle is falling short of a lead’s expectations. If multiple responses are similar, managers know there is an issue with a particular sales process.
Incorporating Closed-Lost Feedback into the Sales Funnel
In a perfect world, leads would proceed continuously through the sales funnel, always moving closer to the inevitable closing of the deal. Unfortunately, most sales funnels tend to be more leaky than the ideal. Leads leak out (and become closed-lost opportunities) at different stages of the sales funnel. Taking the time to interview these closed-lost opportunities gives managers and sales reps an opportunity to pinpoint and plug the biggest leaks.
In an example, a subscription software as a service (SaaS) company is conducting a survey of closed-lost opportunities. In gathering the data, they notice that many of the closed-lost opportunities are closing at the conversion from the free trial to the paid subscription. The survey shows that many of the closed-lost leads cited “price” as a reason for leaving the sales funnel. With this key information, sales managers could push for a new, cheaper level of service for these types of customers. The information provided by the closed-lost deals could open the door to new differentiated product offerings.
Still working through the example, sales reps can take this information into the prospecting sales phase. When talking with new leads, sales reps can show how the company has responded to customer feedback by incorporating a new product level. Sales reps might even have enough information from the survey to be able to target this new product offering to leads similar to those who were closed-lost opportunities. A new product may also enable sales reps to match these prospects with the right offer. The benefits of the information derived from the closed-lost deal interviews don’t stop at the managerial level. Sales reps have valuable new ways to talk to sales prospects based upon that learning.
Closed-lost deals still hold value for businesses, if sales representatives take the time to learn about why the deal fell through. Interviewing and surveying these lost leads can help sales managers understand weaknesses in the sales funnel. If leads are often lost at the same point, management can use this information to propose new processes or products to address the leak in the sales funnel. Sales reps can then reach out to sales prospects with this information which can aid in targeting new prospects with the right offer. Closed-lost deals, if handled correctly, don’t have to be a complete loss.