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About the Author
The President of ChannelCorp, Bruce Stuart is a Certified Management
Consultant with experience in the computer hardware, software and telecommunications
markets of more than 40 countries. He has authored in excess of 300
articles and eight books on the subjects of building channel partner
business value and improving vendor channel strategy. He is a world
renowned executive educator and strategic management consultant.
ChannelCorp Workshops
ChannelCorp provides Executive Education to vendor and channel partner
management. Public workshops take place in Asia, North America and Europe.
In-house workshops take place throughout the world. For more information,
go to the Workshops section of www.ChannelCorp.com.
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2.3 Lost Sales Analysis
Throughout the professional basketball, baseball, hockey and football
seasons, coaches gather to watch game tapes. These videotapes are permanent
records of the win enjoyed or the loss endured in the previous contest.
The viewing of gametapes is a critical component of the job of the coaching
staff. The lessons learned in these tapes keep winners winning, and
increase the odds of winning for the unsuccessful teams. They are critical
to success
The reselling industry has its own version of watching gametapes.
It is not a new or radically different process or approach. Many in
the industry have both humorous and humbling memories of the approach.
Lost sale analysis, as it is called, is an important activity in the
development of high growth reseller. Many of the best reseller managers
in the business world say that it is critical to success. The objective
of this chapter is to provide a simple methodology for lost sales analysis.
Some resellers ask, is lost sales analysis really required; can’t
I just talk to my current customers to find out how to win more/lose
less; is lost sales analysis worth it? Why do we need to do Lost Sales
Analysis anyway?
1 The competition is very good in all markets these days. There are
rarely clear winners. In most cases, the winning reseller is the one
that doesn’t miss the step, drop the ball or go off the road, before
the equipment is installed. Lost sales analysis is required to stay
winning. Losing appears only to be a misstep away.
2 Existing customers can not always be relied upon to provide candid
feedback on your company’s shortcomings. Because your customer
base is partially dependent on you for continued support, they tend
to “candy coat” their feedback to you. If you really want
to know the “truth” , talk to people who bought from someone
else.
3 Losing a deal costs you cash money. Figure 176 will demonstrate
the approximate cost of a lost deal.
Figure 176 - Proposals cost big money
Source: ChannelCorp Management Consultants Inc.
In short, lost sales analysis is required, if you want to win, because
the required data can’t be gathered from existing clients. As the
analysis shows, if you put $5,000-$7,000 into a prospect and lose, you
owe it to yourself to find out why.
How do you set up a lost sales analysis program in a reseller? When
do you do a lost sales analysis? Who in your company should do it? How
should it be done? What will you likely hear? Are there any hard benefits
that you can expect to receive as a result of your program?
Set-up
A lost sales analysis program works best when it is supported by the
President/CEO of the reseller, the head of sales, and the head of marketing.
In addition, attempts should be made to convince the salesforce that
the program is not being introduced to flush out poor salespeople. It
is being introduced to help people understand how to make all of the
team win more. If it is helpful, the sports industry is a very useful
example of how “post mortems” are used constructively. Perhaps
the “game tapes” metaphor will help your people understand
why lost sales analysis is useful.
When
The most effective programs are driven by a “trigger event”.
The type of “trigger event” can vary from program to program
and can vary over time within a reseller. Appropriate “trigger
events” can be:
analysis triggered when any formal proposal is turned down
analysis triggered when a deal over a certain dollar amount is
lost (for example, proposals in excess of $20,000)
analysis triggered when a potential deal “drops off”
a salesman’s “sales in process” list.
Whatever the trigger event, it is critical that the lost sales analysis
be completed within two weeks of your company getting the news that
the deal has been lost. A sense of urgency is critical if you wish the
program to provide the “hard benefits” achieved by saving
“dead deals”.
Who
The decision regarding who will conduct the Lost Sales Analysis is critical
to the success of the program. The first decision to be made is whether
or not the Analysis will be conducted by internal resources, or by an
outside consultant. If internal resources are to be utilized, the following
people are candidates for conducting the lost sales analysis interview
(in order of desirability):
president/chief executive officer
head of sales
head of marketing
salesperson
The more senior the person conducting the interview, the higher the
probability that operational change will occur in the reseller as a
result of the program. Consultants can also be used to conduct lost
sales analysis. In some cases, a qualified consultant can be more cost
effective than using your senior talent to do the job. As always when
using consultants, make sure that they know your company and your objectives
with the program.
How
The lost sales analysis interview is partially an information gathering
session, and partially an information provision session. An appointment
should be obtained with the decision maker(s) in the organization where
the sale has been lost. The person conducting the interview should explain
what the session will be and why you do it. Prior to the meeting, an
agenda, covering the points you wish to cover in the meeting should
be delivered (fax or e-mail) to the person(s) being interviewed. On
completion of the interview, the person that represented your organization
should follow up with a thank you note, and some corporate material
for their files. Figure 177 contains a list of typical questions asked
on Lost Sales Analysis meetings. The better prepared you and your potential
client are for the meeting, the more productive it will be.
Figure 177 - Typical questions in a Lost Sales Analysis interview
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Who was the successful reseller?
What did you end up purchasing?
What were the critical factors that you considered
in making your purchase decision?
Did we ask the right questions?
Did we answer the right questions?
What were the strengths of our proposal?
What were the shortfalls of our proposal?
If you were me, based on what you know about my organization,
what would you do to increase your chances of being successful
with your organization next time?
Based on your experience with our organization, will you ask
us to respond to your needs next time you need technology products
and/or services?
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Source: ChannelCorp Management Consultants Inc.
What you will hear
What you will hear in a lost sales analysis interview may curl your
hair, and make your blood boil. You may hear that your competitors are
spreading the word that you are financially unstable, or that your solution
is full of bugs and its being thrown out of installation after installation.
You may hear that the customer didn’t know that your package did
something that it does better than all the competition. You may hear
that your proposal was late, that it was poorly presented and that it
didn’t address the issues discussed in any pre-proposal meetings.
Whatever you do, don’t explode and don’t get defensive. Remember,
you asked for the feedback. There is nothing personal being discussed,
it’s just business. Just get the data, and make the required changes.
The hard benefits
Those resellers that are disciplined about the execution of lost sales
analysis tell story after story about “dead deals” that have
been pulled out of the grave during the lost sales analysis interview.
In some businesses, lost sales analysis regularly applied, can turn
25-50% of “losses” into wins. Often, the lost sales analysis
interview turns into an opportunity for the reseller to provide critical
information to the potential customer that the salesperson couldn’t.
It only takes one saved deal to pay for a huge number of lost sales
analysis interviews.
Lost sales analysis is a critical method to use in beginning to increase
your hit rate in the proposal process. In order to realize the benefits,
a disciplined program supported by senior management must be executed.
Immediately is not too soon to start the lost sales analysis program.
The next chapter focuses on how to sell service, support, training and
consulting to increase transaction sizes.
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ChannelCorp Consulting services
ChannelCorp provides strategic consulting in the areas of channel economics,
channel strategy, channel marketing, channel development and channel
management to hardware, software and peripherals vendors around the
world. ChannelCorp is also widely recognized as one of the industry’s
leading authorities in the areas of reseller and solution provider profitability
improvement.
ChannelCorps’s management consulting expertise
is built on a solid foundation of fifteen years of researching and analyzing
the evolving business models and marketing strategies of the vendor
and solution providers worldwide.
Suggested Reading
For more information on the topics covered in this article, you should
consider purchasing The Channels Handbook and/or The Reseller
Management Handbook. For more information, go to the Products
section of www.ChannelCorp.com.
Availability
ChannelCorp can make our copyrighted materials available to your organization
for inclusion in your corporate newsletters and websites.
For information on republication, contact Bruce Stuart
- channelcorp@telus.net
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