Are you tracking lost sales?

Sometimes it is what we don’t know which constrains our growth. If you only knew why some prospects weren’t buying your product or service you could at least set about fixing some of the obvious deficiencies.

While every lost sale is not critical, some will demonstrate fundamental or major weaknesses in your product or service offering. It is the ability to systematically track lost sales and to discover the underlying reasons for the losses which can provide a catalyst to improving sales and thus growth.

We can’t always guess what goes on in the mind of the customer who walks away. I recall one situation where we lost sales to a less capable competitor only to discover that we were being rejected because our price was too low. We raised the price and sales picked up. The prospects didn’t think we could possibly meet their requirements at our price point and didn’t bother to investigate the product.

I recall another time when we continually failed to close the deal because the prospects were unwilling to take on a large service project where there was no guarantee that they would secure their desired outcome. We repackaged the service into stages and asked them to commit to one stage at a time. The customer attitude changed dramatically and we lost few deals after that.

Whether you are tracking large project sales or high volume low value transactions, you should have a process which registers prospect interest or leads. It is the conversion of leads to sales which is the measure of your success. Every sale which fails to close is not only a lost profit opportunity but you have left someone in the market saying that you did not satisfy their need.

Understanding the timing, location and situation which results in a lost sale may also be important. Are there specific salespersons or certain products or services which have a higher lost sale rate? Only by asking the lost customer will you be able to find out whether it is your staff, location, situation, product or service offering which is the cause.

Not all lost sales are recoverable or, in fact, failures. Clearly there are times when your prices are too expensive or the features and functions not right for a specific customer need. But perhaps this is also telling you something about setting the right expectations in the marketplace. What you should be aiming to do is to have a high conversion of leads to sales because you are attracting the right prospects. You can only do this properly by ensuring that your message is correct.

One of the most useful outcomes of a lost sale survey is to find out if the prospect understood correctly what you offered. A prospect which you have to deal with only to find they were misinformed about what you do or offer is simply a waste of resources. On the flip side, you get to fine-tune your message through this analysis to ensure you are putting out the right message.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.