Learning from your losses

4 steps to establish a lost deal review process

DEAR STAGE 2: We’re a Series A company winning a high percentage (30%+) of all opportunities we engage in, but I keep thinking that there is more we could be learning about our buyer and their process when we lose. Any ideas on how to close this feedback loop? ~LEARNING FROM OUR LOSSES

DEAR LEARNING FROM OUR LOSSES: Congrats! 30% is an impressive win rate! And you’re right, even with a high win rate you want to ensure you are learning everything you can from your lost deals. I put my head together with Adam Mavrikos, Stage 2 LP and Sales Leader at Toast to share a 4 step lost deal review process you can (and should!) implement today. Read on for an overview of how to get started and some key learnings from Adam having run these plays with his team:

STEP 1: Implement a ‘Lost Reason’ in the CRM 

There is so much information that is lost over time in a sales org — sales reps leave, leadership turnover, data isn’t tracked in the CRM and we “forget” what happened 3 quarters ago. To combat this, we recommend implementing a “Lost Reason” field on your opportunities. This is a *mandatory* field that has to be filled out in order to disposition a deal as “lost” and requires two things: 1) a dropdown with a narrow group of defined options and 2) an open text field for additional detail. 

This CRM setup is the foundation for the next 3 steps, so take the time to build the right list of dropdown options and ensure you are training your team on the level of detail you expect in your notes. For example, you might select “Product Features” and your note might read “Ability to [Insert Need] on par with [Competitor X].” The more specific the better!

STEP 2: Conduct Lost Prospect Interviews

We can learn a lot about our buyer’s journey and our own sales process through qualitative feedback. We are capturing what the prospect told the AE and the AE’s opinion of the lost deal in STEP 1, but to take it up a notch you should consider laying in more objective feedback:

Option 1: Set up an automated “We value your feedback and want to get better” email that comes from the CEO the week after we lose a deal that asks 2-3 simple questions about their needs, the product and our process. Offer a call if they are willing to share more. Adam remembers:

“When a rep would move a deal into ‘Closed Lost,’ our marketing automation system would email the decision maker on the account and simply ask why they decided not to buy. The leadership team would all be copied on the reply. As one would imagine, the responses to this short survey created a whole new level of insights for the early leadership team about customer behavior. It was also an incredible way to audit our sales process and rep acumen in the early days running a field sales org. What we didn't see coming — it helped drive culture we were trying to create.”

And notes that this process only works if you have a supportive team-first culture:

“The team understood that if they received a 'Why not Toast?’ email response from a customer, it was as much a team loss as a personal one; reps knew we as leaders would view it as a coaching opportunity.”

Option 2: Pick 10-20 deals to reach out to for interviews 1-2 times per year to refresh your learnings. Ideally this outreach comes from an exec at the company, but you could also consider having a third party/Investor/Board Member lead the way to increase response rate and gather feedback a prospect may not feel comfortable sharing directly. 

STEP 3: Leadership Lost Deal Review Meeting

As you start collecting data on lost deals, you have to build the muscle of reviewing it. Like you listen to calls or run a forecast meeting, there has to be some leadership accountability for acting on the learnings from lost deals. We recommend starting with a meeting — whether weekly, monthly, quarterly… decide what makes sense for your org!

Adam shares his experience of gathering sales leaders and co-founders together on a monthly cadence:

“We each read every single one of the notes prior to the meeting and were prepared to diagnose the trends. Eventually, the sales leaders developed their own founder's mentality in identifying patterns and insights from these reports. We learned where the competitive pressure was coming from and regional trends across the country.  Often it was a lost reason that would inspire team coaching sessions, deal deep dives, SWOT analysis, pricing decisions and more.”

STEP 4: Define a process for re-engaging lost deals

This is where you can really activate the data you have been collecting! Lost a deal because of a key feature? Make sure you know who to re-engage during the next big release. Lost a deal to timing? Track their renewal date/budget cycle, etc. to drive the next conversation. 

Ideally, you define 2 processes to review lost deals: the first is time-based (ex: every 6 months) and the second is trigger-based (ex: new feature releases). Critically, you need a way to manage the data collected in your lost deal field to filter and report on these opportunities to know WHEN to re-engage. This process should still leave room for thought — just because it has been 6 months, doesn’t mean you have to reach out. These processes should be a flag to review the account and make a decision on whether or not the time is right. 

Adam also shares some great advice for working this process is reverse (aka making sure you are the first call when the time is right OR your champion leaves for their next role). He notes:

“The best reps I've ever worked with were awesome at losing deals. That's a weird sentence, but think about it. If you're going to lose, especially to timing and even competitively, add value through to the end. You'll stand out as a sales professional, and at the same time, you'll build up a juicy nurture list for future deals. And this is where many famous 'blue bird' deals come from... you're out there doing your thing as a sales person and you get a call, look down at your phone and say ‘blast from the past!’ That's a deal you thought you had lost months ago, but the timing was just poor and because you run an awesome 'loss process,' blue birds like this come tweeting at your window every quarter.”

We’ll leave you with this: a smart closed-loss process not only improves the win rate over time, but can strengthen the culture and be a key ingredient in scalably beating your competition. Try implementing STEP 1 now. 

Until next week!