Growth5 Blog

Thursday, October 8, 2009

Loss Analysis

A couple of months ago, we posted about how to turn capital raise rejection into a positive. This article from Entrepreneur Corner -- Win When You Lose - 10 Guidelines for Loss Analysis -- focuses on the same theme. Whether you lose a sale, a deal, financing, etc... here are 10 excellent guidelines for next steps so you can use the loss to your advantage:

1. Interview internally and externally - Loss analysis doesn’t mean the sales representative, or even your sales leader, writes up their perspective of the deal. Interview the appropriate sales representative, but more importantly interview the customer, being sure to identify (and contact) both the business and technical points of contact at the customer.

2. Choose an objective individual to conduct the interview – It’s difficult for the sales representative for the deal to conduct an objective interview. I have seen interviews conducted by the Product Manager, the VP of Sales, a consultant - and in some early stage companies, even the CEO. The key is you want the customer to feel open to speak about why they did not select your solution.

3. Don’t wait too long - The closer you conduct the interview to the conclusion of the deal, the better. You are asking the customer to give up their time to better understand the reasons of their decision. They are more likely to do this if it is seen as a part of the natural conclusion of the deal. If you wait too long it may seem like you are simply trying to get back into the deal.

4. Understand the customer need - Begin by understanding why they were talking to you in the first place. Did they have a budgeted project before they were talking to you? What need were they trying to address?

5. Get their perspective on your product - In what ways did your product meet their primary need and where was it lacking? Discuss with them their perceptions of your key strengths and weaknesses. Identify product gaps as well as areas where you might be able to communicate better about your product’s true capabilities.

6. Get pricing feedback - Start by understanding what they had originally budgeted to meet their identified need. Was your pricing too high? Did the competition beat your price? How are they evaluating the return they expect on their investment.

7. Get competitive insights - Spend time discussing the competitive products they looked at. They may not be able to give much information, but you will be surprised at how much they will reveal about how other products differ from your own including features, pricing and marketing.

8. Review their key decision criteria - Spend the time to understand the key criteria they used to make their decision. This should provide a good view into how to market your products better as well as guide your product roadmap.

9. Evaluate the sales process - Did they receive all the materials they needed to make their decision? Are there sales tools that could have helped the deal - like ROI calculators, case studies or better customer references?

10. Review the effectiveness of your marketing - What publications or blogs do they read? What shows do they regularly attend? Were they looking for materials that weren’t available? Would more product documentation or case studies have helped? What was their impression of the website?

Winning is great, but you're not always going to be on the winning side. Why you lost is some of the most important information you can receive.

I particularly like 4, 5 and 6 above. Understanding why someone chose to include you is critical as well, something you're doing got you in the door, find out more so you can improve on that factor.

How we think we are promoting our message, our brand, our products is not always how they are being perceived by our audience. Find out where the disconnects are and fix them. You'll be that much better the next time you go out.

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