What Is Closed Lost in Sales?
Regarding business, a deal is “closed lost” when it is successfully negotiated but finally falls through for one of the buyers or sellers.
Even though it’s disappointing to lose a sale after working hard to make it happen, it’s essential to remember that not every deal will go through. Companies can overcome the disappointment of lost sales by keeping an eye on the future and focusing on the good things. This will help them keep growing and doing well.
Synonyms
- Lost Sales Opportunity: A lead that did not move through the sales funnel.
- Lost Deal: A sale that was not closed or missed out on.
- Lost Sales: lower revenue growth over time.
Closed Reasons for Loss
There are several reasons a finished deal could go wrong, such as:
Not enough money
Most of the time, the buyer can’t get the financing they need to finish the deal. This could be because of several things, like bad credit or not making enough money.
It could also be because the company’s budget has changed, the finance team is less willing to take risks, or the company’s general financial picture has changed.
If the buyer can’t get the money they need or their budget changes, the salesperson can help them find other ways to pay. If it’s a matter of time, they can help the prospect make a budget.
Changes in the management
If the people in charge of the company who want to buy something change, the new people may have different goals than the older adults. Because of this, the deal could be thrown out or put on hold forever.
Management changes can have a significant effect on the buying decision process. That’s why salespeople should talk to the new decision-makers and try to figure out what they want and need. If they do this, they might be able to save the deal or work out a new one.
Not enough socializing within the group
It’s essential to ensure everyone with a stake in the sale agrees, especially regarding business-to-business (B2B) sales.
Key members of the team who don’t want to go along with it can ruin the whole deal. This could happen because they don’t fully understand the product or service being sold.
Another reason could be that the person making the choice thinks their job is in danger or that the purchase goes against the company’s values or mission.
Salespeople should get everyone to agree when there is pushback within the company. This could mean giving more details about the product or service, directly addressing concerns, and ensuring everyone who needs to see the show can.
Going down in the market
A competitor can offer a better price or goods, which could cause you to lose a sale.
If true, sales teams can use this data to improve their goods, prices, and customer service.
Long Time to Sell
It’s true that “time kills all deals”—the longer it takes to close, the more likely it is to fall through. For example, if the lead response time is too slow, the salesperson might not move the prospect quickly through the sales pipeline. This could cause the deal to be put on hold or scrapped.
Sometimes, the sales team may be unable to change how long the sales cycle takes because of long approval processes or hard-to-reach decision-makers.
Lost and closed Important Measures
Even though closed-lost data isn’t as good as closed-won data, it’s still important to keep track of it to improve in the future.
These are some critical indicators that businesses should keep an eye on:
Lost Percentage When Closed For Good Reason
For sales managers to fix the problem, they need to know why sales are coming in short. Companies can find trouble spots and take steps to fix them by keeping track of the percentage of closed-lost deals broken down by reason.
How many deals were lost to other companies?
If a business is losing a lot of deals to rivals, it might be time to look at its goods, prices, and sales process again. Companies can contact customers who picked a competitor to find out why they did what they did.
How Long the Sales Cycle Is
Close rates can change based on how long the sales cycle is. If the sales cycle is too long, the process may need to be sped up, or the sales team may need more resources.
Sometimes, sales managers can make a new sales plan that lists the steps needed to speed up the closing process.
Closed Lost Percentage By Business
Sales teams can better meet the needs of their target market by adapting their plans based on trends in their business. Let’s say a SaaS company that sells a tool for managing social media might notice that 80% of the deals they lost last month were to retail businesses.
This knowledge can help them focus their sales and marketing on the niches where they’re making the most sales and make a product that fits those niches better.
What sales teams can learn from lost deals?
It’s easy for sales teams to move on to the next chance when one fails. However, sales teams can learn essential lessons from lost deals that can help them close more deals in the future.
By carefully reviewing closed sales, teams can find patterns and trends that might help them determine why a particular deal didn’t work out. For instance, if a specific type of customer makes up a lot of lost deals, the sales team might need to rethink how it talks to that group of people.
Or, if a team member’s product keeps losing to others in the market, they might need to change how they talk about it or how much they charge for it.
Take the time to learn from your mistakes. This will help your sales team do better in the future.
