Today's blog is by Donal Daly, CEO of The TAS Group.
One of the issues that I’m often asked about is how to improve sales win rate. Sometimes the question is presented as “What’s a good win rate?" or “What percentage of deals that I bid for should I win?”
Of course there is really no universal answer to this question –- and the reason for that is that it’s the wrong question.
In my opinion, energy is more productively spent in determining why you lose deals, and, in my experience, the explanation follows a fairly predictable pattern. If that is true, then if you can identify the common attributes of lost deals, you can work to avoid deals with those attributes, or focus on how to overcome the weaknesses that gave rise to the failure. Then by definition, your win rate will improve.
Here are the reasons sales managers give when I ask why their teams lost the deal:
- “Well, he wasn’t speaking to the decision maker.”
- “She didn’t understand what the customer really wanted to achieve.”
- “We should never have bid in the first place. The customer is locked into our competitor.”
- “Our solution just wasn’t a good fit, and he (the salesperson) tried to squeeze a round peg into a square hole.”
- “The competitor had a stronger relationship with the customer.”
- “There was never a project there in the first place.”
- “We didn’t understand the personal motivation of the decision maker.”
- “He couldn’t get the customer to understand our value proposition.”
- “She never realized that the budget was way too small for our product.”
Responses from salespeople to the same question include many of the above, but they sometimes give additional reasons:
- “We’re just too expensive.”
- “We couldn’t provide a reference because we’ve never sold to that type of customer before.”
- “I never knew [the deal] had to be approved the technology committee. He never told me that.”
- “The customer just doesn’t get it. I don’t understand it –- she really needs our stuff.”
- “I never knew that the competitor wrote the RFP.”
- “He never told me that capability X was important.”
- “My [internal] sponsor just didn’t have the juice to make it happen –- even though he told me he did.”
For mid-to-large deals in an enterprise B2B market, the costs incurred in pursuing a sale will typically range between $10,000 and $100,000. Our research at The TAS Group has shown that it takes 50% longer on average to lose a deal than to win one. Think about that for a moment. If your sales team is spending more time losing deals than winning deals, what’s that going to do to your quota achievement? Or, if you could fix the problem, what impact would that have?
Next week, we'll look at the two real reasons sales are lost, and how you can strategize to improve your win rates.