The world of sales and marketing is brutal and competitive. There are billions of companies in the world, most of which have a dedicated sales department. With a finite number of customers per day, it’s the War of the Sales on who will attract and retain the most prospects. It’s a true battlefield where brilliant sales tactics win over mediocre performances.
It’s obvious how success is measured. However, even the most renowned businesses have a bad day and end up losing a customer. Nobody likes to lose, but it is a part of learning how to run a successful business. That’s where the term ‘closed-lost’ comes into play.
Meaning of ‘Closed-Lost’
Basically, the closed lost in sales refers to a failure to sell a product or service due to one or more reasons. The closed-lost term is the opposite of closed-won, which deals with a sale that went through due to one or several reasons.
The term was coined some years ago as a way for sales managers and analysts to track revenue streams. In the business of sales, it’s vital to not only keep track of overall grossing sales but to know how many buyers were turned away. Think of it as a two-sided survey: you receive positive information regarding purchases made and also understand key faults within your department.
The closed-lost term is widely used in sales pipelines as a way to identify problems in the workflow. Unlike burning bridges, closed-lost clients aren’t permanently removed from the pipeline but only pushed to the side until a change occurs. Most modern CRM features include closed-lost. Sales pipeline tools rely heavily on the closed-lost option to keep data transparency in the company and not pollute the main sales pipeline with clients who will not make a purchase.
To sum it up:
- ‘Closed-lost’ refers to client accounts, which, at this point in time, cannot be converted to ‘Closed-Won’;
- ‘Closed-Lost’ in sales CRM tool is used globally to analyze customer data and provide dynamic growth/decline predictions for the business;
- A ‘Closed-Lost’ client doesn’t mean lost forever but rather implies a client who would not make a purchase at this point in time.
Common close lost reasons
Universally, there are several major reasons why a client will refuse to do business:
- Poor customer experience;
- Poor product quality;
- Poor business branding;
- Poor management skills/attitude, etc.
Potential prospects are fickle creatures; you can’t expect to please everyone. Some clients like a product despite its flaws, while others are way pickier about their experience. It’s important to have high standards and expect good quality of service from your company to attract a good quality of clients. Understanding top business trends of 2021 should help smaller businesses identify and work inside niche markets. It helps people identify the right way to go about making a sale.
Now that we’ve established the volatility of customers, let’s list some smaller reasons why businesses lose clients. Of course, the reasons given above are too broad and could be applied to any business. However, the devil is in the details, and often, it’s the small things that put people off.
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- Missing feature or service
No product is perfect. There will always be flaws and minor drawbacks that slip through the cracks. Unfortunately, it’s the customers that suffer when the product they purchase isn’t what they wanted. Using closed-lost analysis allows companies to monitor their products and analyze major reasons for falling through sales. If a pattern emerges, then it is easier to make corrections. There could be many closed-lost reasons that emerge after data analysis. It’s important to take the time to understand the reasons behind any existing problems and focus on customer experience.
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- Misunderstanding with representatives
A lot of businesses cater to customers online. Meaning, these days, there aren’t that many customer representatives as in the past. However, B2B sales still deal with actual human customers. In the business-to-business field, it’s vital that a sales representative knows the ins and outs of a product and is able to persuade the client.
Unlike regular B2C strategies, B2B sales require a different approach. Probably the most crucial difference between selling in B2C and B2B spheres is that business-to-business products cannot be marketed as a commodity.
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- Competition
The business world is a fierce battleground. Location, clientele, prices, and quality — all play a part in shaping business/customer relationships. Sometimes you will attract clients from your competition’s pipeline; sometimes, you will lose your own. Such is the nature of things. However, there are strategies that can be placed to reduce sales bleeding, such as marketing, cold outreach programs, joint business ventures, and data analysis. Using any of these strategies could potentially reduce the number of clients that bleed through.
- Lost cause
Lost cause are clients that would never make a purchase from you. These things happen. Unlike clients who could come around someday, lost cause clients are never going to show interest in your brand. These types of clients should not exist in your sales pipeline and should be marked with a distinctive note on your closed-lost reasons CRM tab.
Benefits of ‘Closed-Lost’ analytics
There are hundreds, if not thousands, of reasons to use a CRM program that analyzes the closed-lost clients. Most importantly, it leads to an:
- Increase in product quality;
- Increase in customer satisfaction;
- Increase in customer retention;
- Increase in market stability;
- Reduction in client bleeding;
These are just a few key reasons why the closed-lost feature is vital for any business maintenance. The goal is to create a sustainable client pipeline that not only provides a reasonable amount of returning customers but also includes information on clients who do not want to do business with you.
Understanding is the key to improving. If you know exactly what is wrong with something, you can implement improvements rather than rely on luck.
Remember that closed-lost analysis is a valuable feature that everyone on your team can benefit from. Always encourage your employees to ask questions regarding customer satisfaction to understand their clients’ experience better.
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