Why doing Lost Sale Analysis is useless?
Why doing Lost Sale Analysis is useless?
When Sales directors are trying to solve sales problems such as low customer retention or poor conversion ratios, they would want their sales managers to reach out to prospects who moved up in the sales funnel but didn’t finally make the purchase. The idea behind Lost Sale Analysis is to identify the barriers for the sale by reaching out to the lost customers or prospects. While in principle this makes sense, there are several practical bottlenecks:
- Those who didn’t buy from you aren’t going to spare time for discussions like this.
They are most likely to assume this is a desperate recovery pitch and turn a deaf ear. - Prospects who didn’t make the purchase aren’t attached to your brand and are less likely to offer a candid reason for non-purchase.
Here is one more systemic reason for why Lost Sale Analysis isn’t helpful. For Ex: If a lost customer gives a missing product feature as a reason for non-purchase, then what about customers who purchased the product even when this feature was missing? Thus the absence or presence of any factor for non-purchase isn’t validated with won customers.
The most common problem with using Lost Sale Analysis is to take many actions which are not necessary or sometimes even harmful to the objective of increasing sales. For example, making the employee ask too many questions to the customer to understand customer needs before showing a suitable product or variant.
Most sales team members don’t trust this analysis because it’s just used as a mechanism to pinpoint mistakes in their skill or will by their managers.
So what is the alternative?
Consider analysing both sales Lost and Won. Learn more about how to perform Win-Loss Analysis.