Redefining Losses: How Accurate Classification Transforms Sales Insights

When is a loss not really a loss? This may sound like a silly question. But in our decades of helping B2B clients with competitive analysis, we have found that some accounts are misclassified as Losses. On the surface, this may seem fine, but including surveys or interviews from these accounts in your Win / Loss research program can bias your data and insights and overstate your loss rate.

In this forum, we have previously written about how to pick the best approach for your win-loss program and provided tips for running a DIY Win / Loss program. This post addresses the practical pitfalls that lead to misclassified opportunities being included in your Win / Loss program and provides tips for gaining insights from the data from these accounts.

Misclassified Losses

The core problem with misclassified losses is that they do not accurately reflect the prospect’s perceptions of the interaction. For the sales team, it looks and feels like an opportunity. But the prospect can have entirely different motivations for engaging in a conversation. These can include:

Early Investigation: While it is true that most buyers rely on online research for the early parts of their buying journey (e.g., investigation), some buyers use conversations with sales reps as research to help them better understand the category of solutions. This is especially true of Boomer or Gen-X buyers, when the solution category is new, or when the solution significantly impacts existing business processes. These buyers will take sales calls or complete contact forms for more information. But they are really at the stage of learning about solutions, not getting ready to buy one. The best sales teams and processes can accelerate some prospects through their buying journey, but in most cases, buyers will move at their own pace and look like a loss even though they weren’t ready to buy in the first place.

Inside Jobs: Sometimes, buyers have already made up their minds about the solution they want to adopt. Sometimes, it’s an incumbent, sometimes a new provider. In either case, these types of buyers engage with additional vendors out of a sense of due diligence or the requirements of the purchasing department. They are looking to confirm their preference rather than objectively evaluate their options.

Misaligned Segment: In some deals, there is a segment misalignment. The most common form of this is when a smaller company engages with vendors that provide solutions the company cannot afford or implement. These buyers often want to evaluate all of their options or have rose-colored glasses about affording a champagne solution on a beer budget.

Don’t Blame Sales

The sales team often takes the blame for spending time on these types of deals and classifying them as losses. This is unfair to them. Sales is in a difficult profession. If you are not eternally optimistic, you won’t last very long in sales. This can lead sales reps to keep hope alive and engage with prospects that are long shots for one reason or another. In addition, performance metrics and incentives can lead to reps engaging in deals with little opportunity. In some cases, the SFA/CRM platform classifications may not allow reps to record the subtleties of each deal, which leads sales reps to select the code that fits best.

Useful Insights

The problem with misclassified Losses in your Loss data is that they do not align with the objective of that data set—identifying why a prospect did not select your solution. That said, these prospects can still provide useful insights.

Top-of-the-Funnel Learnings: Data from Losses that are actually buyers in the early stages of their buying process can provide insights into themes around benefits and jobs-to-be done that prompt them to investigate solutions.

Competitive Positioning: Losses that were an inside deal may not provide useful insights about how to improve your sales process or solution, but they can help you better understand the strengths of competitors.

Targeting Course Corrections: If more than the occasional loss comes from misaligned segments (size, sector, etc.), it may indicate a need to review the targeting for your outbound sales and market campaigns or a need to improve the lead qualification process.

Loss Classification: You may need to refine or expand the classification categories for prospect engagements that terminated before a sale.

Identifying the Issue

The types of misclassifications outlined in this post are much more likely to be discovered in an in-depth interview. Over the course of the conversation, even when not asked directly it becomes obvious when a prospect was just researching solutions or going through the motions to meet the procurement department’s requirements. But you can be prescriptive in qualitative interviews and quantitative surveys by including questions that ask Loss directly about where they were in their purchase process, if they had a preferred vendor going into the process, etc.

You may not have any of these issues in your current Win/Loss program. However, it is worth spending the time to do a quick check-up to see if your current data provides a nuanced view of what is happening with your lost deals.