14. Win/Loss Analysis
Description and Purpose
Win/loss analysis (WLA) is a cost-effective, insightful, and ethical method for gathering and analyzing information about your market, customers, and competitors. WLA analysis identifies your customer’s perceptions of specific sales situations and how you compare to your competitors. It provides a window into and an early warning about why a customer is buying or not buying your products and/or services. Additionally, the analysis provides information about the performance of both your organization and your competitors. The insight from this analysis can then be actively used to focus sales staff more effectively in the marketplace and also to inform research and development of products.
WLA is a management tool that allows managers to understand customer requirements, the effectiveness of their sales team and of competitors. WLA requires the gathering of direct feedback from a client or potential client about why you won or lost a specific sale or contract. It must include both wins and losses. The wins tend to highlight your organization’s strengths and your competition’s weaknesses, and the losses highlight your organization’s weaknesses and your competition’s strengths.
The feedback provides information you can actively use to improve your organization’s sales performance and your existing product portfolio. It can also help guide your organization in the research and development, as well as marketing of new products.
To be most effective, a win/loss program needs to be established as an ongoing process conducted on a regular basis. Although it is often done internally by intelligence or marketing analysts, a third-party supplier should also be regularly included for maximum objectivity.
WLA is a unique tool that brings together all the elements of strategy—information about customers, competitors, and your own organization—within the context of the most critical element for a business—the buying decision. As a market listening tool, it is designed to provide an organization with information that can actively be used to increase its sales and identify potential marketplace changes. By seeking feedback directly from the target market and subjecting this to analysis, an organization can gain something of an objective understanding of its place in the market and use this to improve its position.
From win/loss interviews, an organization can identify how a competitor is developing its products and/or services or whether it has or has not delivered on promises. It also can identify any new market entrants or new product offerings. It can provide an avenue to reopen doors with former clients. As a tool, WLA makes existing and potential clients realize your organization’s commitment to maintaining good customer relationships.
The results of WLA provide information about sales performance, sales opportunities, market perception of your and your competitors’ products and strategies, and early warning of any market changes. It can provide a measurement of how your organization is positioned with decision-makers and key influencers within a client’s organization. When acted on, the insight should enable your organization to improve sales, increase market share, understand the market to maximize business opportunities, and focus marketing and sales resources to increase revenue.
Strengths
WLA is a systematic analysis of nominated sales results, both wins and losses. It encompasses feedback from strategically important existing clients, former clients, and potential clients. Regular and systematic WLA processes provide immediate feedback and also can be used to compare and uncover trends over time.
WLA offers numerous tactical and strategic benefits. Tactical benefits tend to focus on sales performance. Strategic benefits flow beyond the sales team to assist with product management, mergers and alliances, and product research and development. These are summarized in the following list.
Improve sales results by helping the sales team win more business.
Improve client retention by following up on sales wins to accurately identify how and why you win business.
Identify regularly why and how you lose against each of your competitors, and devise ways to enhance your sales positioning.
Establish an action plan to address gaps in perceptions that may exist between clients and the sales force.
Change behavior and the culture to improve client service, maintenance programs, or delivery based on accurate, timely feedback from clients.
Identify traits of your successful salespeople. Also identify traits of unsuccessful salespeople.
Predict the likelihood of winning/losing a sale more accurately and therefore determine when to walk away from potential business.
Change the sales mindset from one of individuals making excuses for sales losses.
Strategic Benefits of WLA
Increase the organization’s profits and revenue over a longer period of time.
Forecast revenue streams more accurately.
Enhance the product/service offering and mix.
Influence timelier product/service development.
Alter the organization’s culture to a more client service/needs focus.
Select appropriate market alliances with increased confidence.
Support the organization’s early warning system.
Identify competitor trends over time to enable action.
Source: Adapted from Naylor, E., “Increasing sales through win/loss analysis,” Competitive Intelligence Magazine, 5(5), 2002, 5–8.
The WLA process allows for direct feedback on the decision-making criteria employed by your clients in awarding your company their business or taking it to a competitor. An expert interviewer can go beyond the standard questionnaire to probe a client and give him a chance to directly express his needs and preferences. This in turn lets your organization make meaningful changes, acting on customer advice to improve practices and win new sales.
The benefits of conducting WLA extend beyond providing tactics to improve sales. WLA also has an impact on marketing, product improvement, and research and development. Information coming out of WLA can be distributed throughout the organization to assist in overall performance improvements. The results obtained from WLA may be used to inform other strategic programs within an organization. For example, WLA may help you develop training programs for sales staff or assist in product improvement projects.
The WLA process indicates in real time the market’s response to new business strategies and products. It provides early warnings to enable the organization to identify and respond to trends over time in the market and assist in sales forecasting. If undertaken in a systematic way, WLA will help you grow revenues in both the short and long term.
In summary, WLA establishes a market listening and positioning tool with consistent analysis, allowing for improved and informed decision-making in an organization by doing the following:
• Helping decision-makers understand the customer’s perspective
• Providing objective input into sales and marketing strategies
• Identifying opportunities, including target markets, key sales propositions, and winning attitudes
• Improving business performance at the expense of competitors
Weaknesses
WLA is based on data obtained from interviews arising from sales results. Therefore, it is reactive and event-driven. You must be careful to ensure that a good (that is, representative) mix of sales results are followed up. Results will be skewed if, for example, only successful sales to existing clients are analyzed in one round of WLA.
A key weakness of this process is that interviews are only as good as the interviewer conducting them. When an interviewer is inexperienced or has not been thoroughly briefed on the sensitivities of the market in question, the quality of the data obtained will be compromised. An inexperienced interviewer may lack the confidence to ask questions beyond those contained in the standard questionnaire developed for the WLA process. Even the most experienced interviewer will be unable to gain all the useful information potentially available if he is not sufficiently aware of the issues in the market to know when to probe for further detail in an interview and when it is not relevant.
Information gathered has no value if it is not systematically disseminated to those who can act on it. As with any information-gathering process, it is possible for the results of WLA to end up being fiercely guarded rather than distributed. On the other hand, it also is possible to undermine the process by giving all the results to everyone even though no one has time to read them, let alone act on them.
The value of WLA will also be only as good as the system set up to educate and inform interested parties about the results. Information taken out of context, such as in an attempt to extrapolate widely from an individual analysis, is unreliable. The true value of WLA is in the ongoing process and in the determination to gain an accurate and unbiased understanding of performance.
WLA must be conducted systematically and in a timely fashion. Interviews must be organized and followed up as soon as possible after the sale is won or lost. Delay in interviewing may result in inaccurate recall, so the analysis performed does not reflect the real reasons behind the decision to do business with your company or your competition. WLA itself should be conducted regularly to give truly comparable results. The analysis must not, for example, be shelved while more important issues are dealt with, because sporadic WLA will not give reliable information.
It is important to note that the strategic implications of WLA are highly dependent on the quality of the raw data. The raw data gathered from clients should be free of any political or strategic bias and subjective perspective, particularly where employees in an organization may distort information. The fact that WLA focuses on sales results may lead to a politicizing of the process within an organization. The sales team may be reluctant to cooperate fully with the process if they feel they are being singled out unfairly. Other parts of the organization may try to ambush the process to push their own agendas. The team responsible for running WLA must be carefully chosen and trained to ensure that the members fully understand the WLA process and are prepared to implement it properly.
How to Do It
Numerous writers in the field suggest that up to seven steps must be considered in creating and implementing a WLA process. These steps are shown in Figure 14.1 and are described in the following sections.
Figure 14.1. The win/loss process.
Step 1: Determine the Target Segments and Identify Prospects
Target the right accounts to analyze and the right interval to conduct analysis. A good starting point is to look at the accounts that generate most of your organization’s revenue. The 80/20 rule states that 80% of an organization’s revenue comes from 20% of its customers. However, other considerations in choosing whom to interview may include whether your organization wants to pick up business from particular potential clients or ex-clients, or whether there are plans to introduce new products to the market. Specific companies that meet the organization’s chosen criteria need to be identified, singled out, and reviewed to ensure that the targets are worth the investment.
Experts in this technique suggest that you need to start by segmenting the specific market group or target, particularly if the purpose of WLA is to identify sales sources. As soon as target segments and their criteria have been identified, key information needs to be collected to qualify potential prospects.
The interval over which you run your WLA will depend on your organization’s requirements. Monthly analysis requires a greater commitment of time and money but provides quick market feedback. Some organizations prefer to run a large win/loss study annually. The interval chosen also is affected by how quickly you want to be able to act on the insights you obtain.
Step 2: Understand Internal Cultural Issues
Understanding the organization’s culture helps you understand how information will be used. For example, in a learning-driven and consultative culture, sales representatives and their managers might become highly involved in both collecting and evaluating information.
It is also important to ensure that involvement in the process extends beyond the sales team. Other key stakeholders need to be clearly identified, and creating cross-functional teams may be a way to address the differing needs of critical groups.
The use of data that resides in the company’s sales information system can also augment the WLA effort. Like most other internal information, extra care must be taken by the WLA analysts to make sure the information is reliable, trustworthy, complete, and timely, among other things.
As mentioned, the results of WLA have implications that go beyond increasing sales. To get the most out of the process, the team running the program should include members of other departments and have the support of senior management.
The objectives of the program must also be well defined. The roles of designing and implementing the program should be clearly understood, because these may be assigned to different people.
Those who are likely to be affected by the information obtained from the WLA program should be educated about the process to ensure that they support it. This should reduce internal resistance to WLA. Some staff, particularly in sales, may feel that their performance is being unfairly singled out for attention by the program. Staff should be reassured that the WLA program has wider implications for the organization than simply monitoring the performance of individuals in the sales team.
You must decide whether to use an independent third party or your sales team to conduct the interviews. Use of a third-party interviewer has cost implications. It also requires a commitment of time from internal staff to brief the interviewer. What use the organization intends to make of the information collected also directs the decision of who conducts interviews. When the results of the interviews will be used in part to evaluate the performance of members of the sales team, it is suggested that sales involvement in the interview process be kept to a minimum. However, parallel interviews of clients and sales representatives can reveal valuable information about the different perceptions they have of the same sales negotiations.
Step 3: Develop the Questionnaire
A WLA questionnaire needs to cover four essential areas:
• Sales attributes. This topic covers the professionalism of your sales team, the quality of the relationship your organization has with the client, and the esteem in which the client holds your organization compared to your competitors.
• Company reputation. This includes questions about the perception of your organization’s and your competitors’ image in the marketplace, the stability of your organization, its reliability as a supplier, and the quality and performance of your products.
• Product attributes. This is a wide area basically covering whether your products actually perform as advertised, as well as issues of price and technology.
• Service issues. These questions cover the delivery and implementation, maintenance and after-sales service, and training provided to clients.
Depending on the purpose of the WLA, other areas that might be included in the questionnaire could address matters relating to how the purchase decision will be made. Will it be made by a group or individual? What are the decision criteria? When will the decision be made? Are other stakeholders involved?
Another consideration is the sophistication of the analysis you plan to carry out on the results. When analysis will stop at the quick identification of market trends, numerous detailed questions may be unnecessary. When statistical analysis and precision are the aim, the information collected must be sufficiently detailed to address the required level of analysis and still be of practical value.
Standard issues need to be identified in the questionnaire to ensure that the data from multiple interviews can be effectively analyzed together and over time. At the same time, some flexibility in the interview process will enable valuable exploration of individual situations.
Step 4: Prepare for the Interviews
The interviewer now needs to be briefed about the significance of winning or losing each sale. To get the most from the interview, the interviewer must be aware of all relevant details and sensitivities of the sale/non-sale being investigated.
When an interviewer does not fully understand the background of a particular sale negotiation, he or she is unlikely to stray from the standard questionnaire to probe for detailed situation-specific feedback. Specific and detailed information can greatly enhance the overall value of the WLA process.
Step 5: Conduct the Interviews
Carefully consider how you want to go about conducting interviews. This decision depends to an extent on whether you plan to use a third-party interviewer or your own sales team. Experts in this field highly recommend the use of an independent third party to keep interview results from being skewed by any preexisting relationship between a salesperson and his or her client. For example, the interviewer may direct the responses he or she receives with unintentional body language cues.
One option is to conduct interviews by telephone. This is a common practice employed by organizations in the U.S. and is quite time- and cost-effective. However, in some situations, such as with big-ticket items, it may be preferable to conduct face-to-face interviews to obtain optimal results in a particular situation. You need to rely on your sales team to figure out when face-to-face interviews would be better. It should be noted that face-to-face interviews provide a much greater opportunity to garner in-depth information and to build on customer relationships than telephone interviews.
Interviews should be conducted as close as possible in time to the actual sale/non-sale so that memories of the negotiations won’t fade. Some organizations may also interview the salesperson involved in the particular sale/non-sale to investigate differences between the organization’s internal perceptions of the negotiations and the client’s perceptions.
Obtaining information that addresses specific issues ensures that meaningful comparisons can be made when analyzing the responses obtained in individual interviews.
Step 6: Analysis and Interpretation
When the interviews are complete, the results need to be tallied and analyzed. The interviewer generally summarizes each completed interview and analyzes and reports on key trends or issues identified as a result of the interviews. If the interviews are conducted by internal staff, training and support must be provided to carry out these tasks effectively and to aid with the report development. WLA must be given clear priority over other duties when analysis needs to be done. The value of WLA is compromised by sporadic rather than regular analysis.
You can leverage different types of analytical tools to help deliver insights from the information collected during the interviews. Depending on the driver for the WLA, techniques can include benchmarking comparisons, competitor analysis, BCG matrix, statistical analysis, value chain, or even input into the organization’s SWOT.
As the WLA program continues over time, trends will emerge from the analytical results. These need to be interpreted in light of the organization’s strategic and competitive intentions.
Furthermore, over time, WLA becomes more valuable in identifying trends that affect product development and sales forecasting. Companies have been known to adjust their product plans in light of client feedback from WLA.
Step 7: Dissemination
The report and results can now be disseminated. Information will arise from WLA that is relevant to different departments in the organization, such as research and development, marketing, and sales. The program team should ensure that each department receives the information that is relevant to it. This should hopefully increase the likelihood that the information is read and supports decision-making in the appropriate department. The results may be presented in different forms, depending on preferences.
Different staff will have different preferences for how the WLA results should be communicated to them, from verbal presentations at the completion of interviews to half-yearly reports. For example, senior management can receive a monthly report summarizing quantified results, and the sales team can receive results through regular e-mail alerts.
Properly conducted, WLA is one of the most valuable tools for sales account strategies. WLA helps organizations understand the value of customers and the cost of retaining them versus acquiring new ones. Simultaneously, it allows organizations to capture best practices in sales and identify trends to enhance future revenue streams.
Further WLA’s can be compared with any previous year’s win/loss study. Analysis of the differences may identify certain shortcomings that have been addressed, while new potential problems may surface. It may also show the progress, or lack of progress, of the competition, making it possible to assess new threats and exploit new opportunities.
This ongoing assessment makes it possible for any organization to track the dynamics of the industry, respond quickly to change, and stay one step ahead of the competition.
Win/Loss Case Study: Email Marketing Solutions
An email marketing solutions company—let’s call it EMS—provides email marketing software primarily to retail and financial services companies, which in turn create email marketing campaigns to sell their products and services. In this fast-paced marketplace, many customers sign only one-year deals, so there is continual turnover. In addition to learning why customers chose or didn’t choose its solution, the company’s goals from win/loss analysis were to retain more business and win more three-year deals.
The company felt that the EMS product had reached maturity and that there wasn’t much product differentiation among competitor offerings. How would EMS differentiate itself from the competition?
Win/Loss Process
Management consulting firm Business Intelligence Source conducted a couple of dozen win/loss interviews for EMS. It was a struggle to convince EMS that Business Intelligence Source needed to conduct win interviews to gain balanced intelligence. EMS thought it could learn everything it needed to know through loss interviews. However, you can never uncover how a company does at implementation, service, and maintenance if you only examine customer losses. This information becomes particularly important when there isn’t much product differentiation amongst competitors. Contrary to common belief, win interviews offer as much competitor insights as loss interviews.
Findings
A win isn’t always a win. In one interview, the customer had signed a three-year deal, which was EMS’s goal. However, this contract came about because of a friendship between the account rep and the customer’s decision-maker. No one had studied the company’s business needs or figured out how this solution would be implemented and maintained. Meanwhile, the decision-maker had left the company, and the new manager was struggling with the software and still had two more years remaining on the contract. The customer did not have the in-house operational skill to implement ongoing email campaigns using EMS’s solution.
One key selling point of conducting win/loss analysis is how much of what you learn can be easily changed to improve sales results.
Easy Fixes
• Improve the quality of customer references. Many of EMS’s clients are lesser-known companies. Some clients don’t know the product well enough to help provide a quality reference to other prospects. This is why it is good to find customer references in the same industry as the one you’re pitching.
• Improve sales professionalism. This involves finding the right balance between closing deals and being too pushy. In one case, the customer liked EMS’s solution the best, but the sale was lost because the sales rep pushed the customer to close the deal in ways the decision-maker found offensive.
• Improve sales representatives’ knowledge of the customer’s industry so that they can solve specific customer business problems using this industry knowledge. EMS markets mostly to the financial services and retail industries. Learning more about these two industries, and the nuances in selling to individuals in them from other individuals who are industry experts or veterans, would not be too difficult or time-consuming.
• Reduce the response time for technical support. Technical support employees, although knowledgeable, took too long to get back to customers. Sometimes customers had to call or email them two or three times.
• Create best-practice white papers to help customers understand the benefit of your company’s solution and to improve your brand ID and credibility in the marketplace.
Longer-Term Fixes
• Incorporate certain features into the core platform. A partner solution adds expense and is less beneficial than including these features in the core platform.
• Improve specific features or add certain features to the product.
• Sales reps need to be positioned with decision-makers rather than key influencers or technical managers.
Competitive Strengths
Every win/loss analysis should include the company’s best practices, which it can build on:
• Brand ID is improving. Continue the public relations and advertising programs that are in place, and work the industry consultant channels.
• The company’s EMS platform is perceived to be user-friendly compared to several competitors at this price point.
• Ease of implementation is a key service benefit that the company coordinates well among sales, marketing, and technical employees.
• Good product knowledge among employees. Win/loss interviews indicated that sales, help desk, and technical employees all have good product knowledge.
Over time by conducting ongoing win/loss analysis and comparing outcomes, EMS could track improvements in its competitive strengths, identify new competitive products and services, and monitor changes in the retail and financial services industry—all of which would enable it to respond quickly to change and stay one step ahead of the competition.
Source: Thanks especially to Ellen Naylor of Business Intelligence Source. It is based on an actual WLA customer case she conducted in 2011.