15
Win/Loss Analysis

Short Description

Win/loss analysis (WLA) is a cost-effective, insightful, and ethical method for gathering and analyzing information about your market, customers, and competitors. WLA identifies your customer's perceptions of specific sales situations and how you compare to your competitors. It provides a window as to why a customer is buying or not buying your products and/or services. The analysis provides information about the performance of both your firm and your competitors. This information can then be actively used to focus sales staff more effectively in the marketplace and also to inform research and development of products.

Background

Many companies believe they are already doing WLA, as they do keep track of their wins and losses and do conduct post mortems. However, these results are generally not shared across the firm; only salespeople are involved, and a history of "lessons learned" is lost.

WLA is a management tool that allows managers to understand the effectiveness of their sales team and the effectiveness of competitors. It is an analytical tool that sits well in the competitive intelligence framework, providing knowledge about a firm's sales performance. If you know yourself and your competitors from a customer perspective, then your ability to improve your sales success is increased.

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 commonly highlight your firm's strengths and your competition's weaknesses, while the losses typically highlight your firm's weaknesses and your competition's strengths.¹

The feedback obtained from a number of these interviews is analyzed. The results illustrate your firm's position in the market and that of your competitors. WLA provides information you can actively use to improve both the performance of your sales force and your existing products, and to guide your firm in the research and development of new products.

To be most effective, a win/loss program should be established as an ongoing process conducted on a regular basis by a third-party supplier for maximum objectivity. Key elements suggested by Schulz² include the following:

• Ongoing (not a temporary event around a particular client, product, or sales representative)
• Uses customer feedback (rather than or in addition to sales representative feedback)
• Timing (within a reasonably short time following the buying decision)
• Employs a consistent methodology
• Consists of clearly defined users

The feedback incorporating the preceding elements and obtained using the WLA process provides more detailed and useful information than the traditional sales post mortem. A sales post mortem involves your sales team discussing its experience of the sale after it is won or lost. WLA directly involves the decision maker with the client firm responsible for the sale or non-sale. It provides access to information your client may use in deciding whether or not to do business with you that your sales team may not aware of; for example, internal budget constraints or the nature of deals offered by your competitors. It gives insight into the client's relationship with both your own sales team and your competitor's sales team and into the market perception of your products and after sales service.

Strategic Rationale and Implications

WLA is a unique tool that brings together all the elements of strategy—information about customers, competitors, and your own firm—within the context of a most critical element for a business, the buying decision. As a market listening tool, it is designed to provide a firm with information that can actively be used to increase its sales. By seeking feedback directly from the target market and subjecting this to analysis, a firm can gain a more objective understanding of its place in the market and use this to improve its position.

From win/loss interviews, a firm can identify how a competitor is developing their products and/or services or whether they have or have not delivered on promises. It can provide an avenue to re-open doors with former clients. As a tool, it makes existing and potential clients realize the commitment your firm has to maintaining good customer relationships.

However, the strategic implications of WLA are highly dependent on the quality of the raw data. The raw data gathered from clients should be free from any political or strategic bias and subjective perspective—particularly where employees within a firm may distort information. Sales staff, for example, are not the best group to conduct WLA, as they often may be too biased or emotionally involved with their accounts to be objective when conducting a WLA. Many firms employ third-party interviewers to gather the feedback for WLA specifically to avoid subjective influences from tainting the data and conduct parallel interviews with relevant sales staff, as well as clients, to allow comparison of these differing perspectives of the same sale/non-sale.

The results of WLA performed on feedback interviews will give information about sales performance, sales opportunities, market perception of your and your competitors' products, and your competitors' strategies. It can provide a measurement of how your firm is positioned with decision makers and key influencers within a client's firm. When acted on, this information can enable your firm to improve sales, increase market share, understand the market to maximize business opportunities, and focus marketing and sales resources to increase revenue.

Naylor identifies tactical and strategic benefits flowing from WLA. Tactical benefits tend to focus on sales performance, while strategic ones flow beyond the sales team to assist with product management, mergers and alliances, and product research and development. These are summarized in Table 15.1.

Table 15.1
Tactical and Strategic Benefits of WLA

Source: Adapted from Naylor, E. (2002). "Increasing sales through win/loss analysis," Competitive Intelligence Magazine, 5(5), pp. 5–8.

WLA must not be confused with typical sales post mortems. First, analysts have the opportunity to learn about customers' perceptions. Customers' perceptions are the basis for their decision-making processes and ultimately impact a firm's sales performance. As Ritchie points out, "widely held perceptions, or misconceptions, must not be discounted. Instead they must be managed or changed in future sales encounters."

Second, WLA should be an independent evaluation and conducted regularly to allow medium- and long-term trends in the market to be identified. Most firms adopt a monthly or quarterly cycle.

Third, when conducted systematically and regularly, WLA enables a firm to keep a close eye on its market, to monitor its own performance, and to gain timely feedback on its strategies and practices.

Strengths and Advantages

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.

Conducting win/loss interviews is a direct demonstration to your clients and potential clients that your firm values its relationship with them.

Interviews are conducted as close as possible to the actual sale or non-sale being investigated to ensure accurate recall of the circumstances. Because interviews are conducted by an independent third-party interviewer, information bias is limited, and particular issues relevant to its business are covered in a more transparent way. Obtaining information that addresses specific issues ensures meaningful comparison can be made when analyzing the responses obtained at individual interviews.

Regular and systematic WLA processes provides not only immediate feedback, but can also be used to compare and uncover trends over time.

The WLA process allows for direct feedback on what the decision-making criteria employed by your clients, in awarding your firm their business or taking it to a competitor, are. An expert interviewer can go beyond the standard questionnaire to probe a client and give him or her a chance to directly express their needs and preferences. This in turn gives your firm the opportunity to 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 firm to aid in overall performance improvements. The results obtained from WLA may be used to inform other strategic programs within a firm. For example, it may assist in the development of training programs for sales staff or assist in product improvement projects.

The WLA process will give an indication in real time of the market's response to new business strategies and products. It will enable the firm to identify and respond to trends over time in the market and assist in sales forecasting. If undertaken in a systematic way, it will assist in growing revenues both in 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

• 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 and Limitations

WLA is based on data obtained from interviews arising out of sales results. It is to that extent reactive and event-driven. Care must be taken to ensure that a good mix of sales results is followed up. Results will be skewed, for example, if in one round of WLA, only successful sales to existing clients are analyzed.

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 they are 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.

There is no value in information gathered if it is not systematically disseminated to those who can act on it. As is a danger with any information-gathering process in a firm, it is possible for the results of WLA to end up being fiercely guarded rather than distributed. On the other hand, it is possible to undermine the process by giving all of the results to everyone and no one having time to read them, let alone act on them.

The value of WLA will only be as good as the system set up to inform interested parties of the results. Information taken out of context—for example, in an attempt to extrapolate widely from one individual analysis—will not be reliable. The true value of WLA is in the ongoing process.

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 firm or with 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, as sporadic WLA will not give reliable information.

The fact that WLA focuses on sales results may lead to a politicizing of the process within a firm. 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 firm may try to ambush the process to push their own agendas. The team responsible for running WLA must be very carefully chosen and trained to ensure the members fully understand the WLA process and are prepared to implement it properly.

Process for Applying the Technique

Numerous writers in the field suggest that there are up to seven steps to consider in creating and implementing a WLA process. These steps are shown in Figure 15.1. Each of the steps in the WLA process are described next.

Figure 15.1 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 firm's revenue (the 80/20 rule—80% of a firm's revenue comes from 20% of its customers). However, other considerations in choosing whom to interview may include whether your firm wishes 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 firm's chosen criteria need to be identified and singled out and reviewed to ensure that the targets are worth the investment.

Powell and Allgaier suggest that one needs to start by segmenting the specific market group or target, particularly if the purpose of WLA is to identify sales sources. Once target segments and their criteria are identified, key information needs to be collected to qualify potential prospects.

The interval over which you run your WLA will depend on your firm's requirements. Monthly analysis requires a greater commitment of time and money but will provide very quick market feedback. Some firms prefer to run a large win/loss study annually. The interval chosen will also be affected by how quickly you wish to be able to act on the information you obtain as well as the frequency of sales opportunities experienced.

Step 2: Understand Internal Cultural Issues

Understanding your firm's culture will provide a guide as to how information will be used. For example, in a learning and consultative culture, sales representatives and their managers might become highly involved in both the collection and evaluation of 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 of addressing the differing needs of critical groups.

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 from other departments and have the support of senior management. Schulz points out the wisdom of involving senior management (even up to the CEO) to help to keep internal politics out of WLA. The objectives of the program must also be well defined. The roles of designing and implementing the program should be clearly understood, as 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 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 firm than simply monitoring the performance of individuals in the sales team.

The decision must be made whether to use an independent third party to conduct the interviews or whether to use your sales team. Use of a third-party interviewer has cost implications. It will also require a commitment of time from internal staff to brief the interviewer. The use the firm intends to make of the information will also direct 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, Schulz suggests keeping sales staff involvement in the interview process to a minimum. However, parallel interviews of client and sales representative 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 a number of broad areas. Naylor suggests four, as follows:

• Sales attributes—This will cover the professionalism of your sales team, the quality of the relationship your firm has with the client, and the esteem in which the client holds your firm compared to your competitors.
• Company reputation—This includes questions about the perception of your firm's and your competitors' image in the marketplace, the stability of your firm, and 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 promoted and covers issues of price and technology.
• Service issues—These questions will cover the delivery and implementation, maintenance/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 there other stakeholders involved?

Another consideration will be 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 not be necessary. When statistical analysis is the aim, the information 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. At the same time, some flexibility in the interview process will enable valuable exploration of individual situations.

Step 4: Preparation for the Interviews

The interviewer now needs to be briefed about the significance of winning or losing each sale. To get the most out of 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 be able to stray from the standard form questionnaire to probe for detailed situation-specific feedback. Specific and detailed information can greatly enhance the overall value of the WLA process.

Step 5: Conducting Interviews

Carefully consider how you wish to go about conducting interviews. This decision will depend 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 avoid interview results being skewed by any pre-existing relationship between a salesperson and his or her client. For example, the interviewer may direct the responses they receive with unintentional body language cues.

One option is to conduct interviews by telephone. This is a common practice in the U.S. and is quite time and cost effective. However, in some situations—for example, for big-ticket purchase items—it may be preferable to conduct face-to-face interviews in order to obtain optimal results in a particular situation. Here you will need to rely on your sales team to advise 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 do telephone interviews.

Interviews should be conducted as close in time to the actual sale/non-sale so to avoid memories of the negotiations fading. Some firms may also interview the salesperson involved in the particular sale/non-sale to investigate differences between the firm's own internal perception of the negotiations and those of the client.

Step 6: Analysis and Interpretation

Once the interviews are completed, the results need to be tallied and analyzed. The interviewer will generally summarize each completed interview and provide an analysis of key trends or issues identified as a result of the interviews in a report. If the interviews are carried out by internal staff, then 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 is due to be done. The value of WLA can be compromised by sporadic rather than regular analysis.

As the WLA program continues over time, trends will emerge from the analytical results. These need to be interpreted in light of the firm's strategic and competitive intentions.

Further, over time, WLA becomes more valuable in identifying trends that impact 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. There will be information arising out of WLA that is relevant to different departments in the firm such as research and development, marketing, and sales. The program team should ensure that each department receives the information 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. Schulz highlights a WLA program where senior management received a monthly report summarizing quantified results, while the sales team had results incorporated into their regular e-mail alerts.

Properly conducted WLA is one of the most valuable tools for sales account strategies. WLA helps firms understand the value of customers and the cost of retaining them versus acquiring new ones. Simultaneously, it allows firms to capture best practices in sales and identify trends to enhance future revenue streams.

Case Study: Microsoft Business Solutions

Microsoft Business Solutions (now known as Microsoft Dynamics) provides a line of financial, customer relationship, and supply chain management solutions to help businesses improve their performances. Delivered through a network of specialized partners, these integrated business management solutions work with Microsoft software to streamline processes across an entire business and include applications and services for retailers, manufacturers, wholesale distributors, and service companies, doing business domestically or in multiple countries.

At the time of this case study, Microsoft Business Solutions was well positioned to be the dominant player in the mid-level financial software market with its Great Plains solution. This solution provides a financial, analytics, and business management system that unifies data and processes across a business, integrating easily with other solutions, and connecting employees, customers, and suppliers regardless of time or location.

With a strong product and a large sales force, Microsoft had the potential of winning the majority of competitive opportunities.

The challenge facing Microsoft Business Solutions was to understand the competitive environment in order to leverage its strengths and capitalize on the weaknesses of its competitors with the goal of winning the lion's share of opportunities.

Understanding the Environment

Primary Intelligence conducted a win/loss assessment of Microsoft Great Plain's previous 100 opportunities, comprised of 50 wins and 50 losses. Information was gathered on purchase selection criteria, primary competitors' strengths and weaknesses, the efficacy of various marketing activities, and customer satisfaction.

Analysis of the gathered information yielded a clear picture of the competitive environment, focusing on areas of differentiation—both in product and in sales methodology. It became apparent that Microsoft Business Solutions had clear advantages in certain areas that had not been previously identified and that although the competition was strong in most areas, they exhibited specific weaknesses that contributed to Microsoft wins.

Learning from Their Losses

Two important, related things Microsoft Business Solutions learned from their losses were that: a) prospects didn't perceive that they or their partners understood their needs; and b) one of the ways prospects expressed this was in lower marks for industry experience and knowledge.

Because of the knowledge gained in the win/loss report, Microsoft Business Solutions subsequently announced industry-focused strategies in four major industry sectors that they believe will help them and their partners be more successful in the mid-market.

Leveraging the Data

As part of the Primary Intelligence solution, senior analysts helped Microsoft Business Solutions leverage the data in the report to improve their competitive position in the marketplace, provide even further insight into the competitive sales cycle that Microsoft Business Solutions' channel partners currently face in today's market conditions, and gain important insight into potential new strategies and programs that could be implemented to ultimately help the partner win more business in competitive situations.

Keeping Current

Another valuable tool for Microsoft Business Solutions was the comparison Primary Intelligence provided with the previous year's win/loss study. Analysis of the differences showed that certain shortcomings had been addressed, while new potential problems had surfaced. It also showed the progress, or lack of progress, of the competition, making it possible to assess new threats and exploit new opportunities.

This ongoing assessment made it possible for Microsoft Business Solutions to track the dynamics of the industry, respond quickly to change, and stay one step ahead of the competition.³

FAROUT Summary

Figure 15.2 Win/loss analysis FAROUT summary

Future orientation—Medium to long term. Each time WLA is conducted, information will be obtained about how to improve sales by optimizing the focus of sales resources. Over the long term, market trends are revealed and can be used to fine tune strategic planning, research, and development.

Accuracy—Medium. Accuracy will depend on the integrity of the interviews conducted. Use of an independent third party will improve accuracy.

Resource efficiency—Medium to high. A third party specialist will be able to run a firm's WLA program very efficiently, albeit in a more costly manner. When internal staff take a greater role, there will be a decrease in the resource efficiency due to the utilization of staff time.

Objectivity—Medium to high. When interviews are conducted by a third party, objectivity should be high. However, use of staff to conduct interviews will probably result in a lowering of objectivity as internal biases creep in.

Usefulness—High. WLA provides useful practical and insightful information on customer perceptions and competitors' activities.

Timeliness—Low to medium. The timeliness of the information obtained will depend on the interval chosen for the WLA process and how often it is repeated.

Related Tools and Techniques

• Benchmarking
• Blindspot analysis
• Comparative cost analysis
• Competitive positioning analysis
• Competitor analysis
• Customer segmentation and needs analysis
• Customer value analysis
• Functional capability and resource analysis
• Scenario analysis
• SWOT analysis
• Value chain analysis

References

Gale, B. (1994). Managing Customer Value: Creating Quality and Service that Customers Can See. New York, NY: Free Press.

Levy, S. (2003). "A call to integrate: CI, customer relationship management, and sales force automation," Competitive Intelligence Magazine, March–April.

Naylor, E. (2002). "Increasing sales through win/loss analysis," Competitive Intelligence Magazine, 5(5), pp. 5–8.

Powell, T., and C. Allgaier (1998). "Enhancing sales and marketing effectiveness through competitive intelligence," Competitive Intelligence Review, 9(4), pp. 29–41.

Powell, T., and C. Allgaier (2003). "How high is your sales IQ?," Competitive Intelligence Magazine, 6(6), pp. 30–35.

Prescott, J., and C. Miree (2000). "TAP-IN to strategic and tactical intelligence in the sales and marketing functions," Competitive Intelligence Review, 11(1), pp. 4–16.

Ritchie, J. (1992). "Competitor assessment tools: win/loss analysis," Competitive Intelligence Review, Winter, pp. 18–19.

Schulz, S. (2002). "Seven steps to building a successful win/loss program," Competitive Intelligence Magazine, 5(5), pp. 9–12.

Web sites (all accessed March 12, 2006):

www.graffgroup.com/winlossarticle.html

www.lassiterassociates.com/winloss_casestudy.html

www.marketing-intelligence.co.uk/resources/competitor-analysis.htm

www.primary-intel.com.solutions/winloss.aspx

www.webpronews.com/ebusiness/sales/wpn-9-20041209HowWinLossAnalysisCanImproveYourSalesPerformance.html

Endnotes

¹ Ritchie, 1992.

² Schulz, 2002.

³ Source: Web site: http://www.primary-intel.com/solutions/winloss.aspx, Primary Intelligence (accessed March 12, 2006).