Sales optimization through lost order and pending order analysis
“Unfortunately, we have decided on a different partner” or “We have postponed the project for the time being” – are these responses from potential customers that you hear again and again?
And do you know the real reasons why the sale was not made? Do you know why you didn't get the order after all? Are you aware of which customers make sense to follow up with or where the lead is lost forever?
From practice…
One of our clients, a global medical technology company, turned to us because it was not satisfied with the sales performance of its Indian subsidiary. It provided us with its RFQs (request for quotation) from several years that had not led to customer acquisition as a data basis and commissioned us to carry out a lost order analysis. After reaching 80% of the medical technology company's potential customers and receiving appropriate feedback on the questions we asked them, our client was not only able to get a precise overview of the main reasons for losing its leads, but also received new leads as a by-product. In addition to pricing, the main reasons for the lack of success were technical aspects such as a lack of compatibility with existing technical structures or the postponement of the project due to internal personnel changes or lack of subsidies - important information with regard to future strategic considerations.
Lost order analysis
To optimize your sales, the analysis of both the reasons for a lost lead (Lost order analysis) as well as the reasons why offers remain open for a long period of time (Pending Order Analysis), are important instruments.
By categorizing and analyzing the reasons for a lost order, you gain valuable information about opportunities for improvement in your sales processes, product range, marketing strategies and resource allocation. The Lost Order Analysis therefore makes it possible to close the gap between the performance of the subsidiary and the expectations of the parent company and to develop more targeted strategies to improve competitiveness in the local market while at the same time aligning with the global goals of the group.
But how do you get this important information?
Methodically sensible approach: customer surveys
Of course, your CRM system (Customer Relationship Management) can provide important initial clues as to the reasons, provided it is properly maintained and actually contains meaningful records of your employees' sales inquiries. The number and value of lost orders, the response time to customer inquiries and the percentage difference in your own pricing compared to competitors can usually be found in this tool.
The far more efficient tool, however, is qualified customer surveys [See also: “Market analysis for practice Part 3: How do Indian customers actually find my product?")
"We work with our client to develop a concept that is tailored to their needs. In other words, we respond to their needs and – based on these – suggest different approaches for a lost order analysis," says Michael Enderle, WB Senior Expert.
"This also includes the manner in which and which questions should be asked of the lost sales opportunities. This ensures that we can immediately develop useful answers for our customers. It is also a matter of clarifying whether the conversations with the "lost" customers should be conducted by telephone, in writing or even in personal interviews. In this respect, WB does not have a standardized list of questions. It may also be the case that our client does not want his name to be mentioned in the conversation," adds Michael Enderle.
Insightful questions could be, for example:
- Is your local sales team actually chasing the “right” leads? Or does their focus need to be changed? (See also: “Why only one in three companies achieves its sales targets")
- How did your pricing compare to the market environment?
- Were there any problems with the prospective customer’s perception of quality?
- How well did the offer match the customer's needs or specific technical specifications?
- Were customer inquiries answered quickly enough? How did communication go in general? Were promises kept?
- Have you had delivery problems in the past and therefore concerns about your future logistical performance?
- Is your product sufficiently adapted to the specific characteristics of the local market and does it sufficiently take into account country-specific requirements?
Unfortunately, in India in particular, it is more difficult to obtain usable, reliable information due to cultural differences. However, informal discussions at the same hierarchical level provide insights that you would not be able to gain from outside without a corresponding long-standing network. For example, the typical Indian customer usually expects an extremely high level of service quality. If this is not the case, the argument of the price constellation is regularly used as a (pretextual) reason for rejection.
Pending Order Analysis
The analysis of "pending" sales opportunities, i.e. those for which the customer has not yet made a decision about accepting the offer for a long period of time, is also an important indicator of your sales efficiency and market orientation. Is it even worth chasing the lead? Was it even a realistic sales opportunity or did the potential customer actually need the offer for other purposes? What prevents the prospective customer from making a final decision? Why does this happen so often in my Indian subsidiary? Questions to which an answer is important not only from a sales perspective.
However, the best analysis is only worth something if the (local) management takes appropriate initiatives on the basis of the findings obtained, since lost orders can always indicate more comprehensive organizational problems that go beyond the pure sales function.
