Table of Contents
When moving prospects through the sales process, interactions with them may stagnate, or they may show less interest than before. In other cases, they may move all the way through the sales funnel to the closing stage, only to back out at the last minute. If this is the case, it’s time to mark the deal “Closed Lost” in the CRM system.
What Is Closed Lost in Sales?
In business, the term “closed lost” refers to a deal that has been successfully negotiated but ultimately falls through due to various circumstances on either the buyer’s side or the seller’s side.
While it can be frustrating to lose a sale after putting in the work to close the deal, it’s important to remember that not every deal will result in a successful transaction. By focusing on the positive and keeping an eye on the future, companies can overcome the disappointment of closed lost sales and continue to grow and thrive.
- Lost Sales Opportunity: A lead that did not move through the sales funnel.
- Lost Deal: A sale that was not closed or missed out on.
- Lost Sales: Lower revenue growth over time.
Closed Lost Reasons
There are many reasons why a closed lost deal may occur, including:
Lack of Financing
In many cases, the buyer is unable to secure the financing needed to complete the purchase. This can be due to several factors, such as poor credit or insufficient income.
It can also be due to budget realignment, finance teams that are more risk-averse, or a change in the company’s overall financial picture.
If there is a lack of financing or budgeting changes, salespeople can try to work with the buyer to find alternative financing options. If it is a timing issue, they can help the prospect develop a budget.
Change In Management
If there is a change in management at the company that is looking to make a purchase, it’s possible that the new decision-makers will have different priorities than the previous management team. As a result, the deal may be scrapped entirely or put on hold indefinitely.
Since management changes can significantly impact the buying decision process, salespeople should reach out to the new decision-makers and try to understand their needs and priorities. By doing so, they may be able to salvage the deal or negotiate a new one.
Lack of Internal Socialization
Especially in business-to-business (B2B) sales, it’s important to ensure that all decision-makers and stakeholders are on board with the proposed purchase.
If there is resistance from key members of the team, it can scuttle the entire deal. In some cases, this may be due to a lack of understanding of the product or service being sold.
It could also be due to a perceived threat to the decision maker’s job security, or a feeling that the purchase is not in line with the company’s values or mission.
In cases of internal resistance, salespeople should work to build consensus among the stakeholders. This may involve providing additional information about the product or service, addressing concerns head-on, and ensuring that all stakeholders involved can see the presentation.
Loss to Competition
In some cases, the competition may be able to offer a better price or product, which can lead to the loss of a sale.
If this is the case, sales teams can use this information to improve their own products, pricing, and customer service
Long Sales Cycle
The saying “time kills all deals” rings true—the longer a deal takes to close, the more likely it is to fall through. Sometimes, a salesperson may fail to move the prospect through the sales pipeline promptly (e.g., slow lead response time), leading to the deal being put on hold or canceled.
In other cases, the length of the sales cycle may be out of the control of the sales team due to factors such as lengthy approvals processes or decision-makers who are difficult to reach.
Closed-Lost Key Metrics
Although closed-lost data is not as positive as closed-won data, it is still important to track to improve future performance.
Some key metrics that companies should track include:
Closed Lost Percentage By Reason
Sales management needs to know why sales are being lost in order to take corrective action. By tracking the percentage of closed-lost deals by reason, companies can identify problem areas and take steps to improve them.
Number of Deals Lost to Competition
If a company is losing a large number of deals to competition, it may be time to reevaluate the products, pricing, and sales process. Businesses can reach out to customers who have chosen a competitor to understand why they made that decision.
Length of Sales Cycle
The length of the sales cycle can have a big impact on close rates. If the sales cycle is too long, it may be necessary to speed up the process or provide more resources to the sales team.
Closed Lost Percentage By Industry
Paying attention to industry-specific trends can help sales teams adjust their strategies to match the needs of their target market better. For example, a SaaS company that sells a social media management tool may notice that out of all the deals they’ve lost in the last month, 80% were to companies in the retail industry.
This information can help them focus their marketing and sales efforts on the industries where they’re closing more deals and develop a product that better suits those niches.
What Sales Teams Can Learn from Closed Lost Sales
After a deal is lost, it’s easy for sales teams to move on to the next opportunity. But lost deals can provide valuable insights that can help sales teams close future deals.
By carefully reviewing closed lost sales, teams can identify patterns and trends that may indicate why a particular deal was unsuccessful. For example, if a high percentage of lost deals involve a particular type of customer, the sales team may need to rethink its approach to selling to that customer base.
Or, if a particular product is consistently losing out to competitors, the team may need to adjust its messaging or pricing.
By taking the time to learn from past mistakes, sales teams can improve their chances of success in the future.
People Also Ask
How do you overcome lost sales?
Lost sales are a part of doing business, but there are steps organizations can take to minimize them. To overcome lost sales, start by evaluating your sales process and identifying where the breakdown occurred.
Once the sales team understands why a deal was lost, they can work on developing strategies to prevent similar situations in the future.
How do you save a sales deal?
There are many ways salespeople can save a sales deal from moving to “Closed Lost” depending on the reason for the lost sale.
If a deal is lost due to poor timing, the salesperson can work on developing a better understanding of the customer’s buying cycle.
If the deal is lost because of price, the salesperson may be able to offer discounts, create a more flexible payment plan, or help the prospect develop a budget.
If the deal is suffering because of internal company issues, the salesperson can work with the prospect to develop a contingency plan.
What is closed lost in Salesforce?
In Salesforce, the “Closed Lost” stage indicates that a deal is no longer being pursued by the sales team. This can happen for a variety of reasons, including the loss of a key contact at the company, budget cuts, or a decision to pursue other options.
Once a deal is marked as Closed Lost, it is removed from the sales pipeline and is no longer active. This allows the sales team to focus on other opportunities that are more likely to result in a sale.