Winning a deal is usually celebrated and losses are quickly forgotten. Unfortunately, losses are a part of the sales cycle, but most software companies do not put much energy into understanding exactly why they lose deals. It’s in our human nature to examine our losses and see how we can learn from them. In my years of selling and marketing enterprise software, we love to talk about our wins and dismiss our losses. With a careful and methodical examination of wins and losses can help a software company quit making mistakes and gain real competitive knowledge that can give them the edge or leg up.

As a fan of the NFL, I have notice that coaches spend many hours watching tape replays to see where mistakes were made to ensure that the same mistakes are not made again. Too often in the software business, the sales organization just moves on to the next deal without reflecting on the last “game”.

Executing a win/loss program should be a common practice by software companies and the marketing organization is the logical group to get it done. The program can be executed internally or externally and does not require no more than a few hours a week.

I have seen many reasons for a company to lose a deal and to be sure, some deals just fall apart at the end for unexplainable reasons. The purpose of a win/loss program is to determine if there are patterns in the sales cycle that can be avoided in future deals. My belief is that to truly understand what happened in a sales cycle, it is mandatory to talk to the decision makers and not the sales staff.

The salesperson is the first to be interviewed but like most people, they usually do not have an objective view of their performance on a deal. Ask an NFL cornerback how a wide receiver got by them for a game winning touchdown and you will likely hear that the receiver got lucky or someone else blew their assignment. The real reason might be that the defensive scheme did not match up well to the offensive and that is the defensive coordinators fault! I used to joke that if you ask a software salesperson why they won a deal, they would say something to the effect of “because of my keen control of the account and sales process”. Ask them why they lost and almost invariantly the response is either “we were too expensive” or “the competition has more features”.

There is no doubt that many a deal has been lost because of price or features. Your competitors are always going to have killer features but it has been my experience that if your company was part of an evaluation process that led to some pipeline activity, your product must have been competitively priced and had customer use-case product features. The idea of a win/loss analysis is to try to get a deeper understanding of the customer’s requirements and where you went wrong. The goal is to avoid the mistakes from occurring again.

The purpose of this paper is to examine the reasons for executing a win/loss program, how to get buy-in, how to actually execute the program and how to deliver the news. I have done many win/loss interviews with customers and too many of them have been losses. My goal is to provide some ideas and tactics that you can put to work quickly to get an edge over your competitors and have some fun while doing it.

Why Bother with a Win/Loss Program?

As a software marketing executive, your job is to understand the customer problem and provide your sales team the messaging and tools on how your solution uniquely solves the problem. Executing a win/loss analysis with actual decision makers gives you a direct conversation with the customer that you likely rarely get. Use a win/loss analysis to get insight into the following:

• Messaging and positioning: Marketing is responsible for creating  the messaging that the customer should eventually hear. During a win/loss interview, you can quickly and easily ask the customer about the messaging and if it made sense to the customer. In a loss situation, you will likely hear one of two things (either the customer never heard the messaging or the messaging didn’t resonate with them). In the former situation, you likely have a salesperson who doesn’t understand the value proposition that you have crafted and therefore could not differentiate your product early on in the sales cycle. Most likely, the evaluation came down to a feature/function battle. This is a sales training issue that can easily be addressed. The latter situation is much worse for a marketing executive as your message isn’t understood by the customer. I recently worked as a consultant for a search software company that strongly positioned itself as the leading solution for a certain class of data. They had an extremely defensible position but the problem was that by focusing on one use-case and ignoring the other use-cases that the customers had, they immediately alienated themselves from many customers. When your messaging doesn’t resonate or alienates customers, you have a bigger challenge. Your choices are to either change your messaging to cover more customer use-cases or to train your salespeople to walk away from deals where the messaging is not likely be a good fit. Whatever you chose to do, having the facts from a win/loss analysis is the key to making these business decisions.
• Sales tools: Your product marketing team creates the tools and collateral to help your salespeople get an edge over the competition. One of the biggest mistakes that I have seen over and over is arming your team with invalid competitive information. I worked on a project once where the product marketing group gave the sales force a “killer sheet” of competitive knock-offs that was to be used when the deal was coming down to the bitter end. When interviewing the losses, I was told that the “dirt” on the competitors was factually incorrect and that the customer easily discovered that my company’s assertions were patently false. The customers told me that the salespeople lost credibility by using these tactics and were genuinely annoyed, leading to our dismissal from the sales cycle. Your competitors are not going to email you the corrections to your competitive knock-offs and will happily let you keep making mistakes. The only way to really validate your knock-offs is to ask the customers about it.
• Competitive information: While we are talking about competitive information, the best source is by talking to customers. I always ask customers about what features they like best and worst with the product that they chose. I have rarely had anyone not share things with me that I could not put to immediate use. I also ask what the competitors say about us so I can prepare ways to handle the objections my competitors are handing my prospect. I always ask about features but also ask about pricing and the sales cycle. Often I get detailed information about licensing options and the people who work for the competitors. Why do I care about the people at the other companies? That information may not be actionable immediately but in the incestuous world of software, you might learn about people you should not hire if the opportunity presents itself.
• Customer References: You have likely put a lot of energy into developing relationships with your best customers to convince them to become references. It is highly unlikely that you know how your references message your product to your prospects. While your references are likely huge fans of your product, their delivery or relevance to your prospects might not resonate. I always ask my wins and losses about the quality of my references and if the information they received was useful.
• Industry Analyst References: If you are in the B2B enterprise software business, you know the value of your analyst relations (AR) program (customer recommendations, workshops etc.) and that they are an enormous percentage on your budget. Since you are pouring so much money into AR programs, you should definitely do some backdoor checking on what the analysts are really saying about your company and product. This should help you cost-justify more analyst relations programs such as scheduling some onsite analyst briefing days that ordinarily cost over $10,000.

Another reason to execute a win/loss analysis, it helps elevate you in the organization. Often marketing is seen as a high-level corporate group disconnected from sales. I saw a recent survey that showed the overwhelming majority of marketing executives had never visited a customer or even spoken with one. Use this program to demonstrate your commitment to the success of the sales organization. Your role in marketing is to understand your customers better than anyone else. Talking to customers and understanding their requirements will make you invaluable. In many roles that I have had, CEOs consider me a consultant to the reality in the marketplace.

Intuitively you are likely thinking that it shouldn’t be too difficult to get the program started but this isn’t always the case. I always start with the CEO first before approaching the VP of sales. Sales VPs will likely assert that the program is a waste of time since they believe they know why they win and why they loose. Remember that the main goal is to determine patterns in the sales cycle that lead to losses.  Sell the program using the benefits that I described before. It is important to get the VP of sales to buy-in as his/her team might be defensive of the program. Remember to stress that the program is not a witch-hunt but an analysis of patterns that lead to wins and losses. He/she needs to let the team know that the program is going to begin and that all pipeline data in the sales force automation (SFA) system be accurate and up to date.

So when deciding how to get started, the first decision to make is to execute the program internally or externally. I have done both and while there are some excellent firms that specialize in win/loss analysis, my belief is to do it in-house. While external firms offer extremely attractive rates between $200 and $500 for each customer interview, I believe that as a marketing professional, your job is to talk to customers and get the anecdotal information that will likely be lost from an outsourced scripted interview. I really believe that qualitative information is more valuable than the quantitative data that most outside firms can provide.  No one knows your business better than you do so why trust it to anyone else? If you have the budget, try both and see what types of results you get.

The next step is to find the customers to contact. Getting win data is simple as the CFO will have a list of all completed deals and the details. Getting the loss data poses a bigger challenge. Your first instinct will be to contact the field force and ask them to send you a list of recent losses. My experience is that asking the field force for this information is not a good use of your time as responses are unlikely. Go directly to the SFA system and get the last few months forecast data from the VP of sales (they always have the real data in a spreadsheet somewhere). With a little detective work, you will find the deals that have vanished from the forecast.

Using the SFA system, I try to identify the appropriate person at the customer account to contact them directly. If you do not have accurate customer contact data then you should consider asking the sales representative directly for the information. If that doesn’t work, there is always www.jigsaw.com!

When reaching out to customers, I use a fairly standard email such as the one below.

Hi Lisa,

As a professional marketer, you know all too well how difficult it is to get people to respond to email even with a compelling call to action (like something as good as cash!). I have found that the response rates to emails are higher of you specify the following:

1. You only want 30 minutes of their time  
2. Include the types of questions that you would like to cover
3. Make it clear you aren’t trying to sell anything
4. Offer compensation for their time

Of course some of your targets will not respond and I have occasionally received some very curt negative responses. For the ones that do not respond, I suggest employing some direct response techniques such as a quick follow up call a few days later asking them to check their email for your note and reminding them of what you said in your email. I usually move on it if I still do not get a response.

Much of your success in getting customers to agree to talk to you relies on the questions that you want them to answer. I always send a short list of fairly innocent looking, but valuable questions. Keep the list of questions short and avoid survey type questions such as “on a scale of one to ten rate the importance of company viability in your decision making process”. CEOs and sales VPs do not care about the data gained from survey type questions, they want actionable information.

Start with a list of questions such as the ones below to get a conversation started. Depending on the situation, I do not always attempt to get every question answered. I try to leave time to explore different areas when I start to hear something interesting.

The final phase of the project is to package the results for delivery to the management team. I usually try to keep it to only a few slides and focus on key trends that clearly affected deals. I would include customer names, titles and direct quotes in the presentation.

I begin the presentation by focusing on common trends that were discovered as being part of the reason for the wins and losses. Typical examples of issues that become exposed are messaging/positioning, accuracy of sales tools, quality of references and analyst perceptions. I then follow up with competitive information that I learned from speaking and observing customers.

Summary

Making win/loss programs part a quarterly project might not be necessary but should not be a one-off event. I suggest executing a program twice a year and certainly the quarter after a new version release or change in product and corporate messaging. Getting the program started might be politically challenging and connecting with customers is always challenging but I believe that you will find the efforts worthwhile. Knowing the customer pain points and how your company succeeded or failed is the role of Marketing. 

Ed Chopskie is the VP of Marketing for an enterprise security software company in San Francisco. Ed has held a number of VP of Marketing roles with both public and private B2B software companies in his 15 years with software companies. Prior to joining the software industry, Ed worked as a technical support specialist for one of the largest datacenters on the East Coast as one of their first DB2 database administrators. A detailed background is available at http://www.linkedin.com/in/chopskie and Ed’s email is ed.chopskie@gmail.com