Win and Loss Analysis – Why It’s an Excellent Method to Gather Competitive Intelligence
Who doesn’t want to win? Winning a deal after months of effort, particularly when you’re against an overambitious competitor, is a feeling to celebrate and relish. However, a very important question is often overlooked in this spirit of celebration – “Why did we win?” Was it because of our product? A feature? Our sales process? Our customer support?
Similarly, losing a deal to a competitor results in disappointment and sometimes even disbelief and anger. The question then becomes – “Why did we lose?”. Usually, the reasons we win are also the reasons why we lose. Unfortunately, a substantial number of organizations still do not know the answer to these questions. Can’t blame them though, because analyzing deal wins and losses isn’t a simple process. Why? Because marketers aren’t usually close to the individual prospect or opportunity to gather this data, and neither are most sales teams in an objective position to capture unbiased feedback from customers and prospects.
In most organizations, win and loss analysis isn’t properly done. It’s something that salespeople do, inputting information into the CRM after the deal closes. At some point, that CRM data is analyzed, and some form of conclusions are drawn. Having said that, how can an organization improve without knowing where they have to improve?
This is why a win/loss analysis is essential for any organization, to better understand its competitive landscape and continuously optimize processes across sales, marketing, strategy, and product management. What’s needed is a better understanding by conducting a win and loss analysis. In this article, let us understand what win/loss analysis is, what are its benefits, how to conduct one, and why it’s a great way to gather competitive intelligence.
What is Win/Loss Analysis?
A win/loss analysis, also known as a win and loss analysis, is simply the process of investigating, determining, and analyzing why deals are won or lost. It is a competitive intelligence exercise that answers – “Why did we win?”, or “Why did we lose?” – by evaluating how an organization’s marketing messaging, sales efforts, and product offerings are perceived from the prospect’s perspective, against the backdrop of several variables or factors like industry, company size, persona, competitor involvement, lead source, etc.
Much like any other competitive intelligence exercise, win and loss analysis involves the collection of data, gleaning actionable insights through the analysis of data, distribution of actionable insights to key stakeholders, and taking action based on those actionable insights. At its core, an effective win/loss analysis helps organizations to:
- Understand the true reasons specific deals are won or lost (it’s equally important to include both wins and losses in the sample mix, for reasons we will describe further on).
- Understand on a tactical level, across multiple deals, why the organization is winning or losing.
- Plan specific actions based on the findings, identify specific best practices to employ more consistently and identify problem areas, especially approaches that are not resonating with customers. Put simply, do more of what’s working, do less of what’s not.
How to conduct an effective win/loss analysis?
Before answering this question, let’s get something straight – there is no single way to conduct an effective win/loss analysis. However, there are many different types of data that can contribute beneficially to your results if you use them in the correct manner. Let’s have a look at these different types of data, which will help you understand the process of conducting a successful win and loss analysis.
Types of data essential to conduct a win and loss analysis
No analysis is complete without hard numbers. There are certain data points that are used in almost every win/loss analysis being conducted anywhere, in any organization, that help quantify how well (or badly) you’re doing, and where you need to invest more resources. These include:
Your win/loss ratio is the number of deals or opportunities won against the number of deals or opportunities lost. It is calculated using a simple formula:
Overall win rate
Your overall win rate is the measure of sales opportunities your team successfully turns into a paying customer or client. It is calculated using a simple formula:
When calculating overall win rate, do not include open and in-progress opportunities even though you know you will close them in the future.
Competitive win rate
Your competitive win rate is your success rate in opportunities where you go head-to-head with a competitor. To calculate your competitive win rate, use this formula:
No. of opportunities won where you were head-to-head with a competitor No. of total opportunities where you went head-to-head with a competitor = Competitive win rate
Loss rate by reason
Your loss rate by a specific reason gives you necessary detail to improve your win rates. How many of your deals were lost because of no budget, timelines not matching up, or feature functionality? It tells you where you need to invest your sales, marketing, or product efforts. To calculate your loss rate by reason, use this formula:
Quantitative data metrics such as the ones above should be calculated every sales quota cycle to measure progress, monitor your successes over time and identify new opportunities for improvement.
While quantitative data gives you numbers for a solid foundation of your win loss analysis, qualitative data is equally important if not more, as it gives you the “why” behind your win or loss. Internal and external interviews, as well as surveys have been the gold standard of qualitative data collection since long, and the same applies when collecting data for win loss analysis. Here’s how to use internal and external interviews to get qualitative data:
Your sales reps spend the most time with your prospects and clients, thus it is natural to seek insights from them. Internal interviews are conducted with your sales reps to get insights on why they won or lost specific deals. Asking questions like – “What were the main reasons that a client signed on?” Or, “what were the main reasons a prospect decided not to sign a deal?”, will help in understanding a win or loss from your sales reps’ point of view, which will help improve your sales enablement efforts by identifying opportunities for better training, resources, and/or campaigns.
Of course, the best qualitative data you can gather will be from external sources like clients and prospects about why they chose the solutions they chose, whether it be your solution or a competitor’s. However, some clients and prospects might not be comfortable with providing you with neutral or unprejudiced answers, so it’s always a good idea to leverage a third-party firm to conduct the interviews. It will get you more honest feedback and better responses. If not a third party, at least make sure that the interviewer is someone other than the sales rep involved.
Here are some questions that you should be sure to ask your external sources:
- Were there any specific product features or services that impressed you, as compared to other vendors?
- If all prices were equal, which vendor would you have chosen?
- What was the most significant contributing factor to your final decision?
- What was your overall experience working with our team?
- What was your decision-making process like?
- What did you like/dislike most about our product/service?
- Do you have any advice for us as we work to make our sales and product experience better?
- Would you consider our services again in the future?
The 3-step process to conduct a win-loss analysis
Now that you know the types of data essential to conduct an effective win-loss analysis, let’s move on to the next steps.
1. Collect data
We’ve already explained what types of data are required, however, as mentioned before, the win-loss analysis process can be different for each organization based on their industry and needs. Thus, it is important to ask yourself questions like:
- What do you want to know, and why?
- Which variables do you want as the basis to evaluate performance?
- What other types of data will you need? industry-specific data? Persona-specific data? Competitor-specific data?
2. Analyze data
Once data has been collected, the next step is to analyze it. The analysis involves sifting through the data to filter out insights. Remember, when analyzing win-loss data, it’s not about why you lose or win one deal, it’s about why you lost or won the last 10 or more deals. Populate your CRM with the data, and then look for patterns and answers. You’ll need a large enough sample to begin to see trends and patterns.
3. Take action
After a thorough analysis, you should have enough intelligence to take action, or at least understand why you win some deals and lose others. Use this learning to improve your performance in areas that clients and prospects consider weaker, and reinforce your strengths. Here are some examples of actions organizations usually take after a win-loss analysis:
Choose your target prospects wisely
The win-loss analysis will likely provide you with data about what type of companies your sales team struggles with. It could be companies of a certain size, companies of a certain maturity level, companies from a certain sector, or something else. The point here is to choose your targets wisely, if the opportunity cost of pursuing deals with such companies is more than you bargained for, walk away quickly.
Redefine your ICPs (Ideal Customer Personas)
Data from a win-loss analysis is a great opportunity to redefine your ICPs. It’s possible that certain customers with which your reps struggle are simply unfit for your solution. It’s time to reconsider and redefine your personas, or at the very least, train your sales reps to make a more compelling pitch.
Improve your battlecards
If your win-loss analysis tells you that there are certain competitors that your sales reps struggle with, and they usually win when competing head-to-head for deals, it’s time to make improvements in your competitive battlecards. Conduct a competitive analysis, find out the strengths and weaknesses of your competitor, as well as your own, and use the findings to position your solution as the better alternative in front of prospects.
Align your product roadmap
Although this is uncommon, sometimes organizations realize through the findings of their win-loss analysis that their product roadmap isn’t as aligned with the demands of the prospects as it should be. If that’s the case, and you find a sizeable number of prospects telling you the same thing, it’s time to work on your product roadmap and make some adjustments.
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Clients and prospects are an undervalued source of market and competitive intelligence. Most prospects evaluate the whole market and competitive landscape before buying from a vendor. So why wouldn’t they be an excellent source of intel? Anyway, companies that are able to effectively conduct win-loss analyses gain a significant competitive advantage, and when conducted regularly, the benefits of such analyses compound over time. Hopefully, this article helps you understand the importance of win-loss analysis, as well as market and competitive intelligence in general. If you find that intel from win-loss analyses works for you, you might also consider investing more time and money in M&CI, for example, trying out a market and competitive intelligence platform