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Performance Management Friday — Abandoned Deals

by David Brock on January 20th, 2012

Last week, I talked about the importance of Win Loss Analysis.   No one questions doing win/loss analysis, in particular, we really worry about losses.  There is a hidden performance and resource drain that can have a dramatic impact on our success.  It’s the abandoned deal. 

Abandoned deals happen more frequently then we think–we usually don’t track them well.  But they’re the deals that we’ve qualified and pursue proactively.  We may abandon them for many reasons–we lose interest, our customers lose interest in us, we see that we can’t win, or any other reasons.  Increasingly, however, I’m seeing the most damaging type of abandoned deals, “No Decision Made.”  These are tragic–we invest in the entire sales cycles.  We spend our time, we invest resources from our company, we go right to the end and nothing happens.

We don’t win, we don’t get the order–but no one does, so no one loses.  The customer just doesn’t make a decision. 

There’s another way this happens.  We go through the sales cycle and the customer–the functional managers get excited.  They select us, then they go to executive management for funding–and the executives choose to invest in a completely unrelated project–something that has nothing to do with the functional group we have been working with.  It’s not a competitive loss–it’s just that our project is a lower priority than others they are considering.

I’m seeing an increasing numer of abandoned deals, typically, we don’t pay much attention to them.  We analyze our Wins and Losses, but abandoned deals fall off our radar screens.  But these deals can be very significant.  In the past month, I’ve been invovled analyzing several companies—some capital/equipment companies, a major systems integrator, a few software companies and a few services companies.  The lowest rate of abandoned deals was 22%.  Most were significantly higher.

Think of that, think of the impact of these levels of abandoned deals–a minimum of 22% of your pipeline has disappeared!  Think of the time you’ve invested, think of the emotional investment that you have in the deal.  Think if the resources you have invested and the expectations you have raised in your company.

But usually we don’t pay attention to this–we track wins and losses.  We just kind of forget about abandoned deals.

What do we do to reduce abandoned deals–I’ll spend more time on this issue in some future blog posts, however, by belief this is largely a qualification problem.  We push a customer to look at something, but it doesn’t have a high sense of urgency.  At the end of the cycle, they just shrug and decide to do nothing.  We avoid this by really looking at the urgency, the consequences of not solving the problem very early in the sales cycle.  We check to see if the project is high on the priorities of the executive teams–the people controlling the purse strings.

Don’t just look at wins and losses.  Remember abandoned deals are important to track.  Understanding those abandoned deals, avoiding them at qualification is important to producing results and managing your time.

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2 Comments
  1. Excellent article with clarity on a common issue in sales. Most opportunities are never funded. I don’t think they should be called deals because that word does not describe them well. The question is not can we get this deal closed it is can anyone,meaning us and any competitors for the potential business get this opportunity funded. My context is more from a complex b2b sales view but it can apply to other sales cycle types. Many opportunities were never deals to begin with because the person the sales rep is talking too does not have the clout within the organization to clearly know if anyone’s solution to a company problem can be funded in a timely manner. I believe a sales qualification process is just as important as a sales process and perhaps more important if you look at a sales sycle from a resource standpoint. How many other opportunities could you have applied your time and resources too to close an opportunity? What did this no decision result cost you as a sales team? I have rarely encountered sales organizations with a predictable simple and effective qualification process that is consistent across all sales reps in the organization. Has anyone else seen this? Is there anyone with a qualification process they would like to share to avoid finding out the no decision outcome sooner?

    • Steve, you raise great points. The qualification (or as I like to suggest–the disqualification process) is critical to identifying the right deals. We have seen people carefully identify/profile the ideal customer, ask key questions to identify much higher quality deals. As a result we have seen tremendous improvements in win rates. Clearly perfect qualification doesn’t protect you from screwing up later, or guarantee a win even if you execute well. But you can make huge strides. As an example, in our own company we typically have win rates in the 85-85% range because we’ve spent a lot of time doing the things I’ve outlined.

      Also, we are seeing analytics improve this process as well–at least in B2C spaces, but increasingly in B2B.

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