Most tech vendor sales teams forecast opportunities (i.e., prospective sales deals) within their customer relationship management (CRM) platform, such as Salesforce.com. The outcome is usually one of two opportunity states:
- Closed – won: The opportunity was successfully closed
- Closed – lost: The opportunity was not successfully closed
The problem with having only two opportunity outcomes is that many times opportunities are closed because the deal went cold. Maybe the prospect’s budget got taken away. Maybe the primary contact (i.e., champion) left the company. Or maybe the primary contact went “radio silent” because he or she has too many higher priorities than to return your salesperson’s call.
The problem with using “closed – lost” for deals lost to a competitor and for deals that simply went cold is that your competitive “loss” statistics will be artificially inflated. For example, let’s say last quarter your company had $3 million worth of sales opportunities where AcmeTech was identified as the competitor. Now let’s say $1 million of that business was won against AcmeTech, $1 million of that business was lost to AcmeTech, and $1 million of that business simply went cold. Now, when you generate a win/loss report for last quarter, it looks like your company only won 33% (i.e., $1M of $3M) of the dollars against AcmeTech when, in fact, you won 50% (i.e., $1M of $2M) of the forecasted dollars. See the problem?
To solve this problem, you need to add a third opportunity outcome called “Closed – no decision,” or something along those lines. Your new definitions for closed opportunity statuses are now:
- Closed – won: The opportunity was successfully closed (no change)
- Closed – lost: The opportunity was lost to one or more competitors
- Closed – no decision: The opportunity went cold
Of course, the CRM user (usually the salesperson) should be required to select the primary (and perhaps secondary) reason why the opportunity was closed through a pick list that varies depending on the opportunity status selected. But you can learn more about that in Chapter 3 of Expert’s Guide to High-Tech Competitive Analysis Programs, authored by CyberEdge’s Founder & CEO, Steve Piper.
In the meantime, if your company’s CRM does not have a “Closed – no decision” or similar opportunity status, this is one of those times where your company is making a clear-cut, no-bones-about-it mistake.
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