The Importance of Closing Opportunities as Lost
Closing an opportunity as lost indicates that the deal is no longer being pursued by the sales team. This can happen for a variety of reasons, such as the loss of a key contact at the company, budget cuts, decision to pursue other options, etc.
Let’s face it, no one likes to lose a deal, but this shouldn’t stop you from clicking the Lost button on an Opportunity! You may not be adding to the revenue stream, but you are contributing to a data set that can assist your organization with determining statistics around competitors you’re losing to, which products aren’t doing well and what industries and sectors you haven’t been successful with. Lost opportunities play a large role in analytics around funnel creation and sales velocity.
By not closing opportunities that have been lost, the opportunity records remain open and sit idle in the system, causing inaccurate data. Here are a few examples:
- The “Open Opportunities” count is thrown off, resulting in an inaccurate ARR average calculation and an unrealistic average days calculation. This directly impedes the system from accurately calculating sales velocity.
- ARR calculations are impacted across the board when opportunities are kept open when they should not be:
- ARR by stage
- ARR by close date
- ARR by sales rep
- ARR by product
- TekStack cannot calculate an accurate win rate without lost opportunity data.
When to Consider a Deal Lost
Setting some metrics around when to consider a deal lost is a good way to ensure that deals are being closed-lost not too early, not too late, and for consistent reasons.
You may consider a deal lost when:
- The customer has told you that you’ve lost the deal.
- The opportunity is approaching 90 days in age and:
- You haven’t had meaningful or consistent exchanges with the contact.
- You haven’t received the signals or information you need to advance the opportunity stage.
- You’re no longer receiving responses from the contact despite following up.
The Velocity tab on the opportunity summarizes the health of an opportunity by displaying details such as stage duration, how many times the contact has been in touch, age, and the last activity date. These details will help you determine if the opportunity is at risk of being lost, or likely has been.
For example, this opportunity should be reviewed and likely closed:
- The opportunity is 132 days old.
- It has been stuck at the Qualify stage for 90 days.
- The close date is a date several months in the past.
- The primary contact has not been in touch at all.
- There hasn’t been any activity recorded.