Deep analysis of revenue loss

Revenue, and the profits generated from it, are often used as the primary indicator to measure the success of a business. However, I suggest there is a better indicator to measure, which is “lost revenue.” You need to know what revenue was lost during the year and the specific reasons for losing those customers. Why do I say this? Because you usually make sales from only 20% of your potential customers and lose 80% of them. If you can figure out how to reduce this percentage, you will be able to boost and accelerate your sales by 20%. Increasing the conversion rate by 10 percentage points is equivalent to a 50% increase in revenue!! This article will help you determine how best to identify and measure the reasons for your loss of revenue, to help you reduce that amount.

Common causes of lost revenue

There are a wide range of reasons why revenue may be lost. It may relate to your company, including your product, pricing, and sales and marketing efforts. This may relate to the client company, including approval from management and the presence of approved budgets. It may also relate to the individuals involved in the transaction, including your sales person, the customer at the client's company, or any other intermediaries who may be involved. In addition, there may be reasons related to external factors, including competition and economic conditions.

Issues related to your company

Remember the four pillars of marketing you learned in business school – product, price, promotion and place? Each of these elements is key to whether a person will buy from you, or look for solutions elsewhere. So, you need to do a lot of research here. Ask your customers to tell you what they like and don't like about your product. Focus on the positive aspects in your marketing messages and try to correct the negative aspects.

Problems associated with the buyer's company

The biggest problems in a buyer's company are related to having management approval to proceed, with a pre-approved budget. No matter how much the lowest member of the crew wants to buy something, if their employers won't let them or if they don't have enough money to buy your product, they won't do it.

Issues related to the people involved

You may not get the sale because of the specific people involved. Maybe your sales person is not that good and needs training. Perhaps the customer has personality conflicts with the sales person and does not want to work with him. You should have a strong control over the “people issues” of the people involved in the deal and may try to sell to other people in the same target company who may be more open to achieving a deal with you.

Problems associated with external factors

You may not get the sale due to external factors that are not within your control. Maybe your big competitor has cut prices and you haven't been able to react quickly enough. Or perhaps the economy is weak and buyers are wary about making large purchases now.

What should be measured here?

Everything discussed above in this article should be measured. Are you tracking the success of your marketing campaigns, and A/B testing with different offers and creatives? Do you measure the success of different sales staff, share best practices, and reduce non-performing individuals? Do you follow your competitors' movements?

Concluding thoughts

I hope you now have a better understanding of how important it is to focus on the reasons behind the 80% of sales you lost, rather than celebrating the 20% of sales you won. If you focus on the 80% of lost revenue, you may be able to increase your win rate from 20% to 40% and double your sales in the process. Good luck!