What is Win-Loss Analysis (Template Included)
February 23, 2022 Edwin Kooistra
Win-loss analysis is a method of finding out why exactly did a prospect buy your product, and in case the purchase was not made, then what was the reason behind it.
It is an essential tool, especially when it comes to sales and product development, because through this, you know what you should be doing and what you should not be doing when it comes to customers and sales.
In addition, research has proven that companies that conduct win-loss analysis as part of their regular sales strategy have a higher customer retention ratio, higher sales, and increased revenue growth annually.
But despite all these ideal advantages that can prove pivotal in defining your business’ direction, as of 2021, only 44% of companies operating in the tech sector use win-loss analysis.
What Is Win/Loss Analysis & Why Does It Matter for Tech Products?
Win-Loss Analysis is a market research exercise that uses a very analytical and methodological approach to bifurcate lead generation and sales data to extract tangible insights that can help a business in an impactful way.
The win-loss analysis focuses on how your target customer makes a purchase and where they position you in relevance to the competition in the industry.
The process for win-loss analysis revolves around taking feedback from customers leads and even conducting telephonic interviews. Some businesses also send out paper-based questionnaires to their leads and customers for their input on why they became a customer or did not make a purchase.
All this activity is conducted to get access to actionable information that helps improve the organization’s processes and cater to certain weaknesses in the system. This feedback is also incorporated in the product development process and the training of the sales team.
Win-Loss analysis and its application and induction within any organization, especially startups, have taken importance in the current scenario of the industry-wide competition.
Win-loss analysis is of great importance for tech-based companies that are operating in the realm of tech products or services. The reason for this is particularly attributed to the fast nature of the industry where competition is increasing day by day and the products themselves are evolving with innovations, at times overnight.
Without win-loss analysis, you as a tech business owner or startup will not be able to keep pace with your customers’ needs and feedback. And without this feedback and input, product improvements and even innovations at times are not possible.
Therefore, you would always need to be on top of your game, especially in the tech service industry, where customer relationship management is of key importance, and win-loss analysis has proven to reveal insightful information for the improvement of the process.
How to Calculate Win Rate & Win/Loss Ratio (Win-Loss Ratio Formula)?
Now that we have developed an understanding of what win-loss analysis is and what it’s important, especially for tech products, let us look at how we can calculate win rate and win/loss ratio.
When talking about win rate, we mean the efficiency by which your salesforce can convert possible leads into customers. It can be calculated by dividing the total number of opportunities that they have converted into final sales by the total number of leads or possible sales opportunities that were generated in the first place.
The win rate is very subjective in a way that it can be calculated depending on the product line, a certain buyer segment, or even the industry that you’re operating in. Below is the formula for calculating the win rate.
Win Rate = Won Opportunities/Total Opportunities
Now coming to Win/Loss Ratio. Win/Loss ratio refers to the ratio of total won opportunities in relevance to total opportunities that were lost.
You would be dividing the number of closed deals or won customers by the number of deals that you weren’t able to close or customers lost. The formula for this is as follows.
Win/Loss Ratio = No. of Won Opportunities/No. of Lost Opportunities
Win-Loss Analysis Template
We will now present to you a sample template that you can use to conduct win-loss analysis for your tech-based business or startup. This template has been developed keeping in view the best industry practices that are being followed in this sphere of data and market analysis.
- Setting Your Target
- Data Collection
- Analyzing The Data
- Act Now
1- Setting Your Target
Just like with any other analysis that you take in a business setting, before starting a win-loss analysis, you should set a goal. You should know what you want to achieve by the end of this analysis and how you would want to analyze different data segments to derive relevant results.
Not only that, you need to set down what exactly do you want to achieve by incorporating the insights that you will receive via this analysis.
2- Data Collection
The first and foremost step that you’ll have to do is collect relevant data that you will analyze. Ideally, you need to know about all the lost and won opportunities as well as the individuals who were heading the initiatives for those opportunities.
But most importantly, you also need to know the customers who were involved in the closed deals and lost ones.
During this stage, you need to ask yourself that apart from the imperative information or data that is needed to conduct a win-loss analysis, what other type of information you must have on hand (even the form of raw data) can help you reach conclusions and improve your processes.
This data reflects how well aligned your sales representatives are. And whether they do know that every information gathered from the market is important. If yes, then they would be putting sales insights into a CRM software or even just jotting them down on a notepad.
Just going through that notepad for each one of your sales reps, you will be able to get insights about your customer’s pain points, competitor positioning, demographics and psychographics of your customers, etc.
But analyzing the sales data is a very critical task, that requires an understanding of the process, industry knowledge, and numbers comprehensively. On the other hand, sales strategy consultants have access to market intelligence data, industry knowledge and are experts in assessing the business objectives.
The stage should be carefully executed as it can make or break the whole process.
Lead and Customer Feedback/Interviews
We must understand that sales rep data fed to the CRM software does give such direct information. But connecting directly with possible leads and customers is the ultimate source of authentic and actionable data.
At this stage, you would also be reaching out to the leads that were generated and your customers, to not only get their feedback but also sort of analyze how they perceive you and your product or service, in the whole competitive landscape.
Here you would also want to structure interview questions that you want to be the same across the board for homogeneity purposes. You would want to ask these questions directly from your customers and prospects, either on the telephone or in in-person interviews. You can also mail these questionnaires to your customers.
Firm Relevant Data
Now, this is where your CRM solution or software comes into play. As a business owner especially in the tech industry when conducting win-loss analysis, CRM software is a lifesaver. With the use of this CRM software, you would be able to understand where you come into play when it comes to your competitors, the industry dynamics, the market share, etc.
When developing a win-loss analysis, is critical to determine the link between your content market strategies, advertising, and promotion initiatives and how effective they were.
Using the data that you collect from your marketing insights, you would be able to develop a link between customer segments, the way they were targeted, and the results. This would help you in identifying the most effective initiatives for wins and recognize certain initiatives that can be improved.
3- Analyzing The Data
Now that you have collected your sales data, have looked through different nodes in CRM software that is available to you, have gathered information regarding your competitors and the industry, it is now time to make use of this data.
With this data, you will now conduct a thorough analysis that will help you in extracting tangible and factual items. These derivations will point towards the reason behind your wins as well as your losses.
Reasons for Lost Sales
First and foremost, you would like to reflect on the reasons for lost sales. Look through what your customers said regarding why they did not choose you over your competitors.
Also, try to read between the lines and understand the psyche-based reasons as to why a certain customer went on to purchase from a competitor and not from you.
Reasons for Won Sales
Learning the reasons for lost sales is important, but, in the tech industry learning the reasons as to why you were able to secure certain sales or deals is also very important.
Because these reasons will help you determine your competitive edge, which you can further work on to make into your competitive advantage. Try to understand and look within the data, away from the obvious reasons as to why you were chosen and not your competitor.
Win Rate and Win/Loss Ratio
And now the obvious, you’ll have to calculate the win rate and win-loss ratio of the data that you have collected through different sources. Do not limit this ratio to numerical analysis or just the number of sales won and lost sales.
Calculate these ratios from different lenses, such as win rate versus the competitors, win-loss ratio for different segments you were targeting, etc. This practice will help you gain critical insight regarding your segments and their profitability. This will also reveal how well your customers are responding to your product in relevance to competitors in multiple streams.
4- Act Now
The last and final step of a win-loss analysis template is how you use the critical insights to improve your processes. At the previous stage, you will incorporate improvements based on the insights and educate your sales reps and team members based on those insights.
It would be best if you did not focus on a short-term goal where you would want to increase your sales and wins. Rather you should focus on reducing your losses as well and developing a customer relationship that will be beneficial for you in the long run.
How to Utilize the Results of Win / Loss Research
Now that we know from the template described how to conduct a win-loss analysis or research, let us now reflect on how we can use the results of this analysis for our tech business.
From what might be seemingly obvious that you can use these results to improve different tactics of your sales team, we would want to reflect on the different avenues within the organization where these results can be utilized.
Starting from top to bottom, leaders within the organization can benefit from this research by understanding how well their sales and marketing alignment is in continuance with product development and how it can be improved further.
Not only that, learning within teams and cross-functional learning can also be promulgated based on the results of this analysis. This will help in promoting learning across the organization, ensuring better alignment between functions, not only limited to those with the core responsibility when it comes to sales and customer retention.
Frequently Asked Questions
Who Is Responsible for Win Loss Analysis?
Unlike common perception, a singular department like sales or marketing is not responsible for win-loss analysis.
Modern research suggests that win-loss analysis should be conducted on all levels starting from the leaders, right down to individual contributors, as well as across organizational functions. All relevant stakeholders should be involved in the process, whether sales, product development, finance, or marketing.
How Do You Read a Win-Loss Record?
A win-loss record can be read in different ways. It can be viewed as a direct ratio between your wins and losses. It can also be analyzed as a total percentage of losses or wins against available opportunities.
Conducting of win-loss analysis is not an additional task instead, keeping in mind the dynamics of the industry and business, it should become an operational KPI. Here we aim to explain not only the importance of a win-loss analysis, especially in the tech sector but its usefulness as well.
We recommend that you use this simple yet effective tool, especially in relevance to the template presented, to help you in improving your internal processes and achieving sustained growth.