Win-Loss Analysis: Revealing Key Insights for Growth

A win-loss analysis isn’t about rooting for your favorite sports team. But figuring out the optimal win-loss ratio for your sales department can put it on the path to victory, if you know how to run with the numbers. So how do you use this tool for improved performance? Understanding how to calculate the win-rate properly will set the stage for everything else.

What is win-loss analysis in sales?

A win-loss analysis compares the number of wins (or positive outcomes) to the number of losses (or negative outcomes).

For salespeople, a “win” is finalizing a sale. A “loss” happens when the deal falls through for one reason or another. It’s this huge range of possible reasons that makes a sales win-loss analysis a bit of a challenge. Few prospects will give you a thorough explanation of why they didn’t like your product or your pitch. Instead, digging for the truth is up to your local loss analysis hero. It’s their job to distribute surveys and feel out former prospects, whether they turned out to be a win or a loss.

But why would you want to revisit potentially painful memories? Well, in the words of every 12-step coach ever, you can’t solve your problems until you know what they are.

What are the benefits of win-loss?

It’s true that when you calculate a win-loss ratio, you’ll reveal faults with your sales process–but you’ll also discover much more. Both sales and marketing teams can use the analysis to back up a wide range of changes across the organization. Here are some examples:

If the win-loss report shows that your product offering isn’t compelling enough, you can dig deeper and find out which features aren’t attractive. On the other hand, research can reveal what your target customers are looking for, so that your dev department focuses on the right things. The same process might expose interesting information about your competitors and teach you more about which way the market is going in terms of product abilities.

A win-loss report will also show where in the sales cycle prospects lose interest. Analyzing the numbers to see where large numbers of potential buyers say “no” allows you to concentrate on fixes in that area.  So, if a large number of prospects prove to be irrelevant after the first contact, your sales prospecting methods might need fine-tuning.

On the other hand, examining your wins also pays off. If certain members of the team are consistently closing deals, you should look into what they’re doing right and pass on those insights to the rest of the team.

Making these moves to sharpen your sales strategy should boost productivity, and that makes any sales team happy. You’ll be able to spend less time to make more revenue, which requires less expenditure and raises overall profit rates.

Who should do your win-loss analysis?

Putting together a win-loss analysis is a bit complicated. Thankfully, it’s not something you need to do every day. But it is important to do it right, if you want to get the benefits.

This is why many companies turn to third parties for the grunt work. There are a lot of specialist firms that will work with you during the process, and they have their advantages:

• Prospects that rejected your offering will be more honest when discussing the faults in your approach.
• Service providers don’t need to protect anybody in your organization or sugarcoat the report they produce, so you’ll get revealing answers.
• Third parties in this field have developed expertise and best practices that will make an analysis faster and more accurate, while you can save your resources for activities that are directly part of sales.

However, if you still want to DIY a win-loss analysis, then you will need to take charge of the surveying/interviewing portion of the process (see below).

What is a good win-loss ratio?

If you look it up, you will see figures almost as high as 50:50 as an average for sales teams, while other stats cite 1:5 as a good rate.

But these numbers can be confusing. Let’s say that you’re a B2B company and you count a sale as a company that signs up for a month. Winning! But if they don’t sign up for a second month, it’s not honest – or helpful – to really consider that a closed deal.

So the best measure is relative to other sales people on the team and how current rates compare to historical figures. Lots of companies are knee-deep in crisis mode right now, so it’s also important to consider macroeconomic factors.

Bottom line – even if your team is just breaking even in terms of revenue-expense, but closing rates are improving, then you are doing something right. You can also consult with win-loss service providers to get their take.

How to conduct a win-loss analysis

Even if you go for the third-party option, you’ll still need to roll up your sleeves. As we mentioned, a win-loss analysis is not the simplest task on the to-do list. (Plus, if you’re already putting in the effort, you might as well get as much information out of it as possible.) But exactly what information is up to you.

Here are the basic steps to follow when setting up a win-loss analysis:

Gather data in advance

At a minimum, each sales rep should keep notes on their progress with every prospect. These details should include what happens at the different stages of the sales pipeline. The analyst will also need access to relevant communications, marketing data, and the reasons why a particular company was targeted.

Define and calculate win-loss rate

What is considered a win in your company? Is it when the prospect signs a contract or makes a first payment? And what is a loss? Some prospects take a lot of time to decide (especially in B2B), so what is counted as a loss this quarter might be a win the next.

Speaking of which, it’s also important to set the time period for the analysis. One way to do this is by looking at the average sales cycle length. For example, if it takes two months to close the average deal, then use two month’s worth of data to calculate the win-loss rate, which is:

Number of wins / Number of losses

The same guidelines should be set for the win rate, which can be useful over time to measure your progress:

Number of wins / (Number of wins + number of losses)

Note: if you have a short sales cycle, let’s say a week, then you can look at the rates during the quarter or half year.

The most important thing here is to be consistent. For example, if a prospect is considered a loss two months after the final contact, use that standard for every calculation.

Create a questionnaire  

The next step of the analysis is to build a list of questions for ex-prospects. Keep it short and to the point, but look for critical information about why the customer chose you (or why they didn’t). Key areas of interest include price, competitive offerings, timing, value proposition, and features. If you are also running interviews, select a few talking points along the same lines.

Analyze the results 

A good win-loss analysis will give you information about the strengths and weaknesses of your sales process and product offerings. You will get a sense of where you are going wrong according to the issues in the questionnaire and stage of the sales cycle. Then, once you make adjustments based on these insights, you should see your win-loss ratio improve the next time around.

Key Takeaways

• A win-loss analysis in sales compares the number of closed sales to the number of failed sales efforts.
• Win-loss analysis helps to refine your sales strategies, but can also be useful for product design, developing best practices, and increasing profit.
• To conduct a win-loss analysis, you should always: collect relevant data; use consistent definitions of “win” and “loss”; and come up with high-impact questions for interviewees.