Winning and losing look the same on the forecast
Every sales team loses deals. The costly part is not the loss; it is not knowing why. A sales manager can usually report how many quotes went out and how many were won. Ask why the others were not won, and the answers turn into impressions: "price, mostly", "they went with someone they knew", "the timing was bad". These may all be partly true. They are also unverified, and decisions made on them are guesses.
This article is about the commercial cost of an unmanaged sales process: one where deals disappear without a recorded reason, so the business cannot tell whether it has a pricing problem, a product problem, a response-time problem or simply an unlucky quarter. It is related to the problem of dead deals staying open in the CRM and distorting the forecast, but concerns what happens once a deal is closed as lost: whether anything is learned.
What an unmanaged sales process looks like
- Opportunities are tracked in personal spreadsheets or email folders, as described in salespeople's personal spreadsheets and customer records.
- A deal that goes quiet is simply never mentioned again; nobody closes it or records an outcome.
- When a reason is recorded, it is a free-text note or a single default such as "price", chosen because it is quickest.
- Stages mean different things to different people, so a deal at "proposal" in one salesperson's list is a verbal conversation in another's.
- Wins are celebrated and analysed; losses are not discussed.
- Competitors, deal size, source and sales cycle length are not recorded, so patterns cannot be seen.
The cost of guessing
Discounting you did not need to give
If the assumption is that deals are lost on price, the likely response is to cut prices across the board. If the real reason in many cases is slow follow-up or a missing feature, that discount lowers margin on every sale while fixing nothing. The pattern behind slow response is covered in slow sales lead response and its revenue cost.
Effort on the wrong prospects
Without loss data, salespeople spend time on leads that rarely convert, such as the wrong size of customer or the wrong industry. Time on those deals is a real cost, and the cost grows as the team grows.
Forecasts that cannot be trusted
A forecast built from open deals that include stalled and dead ones overstates the likely revenue. Cash planning, hiring and stock decisions follow the forecast. If it is regularly wrong, the business plans against income that does not arrive.
Problems that repeat
If five prospects each say that your onboarding takes too long, and nobody records it, the issue stays unaddressed. Every unrecorded loss is a data point lost for good.
Knowledge that leaves with the salesperson
If lost-deal knowledge sits in someone's memory, it leaves when they do, which is the situation described in customer relationships kept in a salesperson's inbox.
What good practice looks like
Sales software vendors build this into their products, which is a useful guide to what is considered ordinary practice. Salesforce's documentation describes opportunity stages that track an opportunity through the sales process, with the aim of recording where each deal stands. Microsoft's Dynamics 365 Sales documentation likewise covers forecasts and opportunity management. You do not need either product. The idea they share is that a deal moves through defined stages and ends in a recorded outcome, so that outcomes can be counted.
The same principle works in a spreadsheet. Three disciplines matter more than the tool:
- Defined stages with exit criteria. What must be true for a deal to move from enquiry to quote to negotiation? Clear definitions are the focus of designing CRM stages that match what your team actually does.
- A required outcome on closure. A deal cannot be marked lost without choosing a reason from a short list: price, timing, competitor, no decision, product gap, service concern, or lost contact.
- A second look. Because salespeople may choose the most comfortable reason, a manager reviews a sample of lost deals, and where possible someone phones the prospect.
An illustrative cost model
The figures below are illustrative assumptions for a hypothetical Durban commercial cleaning company with a five-person sales team. They are not benchmarks.
| Assumption | Value |
|---|---|
| Quotes issued in a year | 240 |
| Win rate | 25 percent, so 60 won and 180 lost |
| Average first-year contract value | R90,000 |
| Lost deals with no recorded reason | 150 of 180 |
| Deals lost to slow quote turnaround, if the team measured it | assume 20 of the 180 |
| Across-the-board discount introduced on the guess that price was the issue | 4 percent on the 60 won deals |
If a quicker quote turnaround could recover even half of those 20 deals, ten wins at R90,000 would add R900,000 in first-year revenue. The blanket discount costs 4 percent of R5.4 million, or R216,000, in margin, on deals that were already won. The numbers are invented for illustration; the shape is the lesson. The unmeasured problem is worth more than the guessed one, and the guessed fix is not free.
Starting without a new system
The first month does not need software. Take the last 30 lost deals and reconstruct the reason for each. Ask the salesperson, check the email trail, and where the relationship allows, ask the prospect directly. Record the reason, the competitor, the deal size and how long the deal was open. Count the results. Even a rough tally often shows one or two reasons that account for most of the losses.
After that, build the habit into the existing workflow. If a CRM is already in use, add a required field for the closed reason. If it is not, a shared sheet will do. The link between stage design and trust in the data is discussed in why teams stop trusting the CRM.
Practical next actions
- Pull the last 30 to 50 lost or stalled deals and reconstruct a reason for each, noting how confident you are in each answer.
- Agree a short list of loss reasons and make one mandatory before any deal can be closed as lost.
- Define each sales stage in a sentence, including what evidence moves a deal forward, and close deals that have been silent for a set number of days.
- Record the competitor, deal size, lead source and days open for every deal from now on.
- Hold a monthly loss review of 30 minutes in which the manager reads out the counts and the team discusses one pattern.
- Test any pricing change against the loss data before applying it broadly.
Sources and further reading
- https://help.salesforce.com/s/articleView?id=sales.sales_core_opportunity_stages.htm
- Dynamics 365 Sales documentation
Related Mellorca reading
- Leads Nobody Has Touched: The Revenue Cost of Invisible Follow-Up Failure
- An Inbox Is Not a Sales Process: The Revenue Cost of Emailed Website Enquiries
- Retyping Website Enquiries Into the CRM: The Cost of Slow, Error-Prone Lead Capture