Learning from Lost Opportunities, or Using Information from "Lost" Accounts to Develop New Business

(Originally published in the September 1997 issue of AFSMI's The Professional Journal)

By William K. Pollock

When a services organization experiences a decline in contract revenues, there are many ways in which it can assess the damage, identify the causes, and begin to correct the problem. Some organizations may attempt to do so entirely by using their in-house resources such as corporate "think tanks" and strategic planning teams, while others may utilize the services of outside consultants and business development strategists. However, it can be argued that there is no better source of data for identifying what the root cause of the problem really is than going directly to the organization's own customers, prospects and "lost" opportunities and asking them specific, direct and targeted questions.

Legend has it that bank robber Willie Sutton was once asked why he robbed banks, to which he replied, "Because that's where the money is!" The same logic also applies to the question, "Where can we go to get the most direct information on why we are losing customers and prospects to the competition?" The answer, of course, is to go directly to your "lost" customers and prospects, "Because that's where the information is!"

No matter how non-, or a-, political your organization may be, during times of revenue downturns, declining sales, or other related financial difficulties, it sometimes becomes too easy for otherwise harmonious coworkers to begin to point the finger at one another. In these times, sales and marketing managers may feel pressure to blame each other for "falling down on the job"; and corporate management may feel that the company's sales force is not "hustling" enough, while field sales may think there is too little management support and guidance to lead the way. Further, company insiders may believe that the downturn is more market-oriented, while market analysts believe that the underlying reasons for the decline are internally-based.

Whatever the reason(s) for a revenue downturn, and regardless of who believes what caused it, it is clear that the organization will need to quickly:

  • Identify the underlying reason(s) for the decline in contract sales and revenues;
  • Design, develop and implement corrective/preemptive actions, both internally and externally, to stem the tide of declining sales/revenues;
  • Create internal mechanisms to ensure that the root cause(s) of the problem remains closely monitored and under control; and
  • If applicable, develop the necessary marketing "spin" and "damage control" activities to minimize further sales/revenue erosion.
To this end, company management will need to focus on the design, execution and management of a well-orchestrated plan to determine:
  • To what extent a problem truly exists that is negatively impacting the organization's ability to maintain its historical levels of contract sales and revenues, and
  • How to address the problem with respect to increasing sales/revenues to historical levels through a combination of internal (i.e., organizational, sales, marketing and promotional, etc.) and external (i.e., market perceptions, public relations, etc.) activities.
While the concept of measuring existing customer satisfaction is one that is now universally accepted and widely practiced, the surveying of "closed" and "lost" accounts is not generally practiced nearly as much. However, there can be no more direct source of information for why a company is losing business than going directly to those customers and prospects that are presently, or have recently been, in the process of evaluating your company' products and services, along with those of other vendors.

For the purposes of research, this universe of "new", "pending" and "lost" accounts can be divided into the following four groups (Figure 1):

  1. New prospects (currently evaluating your company's products and services for the first time)
  2. Current customers (evaluating repeat or add-on business with your company)
  3. "Lost" customers (i.e., customers who have recently switched to other vendors)
  4. "Lost" account opportunities (i.e., prospects recently "lost" to other vendors)
In all cases, it is highly recommended that both current customers as well as recent "lost" customers and prospects be interviewed to obtain the desired responses directly from the key players. As such, any current customers due for renewal within the next three-month period would qualify for the survey, as well as all "lost" accounts/opportunities within the previous three months. Beyond three months, the reasons for "leaving" the company and/or choosing another vendor may be significantly "dampened" in the minds of the respondents, and may no longer be counted on to provide totally accurate information.

In most cases, interviews within each of these groups should be carried out on an "open" (i.e., where your company would be identified as the survey sponsor) rather than "closed" (i.e., where it would not be identified) basis. In any case, these interviews should be conducted only by specially trained qualitative interviewers, and not by in-house or outsourced low-level interviewers or telemarketers.

The preferred method of approach for carrying out this type of study can be accomplished through the use of a qualified outside consultant in terms of the following tasks. First, a series of qualitative, one-on-one interviews should be conducted with key organization management and staff to identify and define the internal "mindset" that has been built on a base of individual perceptions. This task is a critical component of any study where the following factors may apply:

  • Where multiple internal organizational areas are involved (i.e., corporate management, sales and marketing management; field sales; customer service, service operations, etc.);
  • Where the issues being addressed are particularly sensitive (i.e., "fingerpointing" exists between proponents of differing "root cause" theories, etc.); or
  • Where the root cause of the problem resides entirely within the organization itself (i.e., as a result of an inequitable sales commission plan, resulting from changes in the organization's internal policies, processes, etc.).
The information collected from the respondent interviews should be both quantitative and qualitative in nature, and the final research results should be analyzed and evaluated in both tabular and narrative form. All findings should be reported both on the basis of the aggregate data as well as by each of the four key customer/prospect segments, as identified, in order to develop specific patterns of responses.

The final analysis of the collected data can then be used to develop specific patterns of findings, strategic implications and recommendations for both corrective and preemptive actions as they relate to the identified problem. These would include:

  • The assessment, analysis and evaluation of all responses to the interview questions, and the comparison of those findings to the evaluation of the current internal company mindset,
  • The identification and comparison of patterns reflected by the individual account groups as revealed from the interview data;
  • Specific study findings and strategic implications for company management based on the patterns of data reflecting both the aggregate, and individual account segments; and
  • The identification, assessment and prioritization of key factors, characteristics, attributes and perceptions that would serve to identify and validate the root cause(s) of the current problem.
The final executive report and briefing should focus on the key findings of the overall study, the strategic implications resulting from the analysis of these findings, and the development of a set of strategic recommendations for implementing the appropriate corrective/preemptive actions to address and resolve the problem.

Why even bother with a survey of these special types of accounts? Because these are the accounts that are most deeply involved at the present time in the stages of evaluating your company, and its products and services, with respect to future purchases; or they have recently done so, and for whatever reason, have decided to switch to other vendors. Their perceptions, for the most part, are current and well thought out, and if they are planning to switch to another vendor, they will be more than likely to tell you - if you ask them when it is still fresh in their minds.

Why ask them now? Because a decline in contract sales and revenues cannot be allowed to continue and, accordingly, a plan for correcting the problem must be found quickly; before additional accounts are lost, before additional "fingerpointing" takes place, and before any further market erosion occurs. Surveying current customers and prospects may be risky business; but without them, there is no business.


William K. Pollock is President of Strategies For GrowthSM, a Westtown, Pennsylvania USA-based consulting firm specializing in business planning, customer service and customer satisfaction research. He may be reached at 610-399-9717 or via e-mail at wkp@s4growth.com.


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