Producers and sales managers generally track important sales metrics: appointments set, business won, close ratio. But sometimes forgotten are the opportunities that didn’t close. The cost of missed sales opportunities can be substantial, so it’s important to understand why opportunities are missed and how to fix those issues.
This blog will examine why sales opportunities are lost, the cost of missed sales opportunities, and strategies to close more of those sales.
What is a missed sales opportunity?
For the purposes of this blog, a missed sales opportunity could apply to any stage in the sales cycle, including:
- Not connecting with an interested prospect (for example, not answering a phone call or forgetting to return a call or email)
- Not staying in touch with prospects who aren’t ready to buy, but could close in the future
- Not closing a sale
How are sales opportunities missed?
When examining missed sales opportunities, it’s common to focus on active opportunities that didn’t close. However, there are so many other ways to “miss” a sales opportunity, starting before you even speak to a prospect.
Unanswered phone calls
When employers are shopping around, they call multiple agencies to learn more and get quotes. How many prospect calls to you get on a weekly or monthly basis? Now consider: does your phone get answered every time someone calls? While some prospects will leave a message, others will simply move on to another agency if no one answers their initial call.
Next, let’s consider the prospects who do leave a voicemail (or send an email or fill out your website form). These are employers interested in learning about your agency offerings. Do those inquiries get answered, in a timely way, 100% of the time? Every forgotten email or callback is a potential sales opportunity lost.
Let’s move ahead in the sales process to lead qualification. When an interested prospect calls, they should be sent to a producer, of course. But what about other leads you acquire, through purchasing lists, website downloads, events and other sources? There are two important points to consider here:
- If you send every lead straight to a producer (without qualifying them first), you’re wasting valuable time that producers could be dedicating to interested prospects.
- However, it’s essential that those leads are nurtured to determine which are qualified and ready to be passed to a producer. Every lead that slips through the cracks is potential business lost.
Opportunities that don’t close
Finally, think about the opportunities that go through the sales cycle, but don’t close. Are you consistently staying in touch with these prospects? With consistent outreach, some of those deals will eventually close (even if it’s months or years later). Failing to stay in front of those lost opportunities is another way to lose potential future business.
Soft costs of missed sales opportunities
Now that we’ve explored the many ways missed sales opportunities can occur, let’s move on to the cost of those missed opportunities. First we’ll examine the soft costs associated with missed sales opportunities.
If the prospect has a poor experience or impression of your agency, they may share that unsatisfactory experience with other employers, hurting your reputation. This could be as simple as a phone call or other inquiry that was never returned.
If a producer, particularly a less experience one, loses a few deals in a row, it can hurt their confidence. Having trouble closing can make a producer less and less effective, creating a snowball effect.
Lost benefits for the employer
Think about a missed opportunity from the employer’s point of view, particularly an interested prospect that slipped through the cracks. If your agency was truly the best fit for them in terms of services and solutions, the employer loses out as well.
Financial costs of missed sales opportunities
There are a few ways to measure the financial cost of missed opportunities, which we’ll examine below.
If you’re spending money on marketing, whether it’s direct mailers, print ads, social media ads or anything else, it’s important to get a return on that investment. When you’re advertising your agency, leads are likely to come in through inbound phone calls, emails or website inquiries. But if you aren’t answering every phone call or responding to every inquiry, you’re not only losing potential business, you’re wasting the marketing dollars used to attract those leads. This increases your customer acquisition cost, and can add up to significant money lost.
As mentioned earlier, when producers spend time selling to unqualified leads, they’re wasting valuable time that should be spent selling to interested prospects. If you don’t have a good system in place to nurture and qualify leads, you could be wasting your producers’ time and hurting their sales numbers.
Cost based on lifetime customer value
Another way to quantify the cost of missed sales opportunities is by examining the average lifetime value of a client. Numbers used below are samples—input your own numbers to calculate the costs for your agency.
Average annual revenue for a new client $3,000
Years an average client stays with your agency 5 years
This is the average lifetime value of a client $15,000
Now, think of how many opportunities your agency misses, based on all the scenarios discussed in this blog. Let’s be conservative and say there are 10 total missed opportunities. Based on the sample numbers above, that means you are losing $30,000 annually, and $150,000 in lifetime revenue, just by missing 10 sales opportunities that otherwise would have closed. That adds up to substantial dollars, especially when you consider that those lost opportunities could be as simple as someone not answering the phone or returning a call.
How to win more of those opportunities
There isn’t a magic bullet to winning more deals, but several basic strategies can help turn those lost opportunities into wins.
- Implement a mechanism to ensure the phone is always answered. For example, if the receptionist is away from their desk, redirect the call to someone else rather than sending to voicemail.
- Ensure you have a lead nurturing and qualifying system in place, so only quality leads are passed to your producers.
- Focus on mentoring your “middle of the pack” performers to improve their close ratio. A little targeted mentoring can make a big difference in performance.
- Be sure you have a strong onboarding and training program for producers. Even experienced producers can benefit from learning your specific services and processes, as well as improving specific sales skills through coaching.
Another important factor in winning more sales opportunities is setting goals for specific sales activities and measuring progress throughout the year. You may be interested in this Sales Goals Worksheet, which allows each producer to track goals and actual results for cold calls, appointments set, new business won and close ratio.