New orders and lost order analysis

New customers are won and the glow of success permeates the sales department. Sights are set to add even more names to a customer list that continually grows in length mainly because nobody bothers to prune it of inactive accounts.

By implication, therefore, at the other end of the scale accounts are being lost and these are greeted with the disdain that they deserve. Shoulders are shrugged and salesmen mutter that they can't please (read "fool") everyone all of the time and anyway why worry about them when so many new accounts are being opened.

So, accounts are won and accounts are lost almost daily and nobody really knows why. Nobody stops to ask two basic questions:

      "What makes us successful in winning new business"

and

      "Why are we losing customers?"

If a marketer has never really questioned these aspects there is a whole book that could be written of what he does not really know about his market. It would appear a little unusual to carry out a marketing research study of why a company is being successful. Because of this we have only ever been involved in one study where a Furniture Contractor carried out a study among his clients to find out why he was so successful.

That it would appear wasteful of time and money to research a market in which you are gaining market share is almost understandable. Do you go to your Doctor when you are feeling well? "Doc, I am feeling so great that it's got me worried. Why? What am I doing right? Tell me, Doc. I got to know!" And yet isn't it true that if you don't really know what makes you feel so good you are not going to be able to adjust your lifestyle when things start turning sour. And, unfortunately, even good company health does not last forever.

The markt research study of the Furniture Contractor produced interesting insight into why exactly the company was gaining market share in the face of strong competition. Marketing strategy could, therefore, be directed at those factors that customers were obviously impressed with and certain weaknesses could be rectified so that the contractor made his position even more secure.

Turning to the other end of the customer list where accounts are being shed – market research surveys of competitive firms indicate clearly that many successful smaller companies are run by ex-employees of market leaders. In fact, most competition often comes from ex-employees of successful companies who are able to pick holes in their ex-employer's strategies and so, successfully erode the leader's market.

Of more obvious importance is to establish why orders are being lost. Scant attention is usually paid to this and the information that is sometimes obtained on this aspect is sparse and full of gaps. Many questions that would indicate weaknesses in one's own company are never raised. However, companies that have taken decisive steps to research this aspect of their business have been able to produce invaluable information that has been used to modify and strengthen their marketing strategies.

There is only one way to research lost orders or lost customers and that is to compile an appropriate market research questionnaire for interviewing the wayward customer. Interviewing can be carried out by own staff, however, with appropriate control to ensure accuracy and objectivity or by a marketing research company.

The questionnaire needs to be as detailed as possible in order to capture all the relevant information. An all encompassing question such as "Why was the order Lost?" is too broad and leaves far too much to the initiative of the salesman who has lost the order. We have seen questionnaires of this type where half truths and blatant lies are fed into it. And the funny thing is that the company's marketing chiefs do not believe the information they are being fed.

Therefore, in order to obtain as clear a picture as possible of what went wrong each time a customer or an order is lost a questionnaire bearing around 20 questions is needed.

The market research questionnaire must be signed by the interviewer as a true reflection of the circumstances and it is still advisable, as in standard marketing research practise, that a third party carry out a random quality control check of completed questionnaires to check on the interviewer's work.

The obvious advantage of using an external market research company to gather the information is to neutralise the sensitive area of dissatisfaction or animosity between the customer and the supplier, so that the interview can be carried out objectively.

Lost order analysis should be carried out continuously and reported on monthly or as frequently as proves useful. Breakdown of information by large, medium and small accounts, by area and by product group can give a useful insight into where and why things are going wrong and whether any specific division is losing more customers than others.

Finally, the very fact that sales staff are aware that independent monitoring of their lost orders and customers is taking place will make them more alert to servicing of customers and satisfying their  real needs.

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