Why You’re Losing Quotes: 3 Ways to Convert More Quotes into Sales
Do you know why your business is losing quotes? Losing quotes can be frustrating and detrimental to your business growth. Understanding the reasons behind lost quotes is crucial for improving your conversion rates and staying competitive. This blog post explores the common factors contributing to lost quotes and offers actionable strategies to help you win more business.
IN THIS ARTICLE
→ The 3 reasons why you're losing quotes
→ What to do if you're losing quotes on price
→ How to stand out from your competitors to win more work
→ Improving lead times to avoid losing quotes
→ 5 tips for collecting feedback on lost quotes
→ Key terms: Conversion rate, differentiation, lead time
→ Final takeaway
Understanding Why Your Business Loses Quotes
Losing a quote is never a pleasant experience, but it happens to all businesses. Many focus on the volume of quotes – whether it’s the number or their dollar value – and track their conversion rates. However, few delve deeper into the reasons behind lost quotes.
In today’s competitive market, understanding why quotes are lost is crucial. By identifying and analysing these reasons, you can refine your strategies, optimise your offerings, and improve your competitive edge.
The key question is: Do you break down the reasons why a quote is lost?
Let’s dive into the three main factors affecting quote outcomes.
3 Reasons Why You’re Losing Quotes
To make this analysis practical, let’s simplify the reasons behind why your business could be losing quotes into three broad categories:
- Price
- Differentiation
- Lead times.
Encourage your sales team to gather this information whenever possible. It might not be practical for every quote, but aim to collect data for as many as you can.
Price: More than just a number
Price is the obvious factor that comes to mind when considering why a quote was lost. If your business quotes $10 and a competitor quotes $9, it’s easy to assume the lower price will win. But before lowering prices, there are three factors to consider:
- Your conversion rate
- Your gross profit margin
- Your breakeven.
The reason why these come into play is because a business might be losing quotes on price, but still run a profitable operation.
For example, you might have a robust business model where you lose eight of 10 quotes but because you charge a premium price, it still converts to excellent financial outcomes. In other words, you could have a low quote conversion rate where price is not an influential factor.
Conversely, if you’re only winning business due to lower prices, this could negatively impact your gross profit. Ideally, businesses should avoid winning quotes based on price alone.
What to do if you’re losing quotes on price
If your business is losing quotes based on price, here’s what to do:
- Evaluate your conversion rates, gross profit margins, and breakeven points.
- Understand that charging a premium price can still result in positive financial outcomes if your business offers exceptional value.
- Avoid competing solely on price, as this can negatively impact your gross profit and overall business health.
Differentiation: Standing out in the crowd
Next is differentiation, or how your business stands out from the competition.
Were you able to stand out from competitors when quoting? Or were you such a unique option that there was no real competition?
Understanding why a quote was lost or won based on what makes your business different helps sharpen your unique selling points and boosts your competitive edge.
How to stand out from your competitors to win more work
If you’re losing quotes due to lack of differentiation, consider the following:
- What are your unique selling points? Are you clearly communicating these to potential clients?
- Can your product or service be made more engaging?
- Can better outcomes for clients be delivered, adding more value?
In other words, identifying and communicating your point of difference helps you stand out from the competition and win more quotes.
Lead times: Speed matters
Finally, lead times – or the time it takes to deliver your product or service – can significantly impact your quote success. If you can deliver faster than your competitors, you have a competitive edge.
If your business is losing quotes, is it because you couldn’t meet the timeframe that was needed or reasonably expected by the client?
How to improve lead times to avoid losing quotes
Overcoming inadequate lead times often requires greater investment in stock or work in progress. But the additional sales generated can offset these costs, not to mention increase customer satisfaction.
To improve lead times:
- Invest more capital in stock or work in progress to ensure quicker delivery.
- Manage inventory effectively to reduce delays.
- You might also need to invest more in people.
In short, faster lead times require more working capital but results in increased sales volume (and happier customers).
Lost Quotes: Gathering & Distributing Feedback
For deeper insights on why you’re losing quotes, it’s essential to establish a robust system for collecting feedback. It may not be practical for every quote, but aim to collect as much data as possible. Here are several ways to go about it.
Tips for collecting feedback
- Create a standardised feedback form. Develop a concise and easy-to-complete feedback form that asks clients about specific reasons for declining the quote. Include options such as price, differentiation, lead times, and any other relevant factors.
- Automate feedback requests. Set up automated emails or surveys to be sent to clients who did not accept your quotes. These can be triggered immediately after a quote is declined, ensuring timely and relevant feedback.
- Engage with clients personally. For high-value quotes, consider making personal follow-up calls. This can yield more detailed and nuanced feedback, helping you uncover deeper insights.
- Incentivise feedback. Offer small incentives, such as discounts on future services or entries into a prize draw, to encourage clients to share.
Distributing the data
Once you've collected feedback, the next step is to share this information with the relevant people so it can be effectively utilised in your business.
- Delegate your sales manager to create a report that summarises the feedback data and distribute it to all relevant teams, such as sales, marketing, and product development.
- Hold regular meetings with your sales team to discuss the feedback. Use these meetings to brainstorm solutions and strategies to address the identified issues.
- Organise training sessions for your sales team based on the feedback received. Focus on areas such as improving sales pitches, addressing common client objections, and enhancing product knowledge.
Key Terms
- Quotes: Proposals or estimates given to potential clients for the cost of goods or services.
- Conversion rates: The percentage of quotes that are accepted by clients and turned into actual sales.
- Differentiation: The process of distinguishing a product or service from others to make it more attractive to a target market.
- Lead times: The amount of time it takes to deliver a product or service from the moment it is ordered.
Final Takeaway
Understanding why your business loses quotes — whether due to price, differentiation, or lead times — provides valuable insights that can sharpen your competitive edge.
To reduce lost quotes, focus on optimising conversion rates with attention to gross profit and breakeven points, clearly define your unique selling points, and ensure lead times meet client expectations.
By refining your pricing strategy, enhancing differentiation and improving lead times, your business can make strategic adjustments that lead to greater success.
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