Lost sales happen. We know it sucks but it’s all part of running a business. Fortunately, there are strategies that businesses can use to reduce instances of lost sales. Sometimes, all it takes is a little perspective and the motivation to pick yourself back up! In this article, we will talk about why you should pay attention to lost sales and provide you with some tips on how to prevent it. Let’s dive right in!
But first, what is a lost sale?
A lost sale is simply a missed sales opportunity due to instances of stockouts, lack of product information, and poor customer service. It may be referred to as lost income due to orders that could not be fulfilled for whatever reason. Now that we got that out of the way, let’s talk about the importance of acknowledging lost sales.
Why should you pay attention to lost sales?
One way to look at lost sales is that it allows you to better understand your customers and the overall efficiency of your operations. After all, failing presents us with a unique opportunity to learn and grow. Here are some reasons why you need to pay attention to lost sales:
- A lost sale allows you to step back and reevaluate your sales approach. Are you paying attention to your internal procedures? Are you training your staff to provide great customer service? Are your products reasonably priced? If you don’t pay attention to the key processes within your business, it would be much more difficult to come up with a sales process that works.
- A lost sale says a lot about your marketing and promotions. Or lack thereof! Losing a sale is not only a sales problem, it can also be seen as a marketing problem. One significant aspect of sales that businesses need to pay attention to is the alignment of sales and marketing operations. Knowing who your ideal customers are and how to properly target them enables you to craft valuable marketing promotions instead of just offering them a one-size-fits-all approach.
- A lost sale means you’re doing something wrong. Whether it’s not listening well enough to the needs of your customer or not having an idea about who your buyers are, a lost sale means you’re doing something wrong. The best course of action to take is to look at your internal processes and determine areas that need improvement.
What are the most common reasons that contribute to lost sales?
Fundamentally, paying attention to lost sales means you want your business to improve. As a business owner, it’s important to recognize that sales play a pivotal role in the success of your endeavors. Sluggish sales growth can force companies to apply cost-cutting measures or, in the worst-case scenario, file for bankruptcy. To avoid that, you must know the most common reasons that contribute to lost sales.
- Not Differentiating Your Product
- Just what exactly sets your product apart? Now that more and more people are paying attention to the products that they are consuming, proper product differentiation makes you stand out in a crowded market while also establishing brand loyalty. To successfully set your brand and your product apart from your competition, make sure to promote the value that you offer by highlighting a problem that your product solves.
- No Concrete Knowledge of Your Ideal Customers
- Who are your ideal customers? By knowing who your ideal customers are, you will be able to gauge how you could provide value by solving a problem that they have. In addition, understanding your customers would give you an idea about improvements you can make to be able to meet customer expectations.
- Lack of Customer Engagement
- Are you building and nurturing a relationship with your customers? After researching who your ideal customers are, it’s now time to pay attention to customer engagement. Keeping customers engaged throughout the buyer’s journey lets you collect valuable customer information that ultimately influences buying behavior.
- Lack of Staff Training
- Do you properly train your employees? Businesses should recognize that employees can be amazing brand ambassadors. Well-trained staff will be able to showcase what sets your products apart and what value it provides to your customers.
- Sales Forecast Inefficiency
- Do you have a system in place to accurately predict sales fluctuations? As one of the most common business pain points, stockouts can lead to lost sales and customer dissatisfaction. Sales forecasting, if done properly, helps your business secure enough stock to satisfy customer demand even in the busiest shopping seasons.
Tips to Prevent Lost Sales
Sometimes, the greatest sales lesson can be learned from a sale that you weren’t able to close. After all, picking yourself up and moving on is an attribute of a great entrepreneur. However, you must learn from your mistakes and use them as an opportunity to improve your operations going forward. If you’re unsure where to start, we got you covered! Here are some tips to prevent lost sales:
- Keep track of lost sales
- Tracking lost sales gives you a better understanding of why you lost a particular sale. It’ll help you avoid practices that are causing a leak in your sales funnel and focus your energy on key areas that increase customer satisfaction. (Pro tip: Consider purchasing a robust customer relationship management (CRM) tool to easily track lost sales data.)
- Improve your forecasts
- Forecasting gives you an idea about the amount of inventory to secure to satisfy customer demand. Not only will you greatly reduce instances of overstocking and stockouts but you will also improve how you manage your cash flow. However, note that forecasts are not foolproof. Unforeseen external factors can always invalidate your predictions no matter how accurate you think they may be.
- Calibrate your inventory management strategy
- Proper inventory management gives you an overview of what goes in and out of your inventory. Are you storing too many products? Is your inventory turnover ratio helping or damaging your cash flow? Do you have enough products during peak shopping seasons? Having an efficient inventory management strategy enables you to better prepare for seasons with stronger demand and place orders ahead of time to prevent stockouts.
- Build a relationship with your suppliers
- The human factor plays a vital role in the success of a business. As an entrepreneur, your supplier will be your most important business partner. The approach you take with your suppliers impacts the way they service your business. One mistake many businesses make is putting too much focus on price. It’s only natural that you want the best margins but it’s equally beneficial to put quality and a trustworthy reputation first. In addition to proper inventory management, you should also consider building a relationship with a handful of suppliers to ensure that you are not relying on just one supplier’s capability.
- Offer discounts and promotions
- Offers and discounts are a great way to quickly attract potential customers and even those sales opportunities that you lost. It’s no secret that people prefer buying things on sale. Why not use it to your advantage and increase sales across the board?
- Ensure you have enough financing
- Owning a product-based business means inventory is your lifeline. Without it, you would not be able to sell products to meet the demands of your customers. If you’re unable to sell products, how will you earn money? Not having enough cash on hand to purchase additional inventory can hurt any business. While it pays to keep a close eye on your financing, it also helps to be knowledgeable about the different financing methods you can use to be able to acquire the inventory that you need. For your inventory needs, check out inventory financing.
What is inventory financing?
As the name implies, inventory financing is a financial product that lets businesses pledge purchased inventory as collateral to obtain a term loan or a line of credit. Typically, inventory financing serves as a last resort for small to medium-sized businesses that have exhausted other efforts to secure financing. One great inventory financing tool that businesses can check out is Kickfurther.
Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules allowing your brand to scale quickly without impeding your ability to maintain inventory.
It’s always advisable to dig deeper and understand why you’re losing sales rather than just accepting it. By identifying the various reasons behind lost sales, you are already taking a huge step forward in reevaluating your approach and implementing a strategic plan that enables you to see growth in your sales funnel.