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How can Win/Loss Analysis help you find untapped markets?

By Alan Armstrong

This week had a very smart CEO pose a great question to me:

What are we missing in terms of opportunities where we aren’t even considered? Frankly I worry (like all paranoid startup CEOs) that this may be the biggest opportunity for growth. Do you have any hypothesis on how to dig in to that category of clients that have not heard of us?

One of the problems with Win/Loss Analysis is the focus on accounts where your company is already engaged. Can this analysis help you find untapped markets, or accounts where you are not being considered?

This is a crucial question for anyone concerned with product or corporate revenue - investors, product managers, sales VPs, marketing VPs.

I give my answer below, but first, here is a quote from Donald Rumsfeld that explains the problem more fully. Rumsfeld took a lot of heat for this quote, and perhaps it was overly obtuse or intellectual for the press. But if you listen to what he says, it's remarkably insightful:

In marketing / sales terms, here's what Rumsfeld is describing:

  1. Known knowns: These are accounts that you know how to go after. This is your sweet spot in the market. Hopefully you have one or more of these!
  2. Known unknowns: If you are paying close attention to your company's deal flow, there will often be deals that are outside of your sweet spot. Even by accident, your customers will use your product in ways that you hadn't imagined. You have to be paying close attention to notice these, but when you see one, you should take note of it and dig in to their business need, how they found you, and whether they need any additional capabilities. These accounts present a potential opportunity to expand your market. When you profile these accounts, pay very close attention. Once you notice them, you can use their profile to size the market, and if it appears attractive enough, create a pilot marketing/sales program to go after a short-list of these accounts.
  3. Unknown unknowns: These are the potential opportunities that you and your customers haven't thought about yet. Are these potential accounts buying your competitors' products? Perhaps your competitors have discovered them before you, or maybe they are just struggling with a problem that you could solve, but no one has put two and two together.

Back to the CEO's question: How do we find the Unknown unknowns, the untapped markets?

I call these markets "hidden market segments". So how do we find these hidden segments? Here are my suggestions:

Pay attention to patterns in your deal flow

One possible difference between #2 and #3 above is that in #2, you are paying attention, and you notice the anomalies in your deal flow. It takes an intuitive person to notice such anomalies. But it should be a priority for everyone paying attention to the deals. If you need to get started, Win/Loss analysis is a great technique. Unfortunately many people don't do a good job of win/loss analysis. (I wrote about some bad techniques earlier. Steve Johnson covers his views on Win/Loss here. ) You need to ensure that you are studying the whole buying process, speaking directly to buyers, not accepting the reasons given by sales. Too often companies note just the final reason for a win or a loss, but you need to avoid that temptation and look at the whole buying process.

What about the Unknown Unknowns?

The problem with the bucket #3, customers that you don't know about, is a bit circular! Philosophers would call this an episemological problem ... it is an unknowable thing.

While it is difficult, much of the difficulty can be solved in two ways:

  1. Turn #3 into #2 by consistently profiling your wins and your losses. See above. (If you need help, contact me. I do this for a living.)
  2. Look for hunches: If your deal flow is too large to profile consistently without huge sampling bias, start by interviewing people internally. Look around for hunches. Frame the question as I have done above. Start by profiling your sweet spot, and find some really smart, market/customer-centric people inside your company. Explain to them that you are looking for people outside your sweet spot. Once you find some potential anomalies, start your Win/Loss analysis with accounts similar to the anomalies. With 5 wins and 5 losses, you'll have a good start.
  3. Look at your competitors successes: Are they winning outside your sweet spot? Are they attending tradeshows or hosting events for use cases that you hadn't considered? Can you find lost accounts in your past that represent cases like these?
  4. Brainstorm and Sell: What are the potential uses for your product in markets where you've never (knowingly) won a deal? Can you put together a pitch deck identify 5-10 sample accounts, and go after them with a SWAT team? You need BD-type people, not sales-types for these markets because you are breaking new ground.

In the end, it all boils down to finding a new profile of customer. You need detective skills, market knowledge, buyer knowledge, and sometimes good luck, but it can be done.

- Alan

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