- I remember early in my sales career being a bit
intimidated by a colleague in my company who was constantly
boasting about how many sales calls he'd made,
people he'd met, and big sales that were pending.
It didn't take me long to learn that you can have
hundreds of leads, dozens of opportunities,
and sales forecasts with some big numbers,
but to be blunt, it all really comes down to
how many sales were actually closed.
Right after the summary of total revenue obtained,
this performance metric is the most important for
a variety of reasons.
It's more than evaluating a sales person's success rate,
because the results here tie in with so many
other parts of your organization.
The analysis of number of sales you've won and lost,
cuts right through all of the talk,
the meetings, presentations, training programs,
and your leadership techniques,
to calculate the percentage of wins.
There's no hiding or explanation,
it's the bare bones number for everyone to see and own.
The easy part of all of this is the calculation.
Although there are variations to what companies may track,
you can measure this two ways.
Either the ratio of sales closed,
or revenue achieved for each closed sale.
For example, close rate is the number of deals closed
versus number of opportunities in your pipe line.
20 opportunities, five are closed, equals a close rate
of 25 percent.
Five divided by 20.
Win rate, looks at the revenue estimate from all of
your opportunities and actual revenue achieved when
then sales are closed.
20 opportunities totalling 500,000 dollars revenue,
from five closed of 75,000
equals a win rate of 15 percent.
75,000 divided by 500,000.
As you can see there's a
big difference with these percentages.
So it's valuable to track the ratio of measurements
using both formulas.
However along with actual results reported from the
close/win rates, there are three other areas
where some critical performance reviews tie into this.
These are,
coaching, training, and leadership.
The success of disappointment of close/win rates,
within the sales organization
can be tied to the effectiveness
of the coaching and training the manager provides.
Are the sales representatives following each
of the steps of the sales process correctly?
Do they know the techniques for overcoming objections?
How effective are they at closing sales?
I think the leadership style of a manager
is also important as it relates
to encouragement and motivation.
Sales management is responsible for their teams,
so the close/win rates are a reflection
on them too.
Product or service.
The development teams don't like it when sales
and marketing report back with issues
about the product or service.
However, if there's a pattern of lost business
and sales not closed due to comments about
what's being offered,
then that's a critical reporting factor.
Price, features and competitive offers
are some of the issues that need to be reviewed.
Team, everyone's business and industry
is continued to get more competitive,
and that won't diminish.
If a sale is closed or lost, it's not just the sales
person who should take the credit,
or accept the full disappointment.
Yes, they do own the process and are responsible
for the close, but there should be a
team of people behind them.
The most successful organizations have
knocked down the silos from the past
and in reality share those win/close results.
Our systems today can provide us with so
many trackable and measurable metrics.
We can analyze our processes and sales in more
detail than ever before.
However we must never lose focus on the one so closely
linked to revenue, reviewing and evaluating
close/win rates is one of the most valuable
ways to get a view, not just your salesperson's
effectiveness, but the entire organization's
objective of providing a solution to the customer.
It's a key performance indicator that requires
your attention, and separates the talkers
from the real producers.