Over the years, I’ve worked with many sales teams that seemed to view a 20% closing ratio as a bellwether of success. If the team closed 20% of their opportunities in a given month, they patted themselves on the back and celebrated a job well done. If it closed more than that, it set off a company-wide celebration.
I always cringed when I saw that. Here’s why: A 20% closing ratio is way too low. In fact, I often find 30% to be a little underwhelming. Just think about how much work sales teams must put into attracting prospects, qualifying opportunities, and nurturing them through the buy cycle. That’s a significant investment of time, effort, and money to produce a relatively abysmal win rate.
So, what is a good closing ratio? In my experience, companies should close 50% or more of the opportunities in their pipeline. But in order to do that, you have to focus on improving two controllable factors:
1. Value Perception
Most sales reps believe that if they could discount, they’d win more sales. But that’s simply not the case. You’ll win more sales when prospects can see the value of your offerings. This value perception begins before the sales process ever kicks in — when prospects engage with your website, blog and social content — and is reinforced through conversations during the sales process. The language (price vs. investment) and phrases you use (“Oh, we’ll work with you on the price”) all reinforce or undermine the value you worked so hard to establish before a prospect entered the sales process.
2. Continuous Sales Qualification
When it becomes acceptable to close just one out of every five opportunities, sales reps tend to loosen their qualification standards. As a result, they waste valuable time chasing less-qualified sales prospects. Like value perception, qualification must begin before the sales process by defining your services and who you serve. Sales qualification is then subtly reinforced in your website, blog and social content when you offer examples and testimonials. Your nurturing and lead generation content should “talk” to the customers you believe are most qualified to purchase your services.
The good news?
Both of those factors can be improved by ensuring that your team consistently executes 11 simple steps throughout the sales process:
- Fully understand the business requirements
- Uncover the business impact of the problem the prospect needs to solve
- Establish a clear path to the decision maker
- Qualify the budget
- Re-qualify the opportunity during every sales call
- Paint a clear picture of how your recommendation will unfold for their company
- Present the proposal in person
- Include a financial justification
- Perform a trial close
- Ask for the order
- Follow up until you get a definitive “yes” or “no”
If you focus on the right things before and during the sales process, you’ll see your closing ratio climb to 60% or higher. Using the checklist above will go a long way toward making that happen and helping you win a greater percentage of each customer’s share of wallet, but it’s ultimately up to you to influence that change.