For starters, salespeople who don’t keep score also don’t work as hard.
Even if you’re keeping track of commissions, it’s your new business win rate that will ultimately drive revenue. By determining an accurate ratio of how often you win in new business situations, you’ll find yourself thinking and working on your sales effectiveness more and more.
Figuring your rate
A key first step is to figure out your current close rate. If you’re not keeping score, you’ll be less inclined to pay attention to what you need to do to increase your closing rate, the best measure of your true day-in, day-out sales effectiveness.
Step one
Here’s the easiest way to determine your close rate. Look back on all the deals you have bid on over the last 12 months. Include only situations in which you have made an actual sales presentation in person. Exclude situations in which you didn’t actually meet with a prospect.
Step two
Now that you have the number of real deals you have bid on, calculate the number of wins and then divide by the number of total deals. If you make 50 sales presentations per year and you win 15 of them, you would have a 30% win rate. (A small sample is used for illustration.)
Two other ways
Two other ways to calculate your close rate include:
- Win rate by company. This is your ability to turn a company into a customer.
- Win rate by proposal. You compute the percentage of wins among prospects for whom you have written formal proposals.
Other useful sales metrics
There are a number of other useful sales metrics you may want to measure. You could track the number of cold calls you make that turn into sales meetings. You could also track your win rate by when you meet with decision makers, as opposed to meetings with those who have no buying authority.
Rethink your strategy
Having too many meetings with people who aren’t real decision makers may seriously hurt your close ratio. Entering a company at too low a level may put you in a bind. You may end up spending a lot of time with someone who can’t make a buying decision. You don’t need more meetings – you just need better meetings with actual buyers.
Plane ride analogy
When you’re flying in a plane at lower altitudes, the air is choppier and the plane tends to hit more turbulence. When the plane increases its altitude, the ride is smoother and you hit fewer bumps. This is a great analogy to selling to the top. You’ll have fewer bumps and your ride will be smoother.
Other benefits
Here are some of the benefits of selling to top executives:
- You’ll have less to do after each sales meeting. When you focus all of your sales calls on the right decision maker, you’ll have fewer follow-up requests and meetings. When you meet with someone who is not the decision maker, you may have to set up subsequent meetings with those who make decisions. This can be time consuming and costly.
- You’ll have less emotional involvement in each deal. You will feel better about each situation because you wall not need to worry about whether you’re meeting with the right people. You can simply wait for the decision and feel good about the fact that you have done all you can do.
- You’ll get quicker decisions. The higher up in any organization you go, the more you will find that people make quicker decisions. Decision making is usually concentrated among a few people because decisive people tend to rise to the top.
- You’ll get more candid and accurate information on why you win and lose. When dealing with true decision makers, you will usually get more candid information when you lose because it will not be watered down by various levels of bureaucracy. When you get feedback from someone who has an in-depth understanding of sales, you may get an insightful perspective on why you win and lose and what you need to do in order to win the deal.
Adapted from From a Good Sales Call to a Great Sales Call (McGraw-Hill) by Richard Schroder.
