A very high close rate sounds great
But really, it means you aren't doing any effective marketing
— Jason ✨Be Kind✨ Lemkin (@jasonlk) March 25, 2021
Few things will demotivate your sales team more than a very low win rate. Especially one getting even lower. Going into battle every day, and almost always losing … few things are tougher.
But a low win rate is, if nothing else, clearly an opportunity. In fact, if you have an A+ engineering team, it might be borderline great news.
A 10% win rate, for example, certainly means you are losing 90% of deals … but it also means you are getting invited into a ton of deals. You’re getting a shot. You’re getting the leads and the opportunities. You just can’t close them.
The hardest part until you have a dominant brand in a space is actually just getting into a deal. Yes, Salesforce gets into every CRM deal. But that’s not you.
So if you are “in” deals but not winning enough — use this as a roadmap to just level up a bit.
Drive the team to think through how you can get just to the next level (say another 5% higher close rate):
- What are the top 3 feature gaps you can close that will help you win the next big deals like the ones you just lost — but almost won?
- Do you need better sales leadership? That alone can increase your close rate materially.
- Are you nurturing leads properly?
- Are you hands-on enough during trials? Are your competitors more hands-on during pilots, trials, and bake-offs?
- Do you get on enough jets during the bake-off process? Do your competitors get on jets but you don’t? If they do and you don’t, you lose.
- Are you using sales folks to try to close deals at ACVs they aren’t experienced enough at? (this will cut your close rate dramatically). Align your reps around the deal sizes they have experience in.
- Are you providing your sales team enough training on FUD and competitive advantages? Most aren’t that good at this without help.
- Are you focusing your marketing efforts on the areas you do win? After all, you do win some deals.
You can drive this 10% number (or whatever your low close rate is) up — as long as you have a good, dedicated team at least that can make improvements. You can drive it up in one quarter, in fact, if the whole company and team align on what it takes to win the next prospect like the one you just lost.
You have the leads. That’s the hardest part. Getting anyone to even take a look at another vendor like you is hard. And if you are closing even 10% of them, you aren’t doing everything wrong.
And think about what even going from say, a 10% close rate to a 15% close rate will do to your growth rate. That won’t seem that different. But that alone equals 50%+ more growth!
I know you want to win 90% of deals, not 10%. But take it step-by-step. This is the stage where even a few percentage points of improvement will drive massive revenue gains.
Now also — think about the opposite. A high win rate feels good, and sounds good. But it isn’t good. It means you aren’t in enough deals. Win rates should go down as you scale, and push into new market segments. Win rates, in fact, should go down as you do more marketing. Marketing will bring in leads that are tougher to close. In fact, a very high win rate often means you aren’t really doing any effective marketing at all.
(note: an updated SaaStr Classic post)