Is Your Sales Closing Percentage Too High?

It's easy to know that you have a closing percentage that is too low. You compete for a lot of deals and you don't win many. Diagnosing the problem is a bit more difficult. A low number of wins can be the result of poor sales rep performance, competing for deals that you have a low probability of winning, or from a lack of strategic competitiveness in your market. Sometimes the low closing percentage is caused by a requirement for high sales activity levels, which is easier for sales management to demand than it is for them to increase sales rep effectiveness.

But sometimes sales reps have a close ratio that is far too high. Winning a high number of the deals you compete for doesn't sound like a problem. But, a high closing ratio is often the result of competing for too few deals and focusing only on deals that you are fairly certain you can win. By avoiding the harder to close deals, you limit your ability to grow as a salesperson and you may destroy your company's long term growth. And not just financial growth, but also the competitive growth and stretching that only comes from competing for hard to win deals. These deals can really teach you to sell.

You should never compete for deals that you cannot win because they are a poor match for your company (you can't serve them well if you win them). In fact, you should avoid them completely. But you have to compete for all of the opportunities that do fit your company's offerings, even if they are difficult to win. 

For example, let's assume there are 10 companies in your territory that will purchase this month. You compete for two, and you win one. That is a 50% closing ratio. Sounds wonderful, right? But there is almost certainly money left on the table.

A high closing percentage may be the result of too little prospecting, competing for too few deals, and poor territory management. Great salespeople and great companies lose deals, plain and simple. Take a look at your closing percentage and ask yourself whether it is too low or too high.

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Filed under: Sales 3.0

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