The close rate, also called the win rate, is a common statistic for measuring sales effectiveness. The average close rate for outside sales professionals is commonly identified as 40 percent. Other statistics suggest all salespeople combined have a close rate of less than 20 percent. I am unaware of any international governing body requiring all sales organizations to upload a file with their wins and losses to include in their annual “State of Sales” report.
No doubt the existing statistics are from surveys with small samples of salespeople, suggesting there are millions of salespeople who have not been included in any study. More still, different industries have widely different average close rates. One company I know hits their high targets with a 12 percent win rate. What's worse is the variability between individual salespeople; some have incredibly high close rates while others have much lower average close rates.
The sales leader who wants to increase their team's average win rate must confront the fact that different salespeople need different things to improve their results. One person might increase their closing rate by improving their targeting, as they call on companies that can't or won't buy what they sell. Another salesperson may need to improve their discovery call to win more deals. To improve your team's average close rate, you must improve the close rates of the individuals, especially those who have too few clients.
Sales Effectiveness and Increasing Your Average Close Rate
As often as possible, I write about the importance of sales effectiveness because not enough sales organizations focus on it. The easiest way to judge a salesperson's effectiveness is to look at their win rates. The salesperson with a high close rate is effective, and the wins are proof. The salesperson with a poor win rate isn't effective. Both highly effective and ineffective salespeople can improve their close rates over time, but only if it is an imperative. When working with their salespeople to increase effectiveness and address the close rate vs win rate issues, leaders can follow three steps, as outlined below.
Step 1: Start with a Competency Model
A good competency model includes the character traits and skills a salesperson needs to succeed on your team. One competency model might require the salesperson to have a technical background, while another role might require a great deal of business acumen to be valuable to prospective clients.
Without a competency model, it's difficult to recognize what an individual salesperson needs to successfully pursue deals. By using a competency model, you can identify what your whole team might need to improve, while also identifying what each individual needs. Armed with an understanding of what each salesperson needs to change, you can begin to improve their win rates.
Step 2: Build a Development Plan
It's not uncommon to provide salespeople with training to improve their results, however, this can only work under the right circumstances. Sales training only improves win rates when it meets three requirements. First, it must address something the whole sales team needs to work on. Training is not a replacement for individual coaching and development, but it can be helpful if every salesperson would benefit from improving the same skill, such as aligning with the sales close rate benchmark. Second, training must be delivered well, meaning it needs to be engaging and include role-play and other opportunities for salespeople to apply what they’re learning. Finally, training only works when sales managers hold their teams accountable for the behavioral changes that improve their results.
While training is valuable, development is even more important. Because different salespeople need to improve in different areas at different times, individual development plans provide a customized path for improving and increasing each person’s close rate vs win rate in sales. That plan is likely to include training, coaching, and a sales manager who observes their salespeople to better understand what behaviors they need to remove or adopt to generate more won deals.
Step 3: Identify the Major Obstacle
Your competency model might reveal more than one gap in a salesperson’s skills or character traits. You may want to help them in all of these areas, but much of the time, you are better off identifying the major obstacle that prevents them from winning more deals. Not only does first addressing the major obstacle improve results, but it also helps the salesperson recognize their improvement, making it easier to address the second obstacle.
When working to help a salesperson improve, it is best to work on one skill or trait at a time. You are asking your salespeople to change. It's challenging enough to make a single behavioral change. You learned this to be true when you dropped your New Year's resolution before the first week of February. It takes time to make lasting change. Your sales force will never be more committed than you are when it comes to development.
Why You Need to Improve Your Closing Rates in Sales
One sales leader told me he needed his team to create a pipeline that was 800 percent of his team's goals. That means he expected his team to win just 12 percent of the deals they pursued. That would mean losing 88 percent of the deals they created. This is what happens when a sales leader doesn't understand that selling is not a numbers game. It’s an effectiveness game.
Instead of working on improving his team's sales effectiveness and increasing the average close rate in sales, he mandated more activity. He also lost his best performers in the bargain. You need far fewer opportunities to reach your goals when you increase your average closing rates.
By recognizing the competencies your sales team needs to be effective in sales, you can identify what everyone on your team must do to improve their average closing rate and meet the sales close rate benchmark.By building a development plan that improves a skill or enables a necessary trait, you begin the work of helping your salespeople improve. Much of the time, once a salesperson fixes a major challenge in the competency model, it shows up as a higher win rate. As they gain experience over time, your sales team should become more effective. If this is not true, start by following the steps you find here.
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