Competitive sales teams know that consistent success and growth require adaptability to their sales process. Yet random, aimless adjustments to strategy won’t do much to boost progress or performance. Sales teams need a reliable method to gauge how well they’re doing.
By calculating their closing ratio, sales teams can gain a deeper understanding of what’s working, what’s not, and which stages of the sales process need tweaking. In turn, they can make meaningful, intelligent improvements that improve the closing ratio over time.
Here, we’ll discuss the importance of the closing ratio, how to calculate it, and some key examples of how an organization may use it to their advantage.
Closing ratio — sometimes referred to as win rate, close ratio, closing formula, or lead-to-close rate — is a crucial sales metric that measures how many deals you’ve won vs. the total number of opportunities created. The formula can be used to calculate the closing ratio for individual sellers or the entire sales team as a whole.
While you can technically calculate the close ratio at any point in the sales process over any given period of time, it’s generally most effective when it’s used to measure a specific, later stage of the sales process over at least a three-month period. This will provide a more accurate picture of what’s really happening in the sales cycle, rather than potentially highlighting an abnormality or deviation caused by a single, one-off factor.
Sales executives, regional sales managers, operational sales managers, and even sellers themselves can benefit from calculating and analyzing individual or team-wide closing ratios. At the team level, a poor closing ratio can signal inefficient processes, inadequate strategies, or misalignment with marketing. At the individual level, lower win rates might indicate performance issues that should be addressed before it’s too late.
Regardless of who’s using it and when, the closing rate formula remains the same:
Closing ratio = (# of closed won deals / # of opportunities created) x 100
It’s important to note that “won deals” refers to signed, closed contracts within a particular time period, while “opportunities created” means the total number of contacted leads within that same period.
To gain a deeper understanding of closing ratio and how it’s used, let’s look at a couple of hypothetical examples:
While “improving closing ratio” is likely already a goal for every sales organization, identifying the right ways to achieve higher win rates (and doing so consistently) can feel like a shot in the dark. But with the proper approach and some intelligent tools for support, your team can make significant, highly impactful changes.
To increase win rate at the individual- and team-level, try implementing these proven strategies: