Today's sales teams face increasingly substantial pressures. Budgets are tighter, inbound leads have slowed, and conversion rates have dropped, reducing win rates. Sales leaders must meet rising expectations to boost rep productivity and efficacy while contending with declining business development support and turbulent economic factors.
In this new era of sales, competitive organizations must adapt to survive. Doing so requires intimate knowledge of what's working, what's not, and how every action impacts the team's success or failure.
To improve productivity and pipeline conversion, sales leaders must use KPIs and metrics to measure and enhance performance. Sales win rate, in particular, is one of the most powerful tools for analyzing and improving deal health.
While closing any deal is cause for celebration, just one sale does not indicate whether or not a team's method of outreach or their ability to close a sale is working consistently. By tracking and examining win rates over time, sales teams can better understand and forecast pipeline and avoid missing the mark and losing deals.
Here, we'll outline how to properly calculate win rate, why it's so essential, and how to improve the metric moving forward.
What is a win rate in the context of sales?
Win rate, sometimes called pipeline conversion rate, is the ratio of closed/won deals compared to the total opportunities created during the same period. In other words, it's the percentage of leads that become actual paying customers.
Sales leaders often look at this metric at the rep level and across the entire team to evaluate an individual's performance against team performance. Once calculated, sales win rate can be used to find patterns of success or failure which sales leaders can then apply to future tactics and coaching opportunities for more consistent success.
Why is your win rate important?
Knowing individual rep and team-wide win rates is about much more than celebrating moments of triumph or admonishing inadequate performance. When properly tracked and analyzed, win rates can help sales teams improve their productivity and revenue.
Over time, win rates enable sales leaders, managers, and reps alike to pinpoint strengths and weaknesses in the sales process. The data they reveal can help steer a lacking department toward intentional course correction before it's too late.
For instance, a sales operations manager might calculate their team's quarterly win rate to identify improvement areas. After finding that the win rate has declined this quarter, they carefully examine the data and determine that most leads disengaged after an initial presentation or proposal. A deeper investigation reveals that these deals lacked proper follow-up sequences for keeping leads engaged and interested.
Sales managers use this knowledge to revamp, emphasize, and prioritize follow-up sequences with their reps moving forward. The result is fewer drop-offs after the proposal phase of the sales process and higher win rates.
How to calculate a win rate
Sales leaders, managers, and reps can calculate win rates at any given time and include any mix of individual versus team-wide data. But regardless of these details, the formula for measuring win rate is the same:
Sales Win Rate = Closed Deals ➗ (Closed Deals + Lost Deals)
Note: In this context, closed deals + lost deals refers to total pipeline
To gather the data used to calculate win rate, a sales team member needs clear visibility into the health of their pipeline. Keeping track of the number of signed, closed contracts versus the total number of contacted leads within a given period becomes complex without the proper tools, especially if win rate needs to be calculated across an entire team.
Most modern sales teams have already adopted CRM tools, which make it easier to calculate win rates quickly and easily at any scale. But it's important to note that a CRM system alone limits a team's ability to accurately identify and understand what contributes to lead conversion.
Some competitive sales organizations have realized the need for deeper insights into how their efforts specifically impact their win rates. They've started implementing platforms that provide a holistic view of deal health, potential risks, and precise forecasts in a single place. With this type of technology, leaders can analyze historical win rates to better understand how much of their pipeline they can expect to close.
Tips for calculating win rates
Data can be misleading when poorly aggregated and applied, so it's crucial to ensure you're using the cleanest, most up-to-date data possible. To ensure your win rate is accurate and useful, leverage the following best practices:
Use a narrow time period
Just because you can calculate win rate over any given period of time (and at any point in the sales process) doesn't mean you should. Win rate is generally most effective when calculated using a narrow reporting period, generally at a later stage of the sales process.
Rather than potentially highlighting a deviation caused by a one-off factor, win rates based on more specific time periods help teams truly understand the context of the percentage and what corresponding elements may have been influential.
Use your win rate in the context of other KPIs
The devil is in the details, and this rings true for win rate, too. Your win rate doesn't operate in a vacuum, so be sure to compare the percentage to other metrics and KPIs from the same time span to better understand the bigger picture. Paying attention to the smaller details of specific sales can help sales teams more easily identify what is and is not working within the sales process.
How to improve win rate
Lack of action leads to a lack of results, and just knowing win rate simply isn't enough. To improve sales long-term, teams must know exactly what to do with their data. To start improving your win rate today, try leveraging these key methods:
Automate wherever possible
It's no secret that account executives (AEs) primarily close deals. They're not exactly known for taking control of their pipeline coverage; but with SRD ratios and inbound demand shrinking, they need all the motivation they can get to prospect. Sales leaders can make prospecting more appealing for AEs by taking the time-consuming, tedious, and burdensome tasks out of the equation. By equipping sales teams with a single system that automates otherwise manual tasks, leaders can empower their AEs to spend more time on meaningful selling activities (rather than toggling between myriad systems). AEs can then self-source their own opportunities, close more gaps in pipeline coverage, and consistently reach higher quota attainment.
Nurture your leads
Once a lead engages with one of your marketing campaigns, the race is on to respond. In fact, if you wait longer than five minutes to respond after an engagement, your conversion rate could drop by a whopping 80%. That's why an efficient inbound lead workflow is so vital. It helps teams to better focus their precious time on building deep customer relationships from the jump, rather than inadvertently allowing interested leads to fall through the cracks. Part of a great lead nurturing strategy is making sure your leads are educated about the product and ready for the sale; so be sure to share the right content at the right time, answer questions with confidence, and lead with a customer-centric approach that helps them envision a brighter future with your product.
Align the sales process with the customer journey
Today's digitally-empowered buyers expect a frictionless customer journey that feels highly personalized and collaborative. Tailor your selling process to the needs of the customer to ensure a better customer experience without adding extra weight on sellers' shoulders. Based on a recent Forrester study, we know that customers want a digital-first buying experience that offers self-service exploration, so make sure the tools your team uses support those expectations. An easy-to-navigate website, chatbots, and unified tools that align processes, objectives, selling tasks, and more can all contribute to happier customers, faster sales cycles, and higher win rates.
Pay attention to timelines
The buying process has become increasingly complicated. This is especially true in the B2B sales world, where 77% of customers in one survey rated their last purchase experience as extremely complex or difficult. The intricacies of appeasing individuals within large buying groups (often consisting of 6-10 stakeholders), navigating timelines and intentions, and building consensus often lead to overwhelmed buyers who just walk away. That's why it's crucial for sellers to know when to follow up, when to give potential customers space for consideration, and when to call it quits and move on. Intelligent salestech that offers tools like buyer sentiment analysis can help here, as they enable teams to become acutely attuned to buyers' responses to every interaction. Instead of taking a shot in the dark when it's time for immediate outreach or allowing a cooling-off period, sellers can instantly identify true buyer intent and act on a timeline that yields positive results.
Know what your prospects want
Trying to figure out what buyers want can feel like a wild goose chase for already-busy sellers; and can ultimately lead to wasted time and lost deals. A key strategy for improving win rate is to identify customer needs (including expectations, demands, and requirements), then tweak your offerings and sales process to better serve those needs. While each buyer is unique, regularly collecting and acting upon customer feedback, conducting user research, implementing surveys, and leveraging competitive research can all help sellers better understand and solve customer needs. Over time, this deep understanding and subsequent modifications lead to better brand loyalty, improved customer satisfaction, reduced churn, and (you guessed it!) higher win rates.
Boost win rates with the right sales execution technology
It's evident that consistently measuring win rates can help sales teams better understand their progress and performance, but simply calculating the percentage won't help you gain a leg up against the competition. To ensure consistent improvement, sellers need a holistic view into how every effort plays a part in their success or failure; and leaders need the right tools to make swift, at-scale workflow, process, and coaching changes based on those insights.
Outreach's Sales Execution Platform helps teams amplify their outputs for greater win rates across the board. With tools for data-driven deal inspection, real-time rep enablement, buyer sentiment analysis, and more, Outreach can enable your team to increase pipeline conversion rates at scale.
Learn more about how sales leaders use Outreach to help their teams win more deals with less effort, or request a demo today.
