I wrote, Win/Loss Analysis–Are You Learning As Much As You Should? As I mentioned in that article, I continue to be amazed by how casually we treat win rates and how little we understand what causes us to win and lose. There is too much of a tendency to accept what they are building strategies around the volumes we need to pursue to achieve our goals.
Just to put an emphasis on the importance of understanding why we win, why we lose, and how we maximize performance and productivity, let’s go through an example:
- Let’s assume 3 sales people with exactly the same quotas: $5M.
- Let’s assume they each have the same average deal size: $100K (This might be an optimistic assumption, much of our research shows higher performers with the same average deal size.
- Let’s also assume, they each have to prospect the same number of opportunities to find a qualified opportunity: 10 prospecting efforts (10 individual customers) to produce 1 qualified opportunity. (Though we might question this, as well.)
So here’s the comparative numbers they have to work, to achieve their goals:
|Sales Person A||Sales Person B||Sales Person c|
|Average Deal Size||$100K||$100K||$100K|
|Closed Deals Required To Make Quota||50||50||50|
|Deals Required For Healthy Pipeline||250||167||100|
|Prospecting Required To Fill Pipeline With Qualified Deals (10/1)||2500||1670||1000|
This is math we all do, or should do. But in reality, I actually find very few sales people and managers spend anytime thinking about this. The differences in productivity are profound!
Sadly, to often, we don’t pay attention to these things. When I ask sales managers and people for this data, they don’t track it. Then, if they do, they tend to accept the data as if it were a fundamental law of nature. Too many managers and sales people seldom challenge themselves to think, “How do we increase our win rates? Hw do we increase our average deal sizes? How do we compress the sales cycle? How do we create greater yield from our prospecting efforts? How do we most effectively improve the performance of each person on the team?
Instead, the solution is, “Just do more!”
You might say, “Well Dave, you are just showing that math works, what’s the point?”
It’s true, but once we start looking at this, we must force ourselves to ask, “What causes the differences in performance? What are the people with 50% win rates doing differently than those with lesser win rates? How do we get the others to do the things those high performers are doing?”
This very simple analysis, treats everything other than the win rates, as relatively equal. But the reality is far from that:
- Sales people with higher win rates, also tend to have higher average deal values.
- They also tend to have higher yields from their prospecting efforts (It’s natural, higher performers are more focused on the right prospects, not wasting time on poor quality prospects).
- Because the sales people with higher win rates need to chase fewer opportunities, they can invest more time in those opportunities they address, dramatically improving customer experience and propensity to buy. In contrast, those with lower win rates have to chase so many deals, they can’t invest the time they need to win the deal.
- And related to 3, manager coaching of those who are struggling, is usually, “Do more!” This creates a performance death spiral, because by doing more, they reduce the time they spend on each opportunity, causing win rates to continue to plunge.
Over time, as we analyze organizations, we’ve seen unfortunate trends. 10-15 years ago, we saw average win rates in the 35-42% range. Today, we generally see them in the 17-22% range. And it’s not unusual to see win rates at the 9-12% level.
The focus on volume has had a horrible impact on performance. Focusing on reducing the time we spend on each call, the number of dials, the number of emails we make and how we do more seems to dominate our approach to predictable revenue. The consulting and vendor community don’t help, when most of their focus tends to be on how we can increase the quantity of our activities, rather than thinking about how we maximize the results we get from each activity.
The trick to driving performance is seldom driving more activity. It’s usually comes from producing more with each activity we execute. Rather than doing more of what doesn’t work, faster, let’s focus on what works, what produces value, and learning how to execute those more effectively.
Once you’ve done that, the magic comes by then looking at, how do we do more of the right things that produce results?