Scratching My Head In Amazement……

Andy Paul called my attention to a discussion in LinkedIn. It was, yet another, discussion on “sales math.” This one reported on research on win rates. It reported win rates declining from 2022 to 2024 from 23% to 19%, with win rates for deals with ACV over $100K declining from 18% to 16%. The data, by itself, is stunning. But the conversation related to the post was even more shocking, from too many perspectives.

First, there appeared to be no “shock and awe” about these data points. There seemed to be virtual shrugging, “That’s just the way things are…” In any organization I’ve been involved with, this data would be the equivalent of a 12 alarm fire. The CRO and much of the top management staff would be gone, actually, that would have happened as win rates dipped below 30%. Task forces would be in frenzied action trying to figure out why this was happening and what need be done to change that win rate, getting it up to more acceptable levels in the shortest time possible.

But the conversation around these win rates did not display the alarm that one would expect. One gets the sense it’s par for the course in today’s sales world. For the sparse discussion about how to fix it, the discussion focused on higher quality MQL/SQL’s and focus on better prospecting. There was virtually no discussion on qualification and better execution of the sales process.

Sure we don’t want to waste time an resources on things way outside our ICP. Focusing our demand/lead gen within our ICP, though, elicits a “Duhhh” reaction from me. Why would marketing or sales do anything other than this? Why would we waste any time looking outside our ICP? I’ve never thought I should stand outside our local Safeway prospecting people, “We consult, very successfully, with multibillion orgs on improving performance. Would you be interested in learning how we can help your organization?”

But then, too, when we go back to “sales math,” we don’t include those metrics on MQLs and SQLs in our calculation of win rates. Win rates are based on qualified deals only.

But, still, no alarm, virtually no discussion of “how did we get here, how do we fix it?”

Then the discussion went on, again, with no alarm. Someone cited the fact that fewer than 40% of sellers are achieving or exceeding their goals. Again, a virtual shrug of the shoulders, as though this is the way things are. “Thank goodness that 40% enable us to meet our growth goals…..”

I suppose I have grown up in a different mindset around performance management. But this data causes me to ask questions like, “What are the win rates of those 40%, what are they doing that we might leverage with the other 80%, how do we up performance across the board so that more people are achieving their goals….??”

No one seems to be considering, “If we can meet our goals with only 40%, imagine how much we might exceed our goals if we had 60, 70, 80% of our people achieving quota?”

Somehow there is a “performance management culture” that accepts these low win rates, and low performance—as long as we make our overall goals. No one is focused on the lost opportunity or the opportunity to grow even more than we currently are.

The discussion seems to go back to prospecting, getting more and better MQLs and SQLs. I keep wondering, “Why don’t we seem to care about winning more of what we already qualify and invest time/resources in. It’s less a situation of finding more opportunity, but more of winning more of what we find.” The math around pipelines, prospecting, and everything changes profoundly if we simply win the majority of what we have already qualified.

Just when you think things can’t get crazier in this analysis, there is a discussion around the metrics that attract investor interest. Again, I struggle with the new math that exists around sales success and investor interest. One metric that, apparently, interests investors is CAC payback period. It makes some sense, the shorter my CAC payback, the better. And the author presents a business case on the improvement of win rates by 5%. Reduction in CAC payback of 20%. I suspect VC’s are cheering! How many millions more should I be investing with this?

But there is one thing this author ignored in this presentation of the power of reducing CAC payback. For this example, in the high performance case, winning 25% a a great CAC payback of 16 months, the net loss on every $1M in revenue was $250K–such a deal! Though it is better than the $600K loss for every $1M revenue at a 20% win rate.

Having personally invested in a number of start ups, when I see that data, I think I might get better return by hitting the blackjack tables in Las Vegas—at least I might get free drinks.

What am I missing? Am I just an old fart that doesn’t get the new math around sales performance?

This article would have provided comic relief in an otherwise busy day. But the commentary an likes around the article and the preponderance of articles around similar kinds of sales math is stunning and concerning.

We seem to be missing the point. Sales math is important, it provides the “red flag” that something may be amiss. But what it should provoke is questioning, “What’s causing this, what do we need to change, what would it take to double win rates (or whatever)?” What does it take to recognize the answer to every sales problem is more, better, and more MQLs/SQLs?

What am I missing?