We struggle to hit our goals, make our numbers. Every year, we see decreases in % of sales people making their goals. At the same time, our solution to try to make our numbers is driving increases in volumes and velocity.
As I start peeling back the numbers, reinforced by data from the research firms, I start seeing win rates at 20% or less! We’re winning fewer than 5 deals we qualify!
When I challenge leaders about this, too often, they either: Don’t realize this is the actual performance; or shrug their shoulders, “It is what it is….,” alternatively, “We just win our fair share….”
Then when I ask them, “How are you going to help your people make their numbers?” The answer is always, “Do more!” And we pump up the volumes, increase the workloads, increase spending all reinforcing a continued death spiral of sales performance. (By the way, these managers are also the managers that insist on 3X pipeline coverage–I suppose this is new math, I don’t know how 3X pipeline at 20% win rates cause us to hit our goals.)
I simply don’t understand this! Why aren’t we alarmed with these results? Why aren’t we seeking to drive much higher win rates?
I suspect much of the reason is it’s really tough work to improve win rates. It’s far easier to demand we do more. It’s easier to push marketing for more leads, to ask SDRs for more, and to tell sales people, “Work harder.”
Win rates are driven by three primary factors:
- Are we managing qualified opportunities as best we can? For customers that are committed to buying, are we engaging them effectively? Are we helping them successfully navigating their buying process? Are we creating value in every interchange? Are we helping them gain confidence in what they are doing, gain consensus, creating a business justified recommendation? Just pitching our products, relying on features and functions, trying to prove our products are superior to the alternative doesn’t drive win rates. It just causes us to win our fair share.
- Are we chasing the right opportunities? When I assess pipelines, too often, they are filled with opportunities we have no business going after. They are far outside our sweet spot or ICPs. By pursuing these opportunities, whether through wishful thinking or just bad judgement, we are wasting the customers’ time and ours. And in doing so, we harm our brand power.
- Are we chasing real opportunities? We may be chasing the right types of opportunities, the customers may be in our ICP, but they aren’t committed to a change. They may be curious, they may want to learn more. We engage them thinking the power of our personalities and persuasion can convince them to buy–and we can always throw in a discount as an incentive. Even if we are chasing the right opportunities, if the customer doesn’t have a compelling reason to buy; if they haven’t established a date by when they need to have a solution in place (this is not the same as the PO date); if there aren’t consequences to missing that date; the deal is just wishful thinking and good intent–both on the part of our customers and our sales people.
We spend too much time, we squander too much opportunity by accepting such low win rates. If we start winning more of the deals we qualify and pursue, we have to compete in fewer opportunities. Performance isn’t just about doing more, it’s really driven by doing better.
This is less a salesperson problem, more of a sales leadership problem. We will have individual performers with low win rates. Our job is to coach and develop them, if they can’t improve, we need to help them find new roles. But when we see organizational win rates at 20% or lower, management isn’t paying attention.
We have to do better, we have to do our jobs!
Imagine if instead of just talking about a 25% win rate as unfortunate, but not alarming, what if we thought of them this way:
* Percentages are deceptive! Going from 20% to 35% means having to go from 5x pipeline coverage to 3x coverage.
* Each additional opportunity has a static ‘time sink’ cost that gets eaten up with meetings, waiting for files to upload, commuting time, etc. You can’t avoid this cost no matter how good or poor the opportunity is.
* When you have a very high win rate, customers are a lot more comfortable recommending you to other companies. When was the last time you had a Closed – Lost that led directly to another opportunity?
* Higher win rates makes other stakeholders more efficient. Even if you are a superstar sales rep who can work 100+ hours easily, other people don’t or can’t. A Sales Engineer is always going to prefer to work with a rep who only needs them once a week than one who needs them three times a week.
* Higher win rates protects you against stakeholder friction. It’s very, very difficult to get just three stakeholders together on the same page. Now imagine having to do that five times as often because your win rate is 20% instead of 50%.
Joel, nice deep dive into this. This thinking is exactly the kind of diagnosis we need to start understanding the impact of improving our win rates. Then the second series of questions regarding how we do this follows.
If there’s one thing I’d be happy for people to take away from this discussion of win rates, it’s that percentages are deceptive at the extreme ends of the curve. A solution for low win rates would be nice, too, but I’d just settle for people realizing that going from 10% to 20% or 80% to 90% is much more impactful than going from 45% to 65%.
Joel, I’m not sure I understand the basis for your observations. There is an argument about win rates too high–you may be turning away opportunities that are winnable, but with greater difficulty. But the argument of going from 10-20 as better than going from 45-65 is not something that I understand. I suspect you are applying some sort of normal curve analysis, but win rates are not a normal curve distribution.