As much as we obsess on winning, hitting our goals, earning commissions; we are actually pretty bad at it. Over the years, the data demonstrates how badly we actually do. Fewer sellers achieving quota, more customers choosing not to buy, more customers choosing not to engage sellers. Everything is going in the wrong direction.
While companies are achieving their revenue goals, they do so by obsessing on doing more. More sellers, more volume/velocity, extended outreach. But sometimes, when we get below those numbers, we see they are actually underperforming their potential. While they are achieving their revenue goals, they should actually be doing more.
Winning is so fundamental to the culture of selling, yet we are really bad at it!
Maybe, I’m a little old school, but one of the most important sales metrics for me has been our win rates! What percent of the opportunities that we qualify do we actually win?
I’m astounded by the win rates that seem to be acceptable. I was laughing with a friend, “I used to put people on a PIP when their win rates went below 30%!” Yet the majority of win rates I see, today, are less than 20%!
I ask managers what their win rates are. Shockingly, too many don’t know. I wonder, “How do you manage performance if you don’t know your win rate?”
For those that do, too many accept low win rates, almost as though they are constants in nature. “They are what they are!’
I ask, “What are you going to do?” And the responses are, “We have to find more deals! I’ve got a huge prospecting initiative in place!”
When I ask, “What if you won more of the deals you qualified?” Too often, people look at me cross eyed, probably thinking, “What is he talking about?”
Win rates, along with average deal size and sales cycle, are one of the most important performance metrics I can imagine. It drives our pipeline metrics, it drives our prospecting and marketing requirements. It drives everything we train our people on, fundamentally, we have to understand, “How do we win? What customers/opportunities are winnable? Where do we have the best fit? What does it take for us to win? Where and why do we lose? What do we have to change to win? Are we chasing the right customers, engaging them in ways that enable us to win?……and more”
Managers, even sales ops, too often have inconsistent definitions of win rates. Some track it from every contact we make. But that doesn’t make sense, we don’t know if any of these are real opportunities. Those first meetings are to determine if there is a real opportunity, if it’s the right opportunity for us to pursue, if the customer wants to work with us on it, whether it fits our ICP. Once we do this, we create qualified opportunities. Those are the opportunities that go into our qualified pipeline and become the basis for determining our win rates. We qualified them because we thought they were real and we could win them.
We measure win rates incompletely, we either track the percentage of deals we win–so if we have 100 deals and we win 30, we have a 30% win rate. Some measure them on $ value. So if we have $100M in our pipeline, and we win $20M, we have a 20% win rate.
But we need to track both! For example, when you analyze the data above, what conclusion can you make? We realize, that we are bad at winning the higher value deals. Think of how much incremental revenue we can drive if we raised the $ value win rate for the deals we have already qualified. What would you have to change to enable this?
What if you are making your numbers, why should you care?
In the past year, I’ve worked with 3 very large organizations. They were proud of their growth. They had been growing revenue tremendously, they were meeting their goals YoY. But when I did some analysis, one had a win rate of 11%, the second had a win rate of 17%, the third a win rate of 22%.
Everyone, including the CEOs and CFOs thought they were doing well.
At first, they were pissed when I said, “Congrats on making your annual goals, congrats on your tremendous growth! But you are underperforming your potential! You could easily be doing 2-3 times what you are doing. Why aren’t you?”
I went on , “In what world are those win rates acceptable? Rather than continuing to chase more and more to make the numbers, what would happen if you figured out how to win more of the deals you have already qualified? Think of the resources you are wasting to lose!”
After they got through being angry, I think they were more angry with themselves than with me, we started looking at ideas about what they might change and do differently to improve performance.
How do we improve win rates? What we’ve found in working with thousands of sellers, is that it is actually relatively easy to improve win rates, and the effort produces results pretty quickly.
First, vicious disqualification. We fill our pipelines with garbage and we spend too much time closing deals that are unlikely to ever be ours. But you see how this dynamic happens. If our win rates are low, we have to chase more deals and fill our pipelines. The propensity is to reduce the quality of the qualification process. This becomes a performance death spiral.
The answer is to chase fewer deals—but the right deals! Opportunities that are centered in our ICP. Opportunities where the customer has committed to the change because the consequences of doing nothing are unacceptable.
Just this simple step will, within weeks, profoundly change your win rate.
The other thing it does is frees up time to focus on the high quality deals. Where we had been allocating our time across every deal in the pipeline, we now have the opportunity to focus our time on the right deals. Doing this, drives even more improvement in win rates.
After this has been done, it’s important to continue to do deep win/loss analysis to learn what you have to change to improve your ability to win.
The derivative impact of this is that it simplifies our prospecting! Since we don’t need as many opportunities in our qualified pipeline, we don’t need to prospect as many potential opportunities. Again, this means we can do a higher quality job in prospecting.
We should, at a minimum consider anything below a 40-50% win rate unacceptable. The majority of our clients have win rates in the 60-70% range, and they continue to look at how they improve.
We are, actually, in control of our win rates. It’s about time we started paying attention to them!