Competitive sales teams are aware that development and success over the long term depend on their capacity to modify their sales process. However, haphazard, pointless strategy changes won’t really help with performance or advancement. Sales teams require a valid metric to assess their performance.
Sales teams may better understand what’s working, what isn’t, and which phases of the sales process require adjusting by evaluating their closing ratio. In turn, they are capable of making sensible adjustments that eventually raise the closing ratio.
We’ll go through the closure ratio’s significance, calculation, and several major instances of how an organization could benefit from it in this article.
A closing ratio is defined.
The closing ratio, also known as the win rate, close ratio, closing formula, or lead-to-close rate, is an important sales indicator that compares the number of deals you’ve closed with the total number of prospects you’ve generated. The closing ratio for each individual seller or the complete sales team may be determined using the formula.
The close ratio may technically be calculated at any level of the sales process over any amount of time, but it works best when it’s used to assess a particular, later stage of the sales process over a minimum of three months. Instead of maybe spotlighting an anomaly or deviation brought on by a single, one-off element, this will give a more accurate picture of what’s truly happening in the sales cycle.
Closing ratio calculations and analyses can be useful for sales executives, regional sales managers, operational sales managers, and even individual salespeople. A low closing ratio might indicate ineffective procedures, weak strategy, or a misalignment with marketing at the team level. Lower victory rates at the individual level may point to performance concerns that should be resolved quickly.
Calculating closing ratio
The closing rate formula is always the same, no matter who uses it or when:
Closing ratio = (# of closed won deals / # of opportunities created) x 100
It’s vital to understand that “winning deals” refers to contracts that were signed and concluded within a specific time frame, while “opportunities produced” refers to all the leads that were contacted within the same time frame.