🥇 What's a Good Win Rate?🥇
The best closers have win rates of 20%. Some have win rates of 30% (or even higher), which is excellent but not the best. Let's dive in and explore why.
It starts with the calendar
Arguably the strongest correlation to high engagement, performance, and retention in sales, but rarely evaluated, is the closer's calendar. Who's more likely to crush quota this quarter – the one with the full calendar or the bottom?
Quantity leads to quality
Idle time is an account executive's worst enemy. Prioritize filling the calendar with three to five sales meetings a day over worrying about lead quality. Each sales call presents an opportunity to sell – gather information, earn referrals, build relationships, and rep the brand – no matter how dead-end the lead or meeting turns out to be.
That's why we should be cautious of recognizing win rates above 30%. Are we over-hyping win rate as a core sales metric for evaluating performance? Are we too picky and selective with who we sell to, thus leaving money on the table?
The best closers are confident in their ability to turn a subpar lead into a legit opportunity, even if that means their win rate suffers. And a happy and engaged seller is one with a booked calendar.
How to calculate win rate
Win rate is easy to manipulate. To inflate it, we say an opportunity is only qualified when it reaches a later deal stage in our sales process. Most sellers expect a minimum of one completed meeting (such as a discovery call) to qualify a deal. Some teams qualify opportunities only after a demo or when revealing the product.
Once the qualifying event is confirmed, we need the formula to track win rates. A typical calculation is the in-quarter close rate where the only opportunities counted are those closed as won or lost.
Here's an example of an account executive winning 40% of her deals under this formula:
- 30 qualified opportunities
- Four closed as won
- Six closed as lost
- 20 still open and pushed into next quarter
It's easy to spot the flaws. Most notably, this calculation encourages "pushing" from account executives. Instead of closing dead-end deals as lost, it's easier to move the close date to a future quarter.
The better way to evaluate our win rates is to simplify the formula into an annualized basis or rolling periods with n wins / total opportunities.
Here's the same account executive winning 20% of her deals in 2021:
- 125 qualified opportunities
- 25 closed as won
- 100 open opportunities or closed as lost
The sweet spot win rate of 20% is a solid rule of thumb. All sales, however, are not created equal. If we close smaller value transactional deals in a high-volume business (with little calendar whitespace), winning a third of our opportunities is best-in-class.
A higher close rate holds when lead source equals channel partner, marketing, product, or referral. If a bulk of our leads fall into this category, then aiming for 30% or better should be the goal.
Win rates around 15% are reasonable when it's outbound-sourced by an account executive or sales development rep, or if our average selling price approaches six or seven figures and deal cycles are more strategic.
Finally, selling for a startup (and going to market with a new product) or a company with a little-known brand impacts our win rates too. If our product or brand isn't category-leading, then a lower win rate is entirely acceptable and should be celebrated.