Let’s begin!
Further Reading:
- Check out our in-depth guide on everything you need to know about sales forecasting.
- Pipeline management doesn’t have to be difficult. We’ll demystify it in our pipeline management guide.
What Is Win Rate?
The win rate metric compares the number of closed-won (successfully completed) deals against the total number of opportunities. This comparison is typically expressed either as a percentage or a ratio.
Basing your win rate calculation specifically on sales opportunities, not all leads, is fundamental.
Why?
Generally, leads indicate initial interest but not strong revenue potential, occupying the early stages of your sales pipeline. In Salesforce, they precede opportunities, which are created from leads that have been qualified and demonstrate a higher likelihood of closing.
By differentiating between opportunities and leads, you can concentrate on more qualified and serious prospects that a sales rep has vetted. This provides valuable insight into the closing capabilities of your sales team.
Also, some organizations may confuse sales win rate with other pipeline metrics, such as conversion rate. While related, there’s a meaningful difference.
What Win Rate Isn’t: Conversion Rate
Win rate is specific to won opportunities in the sales pipeline, while conversion rate is a flexible metric that can apply to various stages of the customer journey.
For example, it can represent:
- The percentage of newsletter sign-ups compared to website visitors.
- The ratio of website visitors who make a purchase.
- The proportion of inquiries that turn into qualified leads.
In contrast, win rate focuses on the outcome of the sales process — whether a prospect becomes a paying customer. It doesn’t typically involve the broader spectrum of customer interactions.
Understanding these two distinct sales metrics is essential for accurately assessing and leveraging them in your sales strategy.
But first, let’s tackle the essentials of effective win rate calculation.
How to Calculate Win Rate (Formula + Example)
Win rate calculation is simple. The formula is:
Win Rate=No. of closed-won dealsNo. of opportunities100
For instance, if your sales team achieves 20 won deals out of an overall 50 sales opportunities, your win rate calculation is:
Win Rate=2050100=40%
For additional angles of analysis, you can also calculate Competitive Win Rate, Win Rate by Sales Segment, or Win Rate by Product.
1. Competitive Win Rate
What is it?
Measures won deals against all sales opportunities that compared your product or service with another solution. It guides sales strategies by revealing where you’re outperforming or lagging behind competitors.
How to measure it
The formula is:
Competitive Win Rate=No. of closed-won competitive dealsTotal no. of competitive opportunities100
To further refine your analysis, consider calculating your competitive win rate by:
- Each individual competitor for insight into specific competitive dynamics.
- Direct, indirect, or aspirational tiers to analyze competitors by their market relationship to your business.
- All competitive sales opportunities for an overall win rate.
2. Win Rate by Sales Segment
What is it?
Shows the sales win rate for each segment, such as enterprise and mid-market teams. This valuable insight helps identify which segments are excelling or need improvement.
How to measure it
The formula is:
Win Rate by Sales Segment=No. of won deals by sales segmentTotal no. of opportunities by that sales segment100
3. Win Rate by Product
What is it?
This win rate calculation shows the sales success rate of each product or service. It’s useful for companies with multiple products and sales reps or teams dedicated to selling them, highlighting which products sell the most (or least).
However, understanding what drives a product’s success or failure goes deeper. Investigate team performance and user feedback for each product, then allocate resources or enhance your offering based on your findings.
How to measure it
The formula is:
Win Rate by Product=No. of won deals by productTotal no. of opportunities by product100
Important Note:
For any sales leader, analyzing all three win rates we just mentioned together provides a fuller picture of how well your sales strategy is working. It helps you pinpoint exactly where you can improve sales performance.
How Often Should You Measure Win Rate?
A monthly tracking frequency is adequate for most teams.
That said, your tracking frequency should match your sales cycle, industry demands, and business objectives.
For those with a shorter sales cycle or in highly competitive industries, weekly or bi-weekly tracking might be better for capturing rapid changes and making timely actions.
The goal is to track it regularly enough to gain actionable insight into your sales effectiveness without becoming overwhelmed by data. Any sales manager must routinely review the chosen tracking interval and adjust as needed to ensure it remains effective.
What’s a Good Win Rate?
There is no universal benchmark for a good win rate.
Most sales teams achieve a percentage anywhere between 20% and 50%, although some research highlights more precise data. According to RAIN Group Center for Sales Research, the average sales win rate is 47% across different industries and company sizes with only minor variations.
While this statistic provides a baseline, what matters most is your specific situation.
Factors such as your company size, product complexity, sales cycle length, revenue goals, competitive landscape, etc., play significant roles.
For instance, in B2B sales, anything higher than 30% is typically considered top-performing.
Especially crucial is how many decision-makers you have in relation to a deal’s complexity and scale.
Ebsta’s 2023 B2B sales benchmark report sheds light on this:
- Enterprise deals: Win rates peak at 42% with ten to 12 decision-makers.
- Medium deals: Win rates peak at 48% with seven to nine decision-makers.
- Smaller deals: Win rates peak at 29% with one to three decision-makers.
Interestingly, the report shows that engaging too few or too many relationships lowered win rates for each respective deal size. In fact, dealing with 16+ relationships resulted in an 87% decrease in the overall win rate.
But even less favorable results can be useful.
Let’s dive into why tracking your sales win rate, good or bad, is key for pipeline health analysis and sales success.
Why Tracking Your Win Rate Is Essential
As a sales leader, you need to regularly measure your sales win rate to:
- Improve Sales Performance: Identifies areas for sales team improvement and optimization, such as struggling market segments or product lines. It leads to better resource allocation and targeted training.
- Enhance Forecasting Accuracy: Aids in forecasting sales income, allowing you to provide more accurate and tangible data for stakeholders and investors. It leads to better resource planning and decision-making.
- Identify Cause and Effect: Helps uncover cause-and-effect relationships in the sales process, answering critical questions about outreach channels, customer acquisition costs, and competitive losses.
- Benchmark and Compete: Allows a sales manager to set financial goals, reveal performance gaps, and benchmark against industry competitors, guiding adjustments to sales tactics for improved competitiveness.
It also serves a broader purpose as an integral part of your sales velocity, the speed at which you’re closing each successful sale and generating revenue.
These insights into your sales performance are invaluable.
Now, let’s explore how to put them into action.
How to Improve Your Win Rate In Seven Simple Steps
We’ll delve into seven actionable strategies to achieve a higher win rate for long-lasting sales success and revenue growth.
1. Establish Clear Qualification Criteria
To get a higher win rate, implement a structured framework like MEDDPICC for a clear and consistent approach to opportunity qualification.
Remember, you can’t fix what you can’t measure. Even a lost opportunity can teach you valuable lessons about your sales strategy and where to improve.
Therefore, standardization is crucial regardless of how your organization defines an opportunity. If everyone uses a different methodology, it’s nearly impossible to determine whether the strategy or the sales rep is causing a bad or good win rate.
2. Set Financial Targets & KPIs
When setting goals, employ the SMART framework (Specific, Measurable, Attainable, Relevant, and Time-bound).
For instance, a KPI like ‘increase win rate by 4% in the next quarter’ is far more useful to a sales manager than simply ‘achieve a high win rate.’
However, establishing a realistic benchmark can be challenging, especially when you’re just starting. You may not have a clear idea of what constitutes a low or high win rate for your organization right away.
Be prepared to refine this process as you go. Regular reviews and updates will help you establish more achievable targets over time.
Remember not to let KPI goals like these prevent a sales rep from accepting new sales opportunities into their pipeline. Help them understand the importance of seeing the big picture rather than becoming overly focused on a single metric.
3. Raise Your Sales Pipeline Coverage
Consider raising your sales pipeline coverage for a higher win rate.
Pipeline coverage compares the total value of sales opportunities to your quota within a specified period. A low coverage ratio suggests your pipeline lacks sufficient potential revenue to meet sales targets.
Increasing pipeline coverage will mitigate this risk, offering a larger pool of potential clients and reducing the impact of each lost sale. To achieve this, implement effective lead generation strategies, expand outreach efforts, and ensure a steady influx of qualified prospects.
Nonetheless, it’s vital to always balance quantity and quality in your pipeline.
Pursuing too many low-quality leads may temporarily inflate your numbers, but these gains are often short-lived and don’t translate into sustainable business growth. Focus on cultivating a pipeline rich with well-qualified prospects to ensure a consistently high win rate.
4. Set Clear Next Steps
Clarify the next steps in the sales process to prevent a deal from going “dark.”
Closing a sale involves regular and effective communication. Setting up 15-minute calls to establish concrete next actions, even for small tasks like signing the quote link, helps to keep each opportunity on track.
Don’t hesitate to maintain frequent communication with your prospects.
5. Involve Decision Makers Early
Turn every interaction into a successful sale by incorporating decision-makers into the sales process from the outset. This helps you prevent late-stage roadblocks and qualify prospects more effectively.
This way, you can promptly identify unsuitable sales as decision-makers can reject them early, allowing your team to concentrate on potential won opportunities.
Meanwhile, if you’ve got a possible sale, keeping decision-makers in the loop from the beginning helps you avoid unexpected obstacles down the line.
To steer clear of surprises, inquire about their internal evaluation process and identify who else is involved to ensure alignment with your pitch.
6. Avoid Assumptions
A successful sale requires understanding the unique motivations, needs, and success criteria of each opportunity. So, avoid making assumptions about prospects and instead focus on learning their situation through active listening and appropriate questions.
Closing knowledge gaps enhances your communication and builds trust, positioning you as a valuable partner dedicated to their success. This, in turn, significantly boosts sales effectiveness and your rate of won deals.
7. Establish a Single Source of Truth
Streamline your data and technology systems to create a single, reliable source of truth for win rate tracking. This prevents data from becoming scattered across multiple platforms, minimizing the risk of errors or discrepancies in your sales performance analysis.
But it’s not just about win rate analysis. Having accurate, up-to-date deal information in one place is equally, if not more, important for insight into where each deal stands and keeping everyone on the same page.
Sometimes, traditional CRMs make tracking data even more complex. In such instances, a CRM add-on that ties everything together for your sales team can simplify the process and maximize sales effectiveness.
Elevate Your Win Rates & Sales Effectiveness With Scratchpad
Simplify your Salesforce journey and effortlessly capture every critical detail with Scratchpad!
Scratchpad is a suite of modern sales tools seamlessly integrated with your current workflows. It’s designed to help sales teams work faster, collaborate, and give leaders more visibility.
This enhanced pipeline visibility empowers your sales team to focus their skills on the most critical goal: confidently closing deals.
Easily update important fields, streamline your forecasting, and perform comprehensive deal evaluations from multiple angles.
Let’s take a deeper look:
- Capture sales conversations with Scratchpad’s AI Sales Assistant, an advanced sales call recording feature with AI-assisted notes, shareable clips, call summaries, and even auto-filled Salesforce fields for methodologies like MEDDIC.
- Set up automations in Slack and turn time-consuming manual tasks into streamlined zero-code workflows. Automatically create and manage Deal Rooms in Slack for better visibility and collaboration.
- Make swift updates to Salesforce fields, objects, or next steps through advanced views.
- Design navigational shortcuts to essential data with workflow tiles.
- Spot pipeline gaps with deal spotlights, receive notifications for incomplete fields, and ensure each sale aligns with expected close dates and forecasts.
- Integrate Salesforce workflows with your notes to edit, share, and templatize them for repeated use.
- Better Forecating with Roll-ups from sales rep to sales leader level to reveal which data points and past changes link to which opportunity. Unpack forecast changes with Waterfall Analytics and visualize forecasts based on historical performance with trends analytics and daily snapshots.
Understand Your Win Rate to Unlock Sales Success
Tracking your win rate isn’t just beneficial but essential for refining your sales strategy.
But mastering this metric is about deeply understanding its nuances.
When you grasp what drives sales success or failure, you unlock the power to optimize your processes and propel your sales performance to new heights. Achieving a high win rate becomes a lot more straightforward when you can centralize and streamline your sales data.
With tools like Scratchpad, managing Salesforce data doesn’t have to be a chore.
Why not see the difference for yourself?
Start using Scratchpad for free today and unlock the full potential of your pipeline metrics, transforming how you manage and forecast your sales pipeline.
