SellingBrew

Insights & Tips

Already a subscriber? Login

Become a subscriber and unlock an information arsenal focused on making your sales operation more effective.

The Wrong Way to Compare Close Rates

During the subscriber webinar, How to Improve Your Close Rates, an attendee asked a question that lots of people can probably relate to:

We track and compare close-rates by sales rep. But sales managers always seem to brush-off the massive variances we’re showing as being “mix related”. Any suggestions?

Now, the person asking the question was probably hoping to get some tips, suggestions, or Jedi mind-tricks for getting their sales managers to stop being so obstinate, and actually do something about the poor performers.

But in this case, I had to be the jerk who actually agreed with sales management. After all, is it reasonable to expect that sales reps would have similar closing ratios on very different types of opportunities? Really? No way.

You see, unless every opportunity is similar— the same products, in the same quantities, to the same types of customers, under very similar circumstances—it’s hard to draw accurate conclusions about differences in salespeople’s overall close-rates. If each salesperson’s mix of opportunities is different, then it’s reasonable to expect that their close-rates would be different as well.

And therein lays the answer…

If you want to compare close-rates by salesperson in a credible way, you first need to create buckets (or segments) of opportunities that are very similar in makeup—i.e. similar products, similar deal sizes, similar customers, and so on. The deals in each of these “opportunity segments” need to be so similar that even the most stubborn sales manager would have to agree that it’s reasonable to expect similar conversion performance.

In a sense, by segmenting the opportunities first, you’re “mix adjusting” each salesperson’s closing ratios and thereby making it much more difficult to brush-off big variances.

Of course, the bigger question here is whether you really want to be doing this type of salesperson-focused analysis in the first place? I mean, it’s one thing to do it because management is requesting that it be done. But it’s quite another thing to be calling-out individual reps on your own initiative.

All things considered, I’d say that this is definitely one of those situations where if you’re going to do it, you’d better do it right!

Get Immediate Access To Everything In The SellingBrew Playbook

Related Resources

  • Delivering Answers to the Point of Sale

    Our latest research has shown that more data and tools for the field won't improve results. This tutorial reveals a more effective approach for getting salespeople to use data and analytics to make better decisions.

    View This Tutorial
  • How to Improve Your Sales Pipeline Analysis

    Pipeline analytics is great for reporting on current performance, but it can do so much more. This guide outlines 12 strategies for improving deal probability, velocity and value across every salesperson in your sales operation.

    View This Guide
  • Managing Multichannel Pricing

    In this on-demand webinar, you'll learn about market mapping, MAP policies, and other tactics and tips for minimizing the potential for channel conflict, reputational damage, and margin erosion.

    View This Webinar
  • Lowering the Cost of Customer Churn in B2B

    It's not uncommon for 30-50% of a company's customer base to be in some stage of defection. We spoke with Javier Aldrete and learned the new approaches companies are using to recover the revenue they're losing to customer defection and churn.

    View This Interview