The Hidden Truth Behind High Close Ratios
Sometimes it’s hard to separate your ego from your sales success. We live in a culture that glorifies achievement while simultaneously glossing over the unglamorous acts that help secure it. Baked into this is how we view close ratios.
A close ratio, or close rate, is a measure that shows how effectively a sales processional or sales team performs. It tracks how many sales have closed compared to the number of proposals given or sales conversations conducted. In other words - it tracks how many prospects become buyers. You can calculate your close ratio as follows:
Close ratio = close deals/ total offers made X 100
You can calculate the closing ratio for any period of time, but generally you want to look at a time period that is longer than 3 months or cross reference it with the length of your sales cycle.
I’ve seen people pride themselves on near perfect close ratios - and while that might seem like the dream and something to aspire to it could be an indicator of missed opportunities.
High close ratios can also be indications of opportunities to raise pricing and conduct more outbound sales activities. Here are two perspectives I invite you to explore:
Is your product or offer priced too low? It’s perfectly normal for sales not to close. If you close 100% of the sales offers you extend in addition to giving yourself a pat on the back, ask yourself if your pricing is still appropriate. Is there wiggle room to increase pricing?
Are you talking to enough prospects? Chances are near perfect close ratios are an indication that you are only speaking with prospects who know they are going to buy and simply need to confirm a few details. This is not sales. This is order taking. You can read more about my thoughts on order taking here, but in general this is a good indication that you need to beef up your outbound sales strategy.
I personally aim for a close rate between 75 - 85% - this tells me I’m speaking with enough people who say yes, and enough people who say no or no not right now. From there I continue to nurture these prospects and diarize follow ups and touch points. Often times these prospects will close - and it’s usually an easier sell for me down the road because the hard part has been done - I’ve established a relationship and demonstrated know/trust/like.
The next time you proudly boast your close ratio - do a quick gut check. Is it purely an indication of your sales prowess or is it telling you there are more opportunities to explore? Or both! If you or your team want support to improve your close ratios or employ more outbound sales strategies send me a DM!
