Ask 100 sales leaders whether they track win rate or close ratio, and you’ll probably get a pretty even mix.

Then ask those same 100 sales leaders to define each one... and you may get 100 different answers.

Sales can be fun like that (insert humor)! 

But here’s what actually matters:

How many opportunities are you working, and how many of those opportunities are turning into business?

Because once you know that number, you can stop guessing about how much pipeline you need to hit your sales goals.

First, Let's Talk Definitions

There are different ways to calculate these metrics, but here are the definitions I typically use.

Win Rate

Win rate looks at the opportunities that reached a final decision and asks:Of the deals we won or lost, how many did we win?

The basic formula:

Closed/Won Deals ÷ (Closed/Won + Closed/Lost Deals) × 100

For example:

You had 20 opportunities reach a final decision.

You won 8 and lost 12.

Your win rate is 40%.

This can be a really useful measurement because you're comparing yourself against deals where there was actually a decision made.

Close Ratio

Close ratio takes a slightly broader look.

Instead of only looking at deals that ended in a win or loss, you're looking at the qualified opportunities you pursued and asking:

How many of these opportunities actually turned into customers?

The basic formula:

Closed/Won Deals ÷ Total Qualified Opportunities × 100

If you pursued 50 qualified opportunities and 10 became customers, your close ratio is 20%.

Seems simple enough, right?

Well... this is where it can get a little messy.

What Counts as an "Opportunity"?

This is where I see companies get stuck.

What exactly goes into the denominator?

Is it….

• Every lead that comes in?
• Every discovery call?
• Every qualified opportunity?
• Every proposal?
• Only opportunities that made it to a certain stage?

And this is why two companies can say they have a 40% close ratio and be measuring two completely different things.

You may be thinking:

Amy... this is getting too complicated…It absolutely can! But don't let that become the reason you don't track it.

Instead, decide what makes the most sense for your sales process, define it clearly, and then measure it consistently.

Your Business Model Matters

How I measure this can change depending on what the company sells and how its sales process works.

In software sales, for example, I often looked at the opportunities sitting in the pipeline at the beginning of the month that were positioned to close that month. Then I measured how many actually closed.

That gives you a pretty tight view of execution, but it also requires one very important thing:

A clean pipeline.

If your salespeople have deals sitting in stages where they don't belong, your metric isn't going to tell you much.

For a company selling consumable products across an organization, I might look at it differently. I may measure the qualified opportunities that reached the proposal stage against how many actually closed.

Different business. Different sales motion. Different measurements.

And that's okay.

The Wrong Answer Is Not Measuring It

I don't think there is one perfect formula that every sales organization should use. But I do think there is a wrong answer: Not knowing your number at all.

Let's say over time your team closes 50 deals for every 300 qualified opportunities it works. That's roughly a 17% close ratio. Now we have something we can work with.

If your goal requires 50 new deals next quarter, but your team only has 100 qualified opportunities entering the process, you don't have to wait until the end of the quarter to find out you're in trouble. The math is already telling you.

And THAT is why this is a leading KPI.

It's not just about looking backward and saying, "Our close ratio was 17%." It's about using that 17% to look forward.

• Do we have enough opportunities?
• Are we creating enough pipeline?
• Are deals moving quickly enough?
• Do we need more activity at the top of the funnel?

This is where all of the KPIs we've been talking about start working together.

Take the Guesswork Out of Your Number

This is one of my favorite things about KPIs. They remove some of the emotion from sales.

Instead of:

"I think we have enough pipeline."

"The team feels pretty good about the quarter."

"We have a lot of deals we're working."

You can say:

We know how many opportunities we need, because we know how often we win.

That's a very different conversation.

And once you know your typical close ratio, you can start looking 30, 60 and 90 days ahead and see whether you or your team are doing enough today to hit the number tomorrow.

That's when a KPI becomes useful.

If you're not sure whether win rate, close ratio, or another variation makes the most sense for your business, don't overcomplicate it. Start with understanding your sales process and what you want the metric to tell you.

And if you need help figuring out what that math should look like for your team, reach out. I'd be happy to talk it through with you.

About Pivot 2 Performance 

Pivot 2 Performance was created to help sales professionals and sales leaders build the foundation behind the numbers  from daily activity and weekly rhythm to pipeline discipline, accountability, value, and more.

It's practical, affordable, online training you can work through at your own pace.

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