The importance of a sales team’s closing ratios

How many qualified prospects is your sales person currently talking to and what is the estimated value of the potential business to be acquired?

This is a mission critical insight, if their closing ratio is one in five then their pipeline must be maintained at all times to have a value five times greater than the sales person’s monthly or quarterly sales target.

This is probably the single most important Key Performance Indicator (KPI) in any sales team. If a sales person target is £10k and they close one in five they need to maintain a pipeline of £50k at all times.

How many prospects do they need to get in front of to win new business?

Every trip to site, every proposal written is a cost to the business. Improve a sales persons closing ratio and you will reduce your cost of sale AND improve the sales persons target performance. The key to managing a closing ratio is to manage the sales person’s qualification skills this is done by regularly reviewing their pipeline and asking “tough” questions about how well they have qualified the prospect.

Typical closing ratios

These numbers are for guidance and can change due to a wide range of circumstances.

Market conditions, the sales person’s lack of effort, levels of training, time of year can be factors that  influence a sales persons closing ratio. However the numbers below have provided the author of this document with a very good indication of what to expect after many years of managing sales teams.

  • Business owners                                                                                1 in 2   to 1 – 3
  • Major accounts (one or two large multi-site customers)           1 in 2   to 1 – 3
  • Good Hunters (new business acquisition)                                    1 in 4   to 1 –  5
  • Farmers (customer retention upsell and cross sell)                    1 in 3   to 1 – 4
  • Rookies (first 3 – 6 months)                                                            1 in  7   (improving rapidly after the first few orders)
Sales Strategy
About Transmentum
Transmentum are a specialist business working with growing IT, technology and software companies in the managed services industry.. With a proven track record of helping businesses to grow business revenues, profits, skills, and people, Transmentum add value to those who are building a recurring revenue model – including those who aspire to move into the Cloud or develop their own managed service propositions.