Closing Rate refers to the percentage of sales qualified leads that become paying customers. By monitoring your Closing Rate, you are able to improve your sales cycle.
How to calculate your Closing Rate:
(#) of New Customers / (#) of Sales Qualified Leads = (#) Closing Rate
Sales Qualified Leads (SQLs) refers to people who have shown interest in purchasing one of your services and ready for a direct sales follow up. Tracking this metric ensures your marketing team is generating high-quality, sales-ready leads.
What we like about Closing Rate:
The first benefit of tracking your Closing Rate is pretty obvious. It helps you track the efficiency of your sales team, which is often YOU when you’re first starting out. If you’re struggling to close deals, the first thing you should reevaluate is your sales cadence.
The second benefit of tracking your Closing Rate is not so obvious. Tracking your Closing Rate also helps you to understand if there are any issues with the quality of leads you’re receiving. If, after reworking your sales system, you still have trouble closing, you may then need to take a look at the Sales Qualified Leads (SQLs) you’re generating from your marketing efforts.
What we DON’T like about Closing Rate:
If your average sales cycle spans many months, then measuring your Closing Rate over a week doesn’t make sense. You’re not expected to close deals that quickly.
So it’s important that you understand your Average Sales Cycle Length. This will give you a better understanding of how quickly you are expected to win deals and allow you to better calculate your Closing Rate. For example, if your average conversion time from SQL to paying customer is three months, then you simply take the new customers created in month three and divide them by the SQLs generated in month one.
Sales metrics similar to Closing Rate Rate:
Before you select Closing Rate as your One Metric That Matters (OMTM), be sure to check out these related sales metrics and KPIs for context.
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