When the Close Rate is too low, there are a fair amount of reasons that are likely to be variations of the following 4 possibilities:
- There may not be a Target Addressable Market which would allow the effort to be directed
- There is no strict definition of what is a qualified deal
- Sales people burn themselves and company’s ressources following opportunities they cannot win,
- The market may not be there because competition is too strong in terms of offering and/or pricing.
Things become more funny when Close Rate is too high because it is a factor of pride when it probably should not:
- Pricing is too low. Instead of selling value, the Sales team is diluting it and that game typically ends it in unnecessary price war. Most of the Win Loss analysis show price comes second or third in selection criteria
- The Sales team may be focusing too much on the low hanging fruits (eg selling variations of the same thing to existing clients).
Be sure that at some point, competition will try to have a go as this because they will fight for deals that are hard yet possible to win. When you don’t. Winning 1 deal out of 2 you competed for when the market is made of 10 opportunities is not a 50% Close Rate. It is 10%.
