By: Tony Kevin
I’m always talking about closing percentage amongst my peers. About 18 months ago I became obsessed with building metrics that helped me forecast better. I ended up focusing in on tracking my pipeline metrics and now 18 months later I have been deadly accurate in my forecasting.
Ultimately, for me, it came down to figuring out my on-going, consistent close percentage. I began by trapping key metrics about my pipeline before I submitted my forecast. Those who know me, know that I’m not a huge fan of factored pipeline. The concept of getting all my reps to use the sales stages the same way is a challenge, AT BEST. I use Total Open Pipeline. I believe it’s more practical to work with sales reps to enter their opportunities and then categorize them by commit, best case and general pipeline than it is to get all the reps to comply with the details associated with al the sales stages related to a sales process.
I’m not saying the sales process isn’t important. I believe strongly that it is. I just believe that reps don’t spend the time in the CRM system representing all their deals accurately. So until utopia comes to visit me, I will continue to use Total Pipeline.
My method is to trap the pipeline numbers at the beginning of the month by the categories I listed above; Commit, Best Case and General Pipeline and then compare my actuals each month against my pipeline. Over the last 18 months I’ve been within 2 percentage points every quarter. I’ve been averaging right at 19.5% close rate.
My definition of close rate is to divide my actual bookings by my open pipeline at the beginning of the period, typically by quarter.
Some teams calculate close % differently. Usually the other popular method is to calculate the metric based on number of deals. My teams sell a pretty large ticket solution so I feel revenue (bookings) is a better metric.
The Real Value
The real value in calculating this metric is to use it to drive better selling strategies. Once a sales team can see what it’s close % is they can focus on efforts to improve the metric. Without Close %, they simply don’t know whether they are becoming more efficient in their sales efforts.
I use it on my team to drive awareness around value selling. That’s the most obvious remedy for an anemic close %.