Win Rates in a Complex B2B World: Are You Measuring and Using Them Effectively?
People in sales understand win rates. While most claim they measure and use them to drive execution improvements, this is not what we observe.
Win rates are the number of times you win deals that you have competed in. In a complex B2B sales world, these wins lead to revenue, customers, and confidence in your team. They are the one key metric that is easy to measure in sales cycles for every rep, pre-sales person, and products at the individual unit level. Win rates can be used for numerous roll ups depending upon organization structure, management and functions in your company. Many companies do this well and analyze this Big data with AI and BI tools. They use this metric as an after-action report on what has occurred to give the INSIGHTS to both predict the future and make necessary changes. However, we find that many hot growth SAAS companies are measuring it inaccurately; not using it to implement incremental improvement or innovation; or simply not measuring it at all. We believe that this can be dangerous; getting stuck with the wrong Status Quo as the competitive landscape shifts.
I recently asked Bill, the VP of sales of a $120M SAAS company, if he used this metric. He answered: “of course, doesn’t everyone?” My initial assumption then was that he understood this metric and knew how to use it effectively but was surprised when he told me his company’s win rate overall was 60%. As a healthily skeptical person, I told him that this was excellent, especially when Sirius Decisions research data reveals that best in class B2B enterprise sales companies have a 40% win rate, 30% loss rate, and 30% of the deals going away. How could this company have these awesome statistics? Unfortunately, I discovered they did not include all the total deals that quota sales people put time and effort into. Their numerator was skewed in a way that gave them a false sense of success, not looking deeper for operational improvements. As we helped them review this data more accurately, they discovered some ideas for improvement that caused large positive effects on their performance, revenues, and profit. If Sirius research statistics are accurate, depending on your revenue curve, winning one or two more deals per person can have a tremendous affect on the company’s performance. Knowing the types of deals that you lose or never sign can be essential in collaborative planning discussions to qualify out early or change strategy and tactics.
Another VP of sales I interviewed mentioned sales has changed and asked if there were other activity measures that were more important to measure. At CI2, we believe both. Sales has changed with buyer 2.0 having the ability to get more information and less time to meet with vendors. What is not true is that we are still in a game where winning means something. Although MRR, ARR, and retention metrics are important today, the core KPI of win rates is still one of the most reliable ways to assess and measure performance. When reps know their win rates by year compared to their peers, they will become more curious about what the “best of the best” are doing to achieve higher performance. When product managers know their win rates they will get more curious about what they need to do to make the product more competitive. When sales managers and VPs of sales know their collective and individual win rates, they will be able to assess their sales leaders, teams and sales operations to determine needed changes. Win rates are a way to discuss what’s really happening and engage in a dialogue about how to continuously change to increase performance. It’s a number that everyone should know and be working hard to improve just as it is in all other team sports where millions of dollars are at stake.
At CI2, we believe there needs to be a rebirth of the Win Rate metric. With all the advanced technology tools and data available it should be easier than ever to capture, report and slice in dice in ways to help companies and peoples improve and innovate.
If you are interested in challenging your usage of this metric, click the questionnaire link below. We are here to help you unlock more of your potential.