In sales, measuring success and failure is critical to understanding whether strategies were effective or implemented to expectations. The sales win rate is among the key sales metrics used to make informed assessments of sales productivity, management, and strategy.
What is Sales Win Rate?
Sales win rate is the percentage of deal-stage prospects that convert to customers. If you're closing sales opportunities successfully, your sales win rate will reflect it.
Why is Sales Win Rate an Important Metric to Track?
The metric tells you whether your sales strategy and marketing efforts have the desired impact. It's a reliable starting point to evaluate the effectiveness of various factors that go into making a sale, including your:
Sales team, whose performance can be gauged more deeply to uncover pain points and solve them
Sales leaders whose handling of the team will positively or negatively impact sales reps' performance
Sales process, which if inflexible, overly complicated, or informal, can impede deal wins
Target audience, who may not be the ideal customers you believe they are
You may be forecasting revenue from the opportunities created. But the closed-won deals will ultimately matter more. By providing useful insights into the number of deals and the deals that matter, win rate analysis can help improve forecasting, especially as your sales cycle grows.
The Formula for Sales Win Rate
Sales win rate is calculated as follows:
Number of closed won opportunities/Number of closed opportunities (closed won + closed lost) over the same time period.
If you closed 20 deals and won 2, your sales win rate is 10%.
Another sales KPI, close rate, measures closed opportunities against the sales opportunities created over a time period. It is calculated as follows.
Number of closed won opportunities/Total number of opportunities over the same period
How to Calculate Sales Win Rate?
Calculating your sales win rate by the number of closed won opportunities will help you evaluate the outcomes of your annual, monthly, or quarterly targets. You can also use the formula to calculate your win rate by the value of each deal. Add the value of all closed deals over a time period and the value of won deals. Say you closed deals worth $100,000 monthly and converted 10 deals worth $50,000. Your sales win rate is $50,000/$100,000 or 50%.
Industry Benchmarks
According to a B2B Sales Benchmark report quoting Foxtail Marketing, the average of sales-qualified leads that convert to customers is 22%. A higher sales win rate of 30% is easier to achieve for leads coming through referrals, channel partners, or marketing. If successful deals are due to outbound sales efforts by reps, 15% is a reasonably high win rate.
Adjust the sales win rate for industries that convert at a lower level. Look up the win rate standard for your industry and aim to exceed it. You will have to set a corresponding sales quota to achieve the target. A rule of thumb is that 80% of your sales team should be able to hit their quota most of the time. But this number is not set in stone - determine the realistic quota for your industry, revenue goal, and average deal size.
When calculating the metric based on the financial value of deals, higher deal values will positively impact revenue and create positive perceptions of sales strategy and team performance. The win-loss ratio and percentage of successful deals versus closed deals should still be calculated, as even small improvements in win rate can drive huge gains in revenue.