The 30% Myth: A Hot Take on Close Rates
May 13th, 2021
May 13th, 2021
“If you have a .300 batting average, you’re an all-star.”
We’ve heard sales teams use this statistic as an analogy for our close rates. You can’t hit every pitch; you can’t win every call. A .300 batting average puts you in the baseball hall of fame; a 30% close rate represents a job well done.
These snippets of wisdom come from sales leaders with decades of sales experience. They’ve seen where deals get lost, where reps go wrong and know what it takes to produce a winning team. No question, they’re sharp.
When we talk with sales leaders, without fail, the topic of improving close rates comes up. But during these conversations, there’s one particular topic that they notably avoid.
Sure, we’ll discuss this question in some way, shape or form. We’ll generate CRM reports and chop up the data 1,000 times in 1,000 different ways. We attack the data with plenty of thoughtful, scientific questions. In what industries were close rates the highest? How did close rates differ by lead source? Which territories performed better than others?
But there’s also a single, simple answer to the question. The answer requires us to acknowledge an uncomfortable possibility that seems more likely the more you think about it.
What if your sales reps just blew it on 70% of their sales calls?
When you ask sales leaders to provide a baseline for what exceptional sales performance looks like, they point to the top rep on their team. This method seems to make sense until you hear that the top rep is closing 35% of calls.
“New company, novel product,” we justified. The 28% close rate was like a trophy.
Then Balto hired a sales rep that achieved a 48% close rate in her first 6 months and blew the cover off our mediocre sales performance.
We learned that if your top rep is closing 28% or 35% of calls, the only thing this tells you is that you don’t have a rep on your team with a 36% close rate. Or a 50% close rate. Or higher. There’s no way to know how much business you could really be closing – because you’re not closing it.
It doesn’t matter how stellar your top sales rep is; if you are setting your ceiling for exceptional sales performance at closing just 35% of the business that comes your way, you are aiming way, way too low.
How did sales leaders universally decide that closing 80%, 90%, or 99% of deals is an unreasonable goal? In almost any other industry, achieving a 30% success rate would mean catastrophic failure. What if your accountant only identified 30% of the tax refunds you deserve? What if your mechanic told you she was on a cold streak, tried switching up her method for fixing your exhaust system, and only got 30% of the job done? In what other consumer-facing industries is a 30% success rate even remotely acceptable?
Salespeople have gotten used to losing, and the losing mentality echoes throughout the sales organization like an overplayed Top 40 song. You hear traces of it everywhere, from the sales team’s closed-lost stories, to the organization’s sales projections, to the hiring strategy and marketing plan.
The impact of losing is far-reaching. It sticks with you. Over time, even the most ambitious sales leader will drink the losing kool-aid. Soon, we find ourselves standing on a chair delivering pump-up speeches to the sales team about how Hall of Fame baseball players only bat .300.
The math on how close rates impact your revenue is actually a little counter-intuitive, so let’s break down the numbers.
Your sales team closes 30% of their calls – they hit the ceiling you set. But we ask again: what happened to the other 70%?
Let’s assume out of all the calls that don’t close, 80% are just straight-up unwinnable. No matter what your agents could pitch or offer, the buyer isn’t going to move forward. That means 56% of all calls are unwinnable: 70%*80%=56%.
So what about the remaining calls outside those your team closed and those they absolutely weren’t going to close? 100%-30%-56%=14%.
Despite still aiming for the low ceiling of 30%, 14% of all calls were ones that could have been won but were still lost. Fourteen whole freaking points. How much revenue is that left on the table? Look at the size of that pie slice. That’s half of your closed-won slice. A slice filled with 50% additional cash your reps are forgetting on the counter.
Again, this lost revenue isn’t from the “unwinnable” category – this is money flushed down the toilet by reps making mistakes on a call that should have been a win.
How many times have you told yourself,
“That call should have been a win, my rep knows better”?
Probably more than once. Crossing that fine line between winning or losing a sale doesn’t take much more than saying the wrong thing at the wrong time. But you have twenty, a hundred – or even more – reps making more calls than you could ever coach on, let alone QA.
Sales teams across the US have started using technology to fill that gap. It’s called Real-Time Guidance, an AI-powered innovation that listens to both sides of a conversation and visually prompts reps with the best things to say, live on every call. By giving your reps in-call reminders of exactly what to say – whether it’s asking discovery questions or overcoming your #1 objection – they have the confidence to push the limits of their close rates.
Sales leaders are using this new technology to understand what their top sales reps are doing and instantly push those winning sayings and behaviors to the rest of the team. And instead of standing over their reps shoulders, they’ve used Real-Time Guidance to create accountability in their sales force. That is, without the time-suck of reviewing individual calls and providing feedback days after the call took place.
National General Insurance, one of Fortune’s 100 Fastest Growing companies in 2017, increased their sales performance by 16% using Real-Time Guidance in just 14 weeks. As if this isn’t enough, they also decreased their handle time by 53 seconds
Another large insurance group achieved a mind-boggling 132% increase in close rates using Real-Time Guidance. And it only took one month.
.300 may be great in baseball, but your sales team shouldn’t have to settle. Don’t leave money on the table when your reps can be doing better – with less coaching. The right tools can help win every possible call and send your revenue to the stars.
Read how Real-Time is changing the way sales leaders drive revenue here.
There’s no better way to see the power of real-time than to experience it live. Request a demo and we’ll show you the power of Balto’s real-time guidance in real-time on our first call.
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