Most likely you are already familiar with the win ratio concept. But do you really know how it should be calculated and some common mistakes to avoid.

A simple definition: what percentage of opportunities do you actually win? So if your win ratio is 40% it means you sign 40% of the opportunities you actually go after. Not exactly rocket science, but wait there is a catch of course!

How do you define an opportunity? Normally it should be:

– an MQL (Marketing Qualified Lead) : opportunity considered by the marketing team as actionable by the sales team which has then been transformed (accepted) as:

– a SQL (Sales Qualified Lead): opportunity confirmed by the sales team, with an expected close date in line ywith your business. So let’s take a few examples to understand where some expertise is actually required, in order to get a valid win ratio

1°) Marketing has identified an opportunity to be closed within 6 months with a prospect and passes on the MQL to the sales team

2°) Sales team talks to prospect, let’s look at the different scenarios:

– there is an opportunity, but budget is way below what they can sell: MQL is rejected and will not make it to the pipeline. No SQL is created

– there is a qualified opportunity, with a real budget, an an expected close in 12 months: as it is too far comared with your normal sales cycles, it we be created as a Sales Lead (for nurturing) but not yet as an active opportunity. In 6 months, if still valid it may be transformed into a Sales Qualified Opportunity.

– there is a qualified opportunity, with a real budget, and a close date in 3 months. A Sales Qualified Opportunity is created

3°) Once the Sales Qualified Opportunity has been created, we will have to track what happens. We can either win or lose the opportunity. But in reality sales people will often find other routes to avoid impacting their sales ratio: 

– delay, close date by a few months (no impact as long as it is not done several times)

– delay expected close date by longer than average sales cycle (this should be considered as a lost opportunity)

– project abandonned by prospect: this should be a lost opportunity (was not properly qualified initially)

– vendor dropped the project (realised there was not a good functional fit for instance): this should also be a lost opportunity

These are just a few examples to illustrate that a reliable win ratio is not so simple to calculate accurately. it requires a clear definition of the processes and a constant monitoring of how the CRM system is actually used by the sales team.

Yet this is one of the most important KPI to assess the performance of a sales team.