B2B Sales Win Rates are in a 5-Year Decline

According to the latest report from CSO Insights, B2B sales win rates are caught in a 5-year decline, with no evidence of an upcoming rebound. It’s something that every sales manager - and every CEO - needs to pay urgent attention to...

Although, according to CSO Insight’s Sales Management Optimisation 2011 Key Trends Analysis, sales win rates have declined from just over 50% in 2006 to under 45% in 2011, it isn’t your competitors who are benefiting. Losses to the competition have remained steady at an average of just over 30%.

Nothing is the Big Winner

The big change is in deals that are ending not in a win or a loss, but a decision to “do nothing” - up from under 20% to nearly 25%. Just to put this into context, these figures are for apparentlly well-qualified deals that have been confidently forecast by the sales person concerned. Despite all this confidence, less than half are being closed.

Just in case a five percent swing sounds trivial, one CSO Insights client apparently calculated that - for their business - a 5% increase in sales win rate would result in a 22% increase in revenue per sales person. The impact is clearly substantial. But what are we to do about the situation?

The Need to Qualify Better

Some percentage of those confidently forecasted deals were never destined to close. The signs were, in retrospect, probably obvious: the prospect didn’t fit the vendor’s ideal customer profile, or didn’t have a sufficiently compelling reason to change the status quo.

But because the deal wasn’t qualified out early enough, it continued to draw on resources that could have been better applied to other deals. So my first recommendation is to qualify harder, earlier, and more often. Start by defining your ideal customer profile. Be resolute about challenging deals that don’t seem like a good fit or which appear to lack urgency. If you redirect your energies you can - and you will - uncover more promising opportunities.

Sales Managers Need to Become Better Coaches

In a not unrelated finding, CSO Insights concluded that nearly 50% of all sales managers “need improvement” when it comes to coaching and mentoring skills training. The combination of poor qualification and inadequate coaching and mentoring is particularly damaging. Sales managers are failing to identify the deals that need to be questioned, and the sales people that need to be helped.

If you’re a CEO or a Head of Sales with sales managers reporting to you, this is a matter that requires your urgent attention. Training your sales managers is every bit as important - we would say more so - than training your sales people. How much time are your sales managers devoting to mentoring and coaching? Do they have the information that allows them to identify where to focus? And do they have the skills necessary to elevate the performance of your average sales people?

Elevate the Average

Your top performing sales people, by and large, have achieved that position because they have strong qualifying skills, and an ability to identify and implement the appropriate account strategies. They probably don’t need your help.

It’s the 50-80% of sales people in the middle that will benefit the most from focused attention. It’s their performance that is dragging down your average win rates, lengthening your average sales cycles and contributing to your forecast inaccuracies.

Reversing the Trend

The trend can be reversed. Here’s what I recommend: distil the winning habits of your top performers into a set of best practices in opportunity qualification and account management. Develop targeted training to share these winning ways across the whole sales force. Embed them into your CRM system. Reinforce them in your daily interactions with your sales people.

Most of all, make sure that your managers have good data as well as good training. Ensure that your CRM system is capable of tracking deal velocity, and elevating stuck deals for management attention. Equip your managers to manage by exception, and free up their time from inspecting to coaching, mentoring and enabling. Track your win, loss and no decision rates like a hawk. And resolve to turn those “no decisions” into wins.

How many of your forecasted deals are ending in "no decisions"? And are you doing everything in your power to eliminate them?