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What is the Minimum Acceptable Close Rate on Leads Provided to Sales?

Posted by Dan McDade

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on Mar 19, 2010 2:00:00 PM

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I posted a question on LinkedIn's Sales and Marketing VP's Group and the results have been fascinating. First, here is the question as posted:

"What is the minimum acceptable close rate for leads provided to sales in a complex selling situation (long sales cycle and multiple decision-makers)?"

One thing I like about LinkedIn is that there are lots of people who genuinely want to help! Here is a distillation of the scores of responses I received:

"I don't think there is a correct answer to your question. Too many moving parts!"

"To what extent are the leads qualified to begin with?"

"My answer, definitively speaking of course :-) - is "it depends"

"I don't think there is an answer to your question. It depends on the industry, product, ROI, and every other factor usually involved in such a complex sale plus the economy with the politics involved with it (i.e. how does a C-level person justify a multi-million dollar expenditure which laying off people due to budgetary reasons)."

"This may not be the best metric to use against quality sales people in a complex product/service environment. Are your people out there building relationships and trust with key executives who have pain? Do they listen more than they talk about how "great" their product/company/solution etc is?"

"Complex deals are really sold based on relationships, so the lead gets us started but is a long way from what it takes to close the deal."

"All you can do is look at the statistics over time. More than likely you will find a normal distribution across your sales team. Look at it every 6 months, and cull the bottom 10-15% of the team (that has passed through the probation period for new hires) and refresh with new talent. Over time you will raise the gene pool."

"Just don't beat yourself up because you have a low close rate if you knowingly go after low probability business."

"I would say over a 24-month period the close rate on such leads (across a large number of reps of varying capabilities AND a even distribution of leads across project cycles) would be 1.25-1.75 times the ERP vendor's overall market share. I honestly don't think one can credibly get any closer to an answer than that."

"A simple 3:1 rule has worked well for checking that pipeline gen and sales process management are moving in the right direction: 3 suspects to 1 prospect,
3 prospects to 1 qualified opportunity, 3 qualified opportunities to 1 win"

"4.3%!  This is based on 100,000 raw leads, across about 50 companies in various segments from the tech industry from the last 10 years."

Wow! I would not have expected the relative lack of specificity in the answers to my question. What does this say to you and how would you answer this same question?

 

how much are you paying for leads?

 

 


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Topics: Lead Generation, Lead Management


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