What is the Minimum Acceptable Close Rate on Leads?

Posted by Dan McDade

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on Jun 28, 2016 10:30:00 AM

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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:

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

"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."

Of course, lead definition (and hence, lead quality) are keys to the answer to this question. So too is the quality of the sales force. We had two clients in similar businesses that had relatively tight lead definition where one client is closing deals regularly while the other client cannot seem to harness its sales reps to show up on time and effectively work the leads. Another client is so good at following up on sales rep lead follow-up that they are closing twice the leads industry averages would have suggested.

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?

 

By Dan McDade


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Topics: Sales Leads


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