No matter how many leads your sales team manages to pull in, the real difference is made when those leads convert into customers.
Figuring out which part of your sales process to improve will help you win more business and improve the morale in your sales department. The metric used to measure closed deals is often called a close rate.
What is a close rate?
A close rate is the percentage of leads that become customers. A close rate is also one of the primary metrics used to determine the effectiveness of a sales team or person.
What is the average close rate?
One close rate does not fit all. For most companies, their sales close rate will vary depending on their company size, location, buyer personas, deal size, sales cycle, and industry.
To help you better understand what close rates look like across various industries, here are the benchmark average close rates for five various sectors, according to HubSpot:
- Biotechnology Industry close rate: 15 percent
- Business & Industrial Industry close rate: 27 percent
- Computer Software Industry close rate: 22 percent
- Computers & Electronics Industry close rate: 23 percent
- Finance Industry close rate: 19 percent
How to calculate your close rate
(Number of closed deals / Total number of sales leads) x 100 = Close rate %
For example: (6 closed deals / 20 leads) x 100 = 30 percent close rate
5 ways to improve your sales close rate
Once you figure out your ideal close rate, you’ll need to take the proper steps to reach it. There are numerous ways to increase your current close rate, but here are a few to get you started.
1. Know your product or service
Before you can sell your product or service to anyone, you must understand what problem it helps solve. Customers buy solutions and not products or features. If you’re confident in how your product can help prospective customers solve a problem and are also able to help them understand the benefits of your product or service, then you’re on the right track to seal the deal.
Sales training and sales enablement can help your sales team (and customers) better understand your solution. With sales training, you can make sure all sales representatives are on the same page and have a deep understanding of your product or service, your ideal customer, and your sales goals and objectives. When your reps are aligned, they create a better sales experience because prospects know that they’re getting a consistent message across the board.
Sales enablement content can help you close deals faster by showing prospects real-world examples of how your product or service has helped customers like them solve similar problems.
2. Understand the markets you sell to
The best way to truly know your customers is to get an insight into their market. Having a high-level idea of your customers’ industries will help you develop a deeper understanding of what their world looks like, so you can speak to them as a peer when pitching a sale.
To help you dig deep into your customer markets, here are some questions to consider. First, what is unique about your customer’s market? You need to understand what the core of their industry looks like to know what they do for a living. You also need to clearly understand who their customers are, common challenges in their industry, and the market’s key performance indicators.
Once you answer these questions, you should communicate with your customers as if you operate in the same industry as them. That means using the same language, measuring success the same way, and looking at the buyer journey through a similar lens.
3. Know your ideal customer profile and prioritize leads
Along with understanding the ins and outs of your product or service, you also need to understand your ideal customer profile, also known as ICP. From there, you can prioritize leads that have a higher chance of converting.
One way to do this is to analyze your sales data. Your data will tell you what demographics are closing, what their buying process looks like, which ones are closing the fastest, and where more opportunities lay. Once you figure out your ICP, you can spend more time catering to them by creating personalized messaging to garner their attention, i.e., creating messaging around how you can help them improve their key performance indicators. For low-quality leads, you can save time by automating communication with them.
Remember, your product or service won’t be the perfect fit for every customer. Knowing when to mark a lead as unqualified can help you lower your total number of leads so you can spend more time focusing on the ones that will close. These insights from sales can be shared with marketing to help them optimize their campaigns.
4. Send and receive feedback from your marketing team
Your sales team can always lean on your marketing team to provide them with better-qualified leads. Similarly, sales can give marketing valuable feedback on lead quality and profiles of stronger leads.
The better the leads your marketing team provides, the higher the chances are that sales will close the deal. It's essential to have a steady two-way feedback flow to continue honing in on your ideal customer profile. Helpful insights you can provide your marketing team include specific use cases that work, industries that convert better, company size, or particular characteristics to consider (i.e., what integrations they use, etc.)
You can also let marketing know where the most substantial leads come from. For example, Facebook might produce poor-quality leads, whereas webinar leads have a higher chance of converting.
With this feedback, marketing can be more strategic at what campaigns they pour their effort into, which can help them drive better leads with less guesswork and energy.
5. Remove friction for the customer
The easier it is for your customers to understand your solution, get the information they need to purchase it, and quickly contact someone to buy it, the more likely they will do so. There are numerous ways your sales team can remove friction from your entire sales process to make it easier for your prospects.
One way to reduce friction is to make it easy for your leads to make initial contact. You can place important information directly on your website or in other places your customers are likely to look for info (like your social media pages.) This information can look like contact information or links to a free trial or demo sign-ups.
Another example of reducing friction is to simplify signing contracts or submitting payments. The harder it is to sign a document or pay a bill, the more conflict it builds for your customer. One way to simplify the process is to send document or payment links directly to your customer in their preferred communication channel. For example, you can text a patient a payment link to take them straight to the page they need. It’s also easier to send documents online than sending paperwork back-and-forth.
By nature, sales cycles are typically long, so a shorter sales cycle can increase the likelihood of your customers sticking around with you instead of jumping to a different solution. The goal here is to create a frictionless and quick sales cycle.
6. Use the right communication tools
Sales is all about people buying from people, and the right communication channel is the bridge to reach them. Some of the best communication tools for sales are business texting, email, and phone calls. The best sales teams use each channel to better connect with their prospects.
Phone calls or virtual meetings are great for discussing the meat of your product or service. Emails can help you get a cold introduction to a company, and it also works as the best medium for sending large chunks of information.
Lastly, business texting can help you quickly follow up with new leads and keep in touch with leads during the long sales process, so you don’t miss out on an opportunity to close a deal.
Frequently asked questions (FAQs) about close rates
Q: Is a close rate the same as a conversion rate?
A: A close rate (from the total leads) is the same as a conversion rate for your leads.
Q: What are four types of closing techniques?
A: There are more than four types of “closes,” but here are four types of closes courtesy of SalesForce:
- The assumptive close: A phrase or question that assumes a deal is closed. For example, “We can start onboarding next week.”
- The option close: Similar to the assumptive close, but you provide the lead with a choice. For example, “Would you like to start your onboarding next week?”
- The suggestion close: Once you establish trust with a prospect, you can suggest a solution for them. For example, “Based on your needs, I think you should start onboarding next week.”
- The urgency close: You can create a sense of urgency if you see that your prospect is short on time and needs a solution quickly. For example, “You’ll need to start onboarding next week if you want to reach your Q2 goals.”
The bottom line
Improving your close rate comes down to having a deep understanding of your prospect and how you can spearhead your sales approach to target them. Remember, the best way to learn about anything is to ask more questions. Don’t be afraid to ask your prospects, teammates, or leadership team questions to expand your knowledge as a sales representative.