Cracking the Close Rate Conundrum

Ah, the notorious “close rate issue.” We’ve all heard about it, and many of us have dealt with it. It's that frustrating moment when you realize your team isn’t closing deals at the rate you’d like. Hopefully, this isn’t news to you; every leader should be aware of how business is progressing through their funnel. But let’s say, hypothetically, that you weren’t aware of your close rates and just discovered they're lower than expected. What do you do? How do you solve it?

The Great Close Rate Debate: Two Options, One Winner

Option One: The Tried (and Failed) Approach

When close rates tank, there’s one option most companies tend to lean towards. You can call it politics or just smart business if the goal is to save jobs rather than actually win as a business. Unfortunately, this option has never worked in the history of business. Let’s break it down to understand the pros and cons so you can avoid it in the future and save yourself time and energy.

Scenario: Close rates plummet to dismal numbers. The sales team insists it’s not their fault, claiming the pipeline generation teams have been sending them poor-quality opportunities. They argue they've been doing their best with what they've received and point the finger at others, blaming unqualified opportunities. As a result, a group is gathered to “update” the criteria for accepting opportunities into the sales pipeline.

Example: A demo request comes in from the marketing team. An SDR conducts a brief introductory call, then schedules a 30-minute meeting with an account executive for additional discovery and selling. At this point, the sales rep follows a standard process to determine if the prospect meets the criteria to be accepted into the sales pipeline or should be rejected. This is where it gets interesting.

Instead of trying to sell, the sales rep takes the opposite approach and makes the prospect sell to them. They grill the prospect with questions about budget, authority, and timeline. If they don’t hear what they like, they have two options after the call. The less experienced reps might reject the opportunity, claiming it wasn’t good enough. The smarter reps delay the process, saying things like, “I didn’t feel this was the right person” or “I didn’t feel the opportunity was serious enough.” They keep it out of their pipeline as long as they can to avoid looking bad in the case the opportunity doesn’t close.

Outcome: Close rates go up, but opportunity acceptance rates plummet. Pipeline targets are missed, team morale tanks, and the cycle of blame begins. Pipeline generation teams start quitting, prompting leadership to hold the sales team accountable for not trying to sell. The sales team then starts accepting good opportunities again, but close rates drop once more, leading them to tighten the criteria again. And so the cycle continues.

Pros: Absolutely none.

Cons: Too many to count

Option Two: The Winning Strategy

The options work every time, but it requires maturity, effort, and everyone taking ownership of the sales funnel. It takes a village to win business.

Scenario: You must recognize that perfect data is unattainable, so you need to make the best decisions with the information you have. Your acceptance rates (the ability to move prospects to a sales-accepted pipeline) are likely average or below industry standards, indicating that we're not letting everything in. Despite this, your close rates still lag behind where you want them to be.

Rather than pointing fingers, the leadership team steps back and acknowledges the core issue: we are getting the right people and companies to take meetings with us, but after one or two meetings, they lose interest. Why?

To answer this, instead of relying solely on your sales team, where external data shows they accurately identify the reasons for losses only 50% of the time, you hire an external firm to conduct third-party win/loss interviews. With this information, you start holding weekly meetings to review the reports and build an action plan based on the reasons customers provide for their decisions.

Outcome: Close rates improve without hurting acceptance rates. You win new business and foster a healthy company culture.

Pros: Too many to count

Cons: Absolutely none

The Current Predicament & How to Get Out

If you find yourself in this predicament, good luck. It’s like being stuck in a never-ending episode of "Survivor: Office Edition." But don’t worry, you can escape this island with a mix of clever maneuvering, some solid numbers, and a hefty dose of truth-telling. Here are your options:

A. Hope for Option One: Cross your fingers and hope moving the ‘goal post’ or changing internal processes helps you sell more. It’s never worked before, but hey, there’s a first for everything. Who knows? Maybe this time pigs will fly.

B. Push for Option Two: Be bold and put on your company superhero cape. Present the data to your leadership team and ask, “Do we want to play games or win business? Because last I checked, Monopoly money doesn’t pay the bills.”

C. Third-Party Leader: If you’ve already started down the rabbit hole of option one, marketing, SDR, channel, or sales won’t be able to save you. The damage is done, so call in the independent team to salvage what’s left. A good third-party leader will steer you towards option two as fast as possible and a bad one will just have you chasing your tail endlessly.

D. Restructure Roles: If you’re tired of this circus, hire a real CRO who oversees both pipeline creation and pipeline close. A real CRO just wants to win and won’t let their teams play games.