🌶️ Hot take: Sales in the current state of sales is not a pipeline game, it’s a closing race.
The old adage "more is better" doesn't necessarily hold true anymore. It’s way harder grow your sales pipeline.
Competition is raining into just about every industry. You’re probably feeling new competitors are popping up all around you.
With the economic downturn, there are just less qualified buyers. Layoffs and downsizing tech stacks are becoming so much more common.
Top of funnel pipeline generation is just too expensive to keep up.
So where do we go from there?
Well there is a huge opportunity to focus on increasing the close rate for what is already in your pipeline.
I'm not suggesting we abandon the ToFu (top of funnel) pipeline game altogether. It's more like a shift in focus.
You’re most likely spending more money for less traffic and web conversions. Instead of failing to significantly grow your pipeline, let's zero in on the sales team and wring out as much revenue as we can from those high intent leads already in front of us.
In this blog, we'll explore why close rate optimization is crucial and delve into actionable strategies to achieve it.
What is a good close rate?
There isn’t an exact number that every team should have in mind when looking to benchmark close rates. There are many factors - the industry you’re in, competitive landscape, product you sell and your GTM strategy.
Though for a good start, the average opportunity to conversion rate in the SaaS industry is around 22%. (Hubspot)
You might be wondering now, well how do you define an “opportunity”? It’s true, the definition of an opportunity will be different based on the person you’re asking.
So another interesting benchmark is there's on average 1 closed deal for every 4-6 demos. In other words, the industry-standard ratio is about 15-20%. (Walnut)
Understanding this benchmark helps in setting realistic goals for your team, but you shouldn’t stop there.
Calculate your own conversion rate. How do you compare?
The best teams push themselves beyond their limits and use their own benchmarks to set new goals. You think the teams who close 40% of the time are sitting pretty? No, they’re shooting for 50%.
And I can tell you by my own experience talking to SaaS leaders, closing 50% of the time is often a realistic goal for many top teams and brands.
How do I increase my sales close rate?
The good news is that there is a huge opportunity within your own pipeline. Don’t take it for granted!
Several factors influence close rates, including the competitive landscape, product quality, lead quality, and the execution and knowledge of your sales representatives.
Gone are the days when unexpected deals just magically close and appear in your inbox. You got to work for it!
There are some areas you can target that will improve your team’s closing performance.
Let’s get into it!
We’ve all heard the saying, “time kills all deals”. And I can’t emphasis that enough so we’re putting this at #1.
Take a look at your sales cycles and how you're moving your prospect through the sales funnel.
I don’t know where this misconception comes from but long sales cycles DOES NOT equal higher ACV deals. Teams with the best momentum always will win the race.
It is unlikely that deals actually need weeks to make a decision but several meetings or touch points may need to happen. It is your team’s job to keep that ball steadily moving down the field and that your brand is always top of mind.
That starts with that first hand raise. Mind blowing statistic: 35% to 50% of B2B sales go to the vendor that responds to customers first. (Marketing Leadership Council + Google)
When you think about it, that makes total sense. The first company who gives you a demo you are soaking everything in, probably impressed and excited. The rest of the competitors you talk to, you are comparing each one to the first solution you saw.
Expert tip: Invest in an inbound router or scheduler and have buyers book a meeting immediately right there on your website. Make the demo happen within 24 hours if you can.
Do not make them wait, it’s not a good buying experience for them and it will most likely kick you to the back of their mind.
Give your team negotiation power
Empower your reps with the right tools in order to get that deal over the finish line. Any bottlenecks you are hearing from your team needs to be taken very seriously and fixed.
Give your sales reps negotiation power! If you are looking over every single contract, no wonder you have a close rate optimization issue.
Set a baseline for acceptable discounts and be very clear what criteria deals and accounts need to hit in order for negotiation to make sense. Write up a playbook and pass it over your team.
Expert tip: You can even give some extra rewards to incentivize reps to close deals without any discount.
Automate low value tasks with AI
Let's give our sales reps a breather. AI and automation can tackle many of those tedious, low-value tasks so your team can do what they do best – selling.
Automate as much as you can throughout your sales process. Create automated sequences and email templates for common outreach - reminders and agendas when a meeting is booked, no shows, abandoned bookings, and even later down the process like sending a contract. Use AI to generate clever ideas for email subject lines or ways to stand out in the copy.
Integrate your tools with your CRM. Set up alerts and notifications in slack for intent signals. Enrich your CRM data if you can with discovery information.
It's not just about saving time (though that really helps); it's about making your sales game sharper, letting the team focus on real connections and sealing the deal.
Expert tip: AI generated notes and automated CRM data entry can save reps an average of 4 hours per week. Sales reps, on average, dedicate a mere 36% of their time to active selling. The majority of their hours are consumed by non-selling tasks, including administrative duties (18%), prospecting (16%), and research (14%). (VSA Prospecting)
AI can take a lot of that work out of their calendar.
Prioritize high quality leads
High intent prospects or higher potential deal sizes need to go to the front of the line. A huge mistake many reps make is not knowing where to spend their time and treat every account equally.
You do not have to talk to everyone, and you shouldn’t.
Be clear what your ICP is and what personas reps should be having in these conversations to close.
You can also set up alerts to your sales team with strong buying intent signals such as hitting your pricing page or multiple comparison pages.
Expert tip: With your inbound router, disqualify accounts that do not match your ICP. Many marketing teams disqualify leads by revenue or company size. Instead of sending them directly to your sales reps, send them to a landing page with a generic demo video or urge them to sign up for a trial. If they still want to talk to sales, you can provide a link at the bottom to set up a meeting. Most entrepreneurs or single users will appreciate the on demand demo or trial.
Give the best opportunities to your best reps
Do you bench the best athletes? No, pro athletes do not get equal playing time and coaches are not letting them play different positions. They play to their strengths and the best get played more. Heck, I am pretty sure that starts happening in sports when you’re 10 years old.
You need to prove your talent and skills to get rewarded. Same mentality in sales.
This doesn’t mean distribution needs to be unfair but have your less experienced reps work their way up by starting with lower tier accounts and prospects like SMBs or startups.
Match reps to accounts like you’re setting up two friends on a date. You want the conversation to go well? Stop those generic round robins. Pair people based on related experiences - maybe location, common interests, industry, experience, etc. You can also pair the best accounts with reps most knowledgeable about their specific pain points. An enterprise account and a startup will care about very different things.
Expert tip: Set up and test routing rules to elevate better quality leads and make sure you're handing off the best accounts to your best reps. Common criteria for inbound qualification is location, revenue, team size, company size, industry, or by lead score.
Understanding why people buy from Voice of Customer
Knowing why people buy, and why they don’t, is very crucial when optimizing your close rate.
"Educated” guesses or theories aren’t going to cut it.
Even if you’re on the right track of why customer buy, having reps listen to the reasons why deals close and why deals are lost from the source is the best way they can learn.
Get reps ready for those bumps in the road when prospects are eyeing the competition. No missing the nitty-gritty details on what aches them. Find the sweet spot between why prospects bail and what makes them stick around.
When your reps are properly educated, the conversations will naturally steer away from “selling” and more to shaping the best solution for the prospect and building that relationship. That’s when you win deals.
Learning should be embedded in your culture, especially in the sales game where things are always shifting – buyers, needs, your solution. Keep your reps in the know, prep them on prospect pain points, and make sure they're crystal clear on how your solution can solve their problems.
Expert tip: Record your calls! The best comedians review their set to analyze laughs to understand what jokes land. Sales reps should do the same – listen to their calls, especially the ones that hit the high notes.
Create a playlist or a slack channel to keep the Voice of the Customer (VoC) loud and clear. Freshen it up by having reps toss in their own calls or written feedback. Everyone's usually on board in the first few weeks or months, but don’t it fade away.
Promote your referral program
Referrals are a very easy way to boost your close rates. Close rates are BEYOND higher when prospect comes from a referral or word of mouth, upwards of 50 to 70%. (Hubspot)
Talk to your customers and let them know about your referral program. Make the incentives enticing and make it easy for your users to send referrals to you right from your platform.
How much do you pay for customer acquisition with paid advertising? Well, cut that in half and turn it into a massive reward for customers bringing in the business.
Make it fun. Build relationships, give back, and throw in some VIP perks like first looks at new features or exclusive fun rewards. Send them a personal thank you note. The smallest gestures go a long way!
Expert tip: Track promoters in your customer base through an NPS survey. Do you have any promoters who have social influence? Throw in a sweet $200 gift card to spread the word about your product and their experience, especially during a big launch.
Automate coaching and track deal risks with AI
Are your sales reps talking to the personas who are decision makers? Is the prospect leaning towards competition, why? Do you reps understand their pain points? Are your reps having quality conversations that move deals forward?
AI can help automate a lot of that discovery.
If you’re using a conversation intelligence tool, track and get alerted to key phrases or words that indicate things may be going south such as ‘we are also evaluating’, ‘alternative provides this’, ‘concerned about cost’, etc. You can try to reverse course or change up the strategy before it is too late.
For coaching, use AI to auto score conversations. Instead of listening to calls ad hoc, you can directly go to conversations that need immediate attention like when an important step was missed or a lot of negative sentiment in the conversation. Track performance with your team on an individual level so you can create targeted coaching programs.
An AI Forecasting tool can give you deal risk alerts and give insights into your forecasts and how things are moving within your pipeline so you can stay on track with team performance and quota attainment. Know that reps are moving deals at the right pace, talking to the right people, and having quality conversations.
Expert tip: Spend at least 1 hour per day listening and coaching calls. AI can help cover more ground and give you insights into where you should focus but you still have to put in the work!
Let's close those deals!
It's time to break free from the traditional pipeline game and embrace the reality: you have to focus on closing. The days of "more is better" in the top of the funnel are becoming harder to sustain, especially with fierce competition raining in from all angles and a transformed SaaS landscape due to economic downturns.
The modern SaaS sales landscape demands a shift in focus towards the art of closing. It's about working smarter, not harder, by refining your approach to achieve higher close rates. So, gear up, embrace the strategies, and let's make every close count.
Avoma can really help your sales team increase your close rate by automating low value task with AI, get meetings booked with prospects immediately, coach your reps to improve performance and give you insights into your deal pipeline and alert you when things may be going south.
Here's to a future of successful closes and thriving sales teams! 🚀