How 5 Points Became $600,000
A client wanted to move her renewals close rate from 33% to 38%. Those five points were not a round number she liked, they were worth an exact amount. Here is the calculation she ran and the two part deal review that got her there.
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If you prefer to read - here is the transcript:
A client of mine had a really interesting calculation that they did, which I thought was worth sharing. She was looking at her renewals pipeline and noted that their average closing ratio was 33%. And she said to me, let's work on some live deal reviews so that we can bump that up to 38%.
And I said, okay, that's a reasonable goal. Why that number? And she said, well, if we can bump it up by five points, based on our average sales cycle and our average deal size, that will add an additional $600,000 to our pipeline, which is exactly what we need to close the business this year.
I thought, this is a really smart and simple example. So what did she do?
First, she set a reasonable goal based on actual targets that needed to be accomplished that year. That is going to help get the sales team behind her process.
Second, we sat down and looked at the opportunities that had closed previously. What were the patterns that caused those deals to close? Who were we selling to? What value was created? What industries were they in? How long had they been customers? Who internal to the team was involved in those deals?
And then we did the hard work on the deals that we lost. Yeah, it's heartbreaking and it's difficult, but we have to take a look at why we lost. What didn't we do? What did we do and fail at? What skills can be improved, and what skills need to go away? Were those bad deals to begin with? And do we have any other opportunities in the pipeline that look and smell like those bad deals, that we should walk away from now to free up time to spend on the good opportunities?
This very simple analysis and exercise drove them, and will help you, towards a number that will either put you at or past your target for the year.