Is There a Standard for Percentage of Leads Closed?

Michele Warg
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The secret sauce of your sales force is how it takes leads from the top of the sales funnel to the bottom. You have plenty of ways to track the process, but what is a good indicator for what percentage of leads should create closed sales? Your optimal close rate reflects five specific factors that give you an overall formula that your company can employ to track this key metric.

1. Know Your Market

You must specifically define your market to know precisely what kinds of leads to pursue when it comes to a close rate. You can try to land multimillion-dollar contracts with companies valued at $5 billion or more, but that takes an enormous amount of effort and dedication on the part of your sales team. You must examine the budget for your sales staff in terms of the number of people you need to tackle these leads to see if this is feasible.

2. Delineate a Lead

What constitutes a lead? In one instance, the head of a marketing department said his team delivered 9,000 leads to sales in one year. The sales head of the same company said he received zero leads from marketing in that same year. The close rate of that scenario is zero percent. Unfortunately, the qualified lead rate in that situation, when marketing paid $23.15 per lead through a lead aggregator, came to 0.8 percent. The sales staff felt that rate was horrible and not worth pursuing.

3. Return Your Investment

In the aforementioned scenario, those 9,000 leads from marketing cost a total of $208,350. Can your company afford this? Does your close rate reflect a high enough return on investment for this six-figure expenditure? Lowering this cost may create more leads because you have more effective tools for mining prospects.

4. Nurture Leads

Understand that nurturing leads means the lifetime of the sales process may take weeks. The bigger the deal, the more nurturing it takes. More nurturing means more staff time, higher investments and greater risks.

5. Improve Your Process

Your sales process may interfere with converting leads to sales. Staffers must know when to follow up and when to abandon the chase. Use data to see if the prospect fits into your criteria for landing sales. Assign specific staffers to fit certain roles along the sales process. Monitor and collect data every step of the way to see what you can improve for next time.

Basic Formula

The basic formula of these five things is that pursuing many lower-value contracts is worth more than fewer higher-value contracts. What may be just as advantageous to your team is trying to land many lower-dollar contracts at smaller companies. Consider the time and effort it takes to go after a single $1 million contract versus 50 $20,000 contracts. Once you define your market, you understand what types of prospects pay off and which ones don't as a percentage of leads that convert to actual sales in terms of your close rate.

The optimal close rate for your firm depends on sales scenarios, the tools at your disposal, risks versus rewards and the metrics that determine your success. Everyone at your firm must understand these concepts to create a viable strategy to land the best kinds of contracts for growth.

Photo courtesy of Stuart Miles at


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