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Opportunity conversion rates are a critical sales metric in any organization.

That’s because when all is said and done, there are only 3 ways to increase revenue.

  1. Grow the pipeline.
  2. Increase average deal size.
  3. Increase the opportunity conversion rate.

Of course, they’re all important.

However, in many businesses a small improvement in conversion rates will yield a disproportionate increase in sales revenue.

Also, measuring opportunity conversion rates (or win rates, if you prefer) helps identify ways to improve individual salesperson performance.

However, like many other salesforce dashboard charts, the opportunity conversion rate graph doesn’t give you the answer.

Rather, it tells you what questions to ask.

But be careful.

An over-emphasis on opportunity conversion rates can destroy pipeline visibility!

And what’s more:

There’s a right and a wrong way to measure opportunity win rates.

Naturally, I’ll explain the correct way.

(By the way, before we get started, here’s the dashboard chart that shows the trend in the size of your pipeline. And if you’re interested in average deal size right now, read this).


How to measure opportunity conversion rates in salesforce

Like most things, there’s more than one way to measure opportunity conversion rates.


Don’t measure conversion rates like this

Sometimes people try to measure win rates in the context of the total pipeline.

In other words, the conversion rate is the value of closed won deals in a month as a proportion of the total open pipeline.

However, I think this gives a distorted win rate.

For example, let’s say your sales cycle is three months.

A deal created today, is unlikely to close for another two to three months. So why is it relevant to the opportunity conversion rate for this month?

What’s more, if the sales team close the normal number of deals this month, but also do a great job of creating new funnel, the win rate is artificially low. Those new opportunities have dragged down the conversion rate.

Unfortunately, this perception of a reduction in the win rate might lead to all sorts of inappropriate management action.


Correct way to measure conversion rates

So keep it simple.

The correct way to measure opportunity win rates is to compare the number and value of deals won in a month with the number and value of deals lost in the same month.

It’s unambiguous.

There’s no debate about whether certain elements of the pipeline should be included, or not. And it avoids the risk of double counting open opportunities from one month to the next.

Here’s an example of an opportunity conversion rate report in salesforce.

Opportunity conversion rate report in salesforce showing win rate by Value and Count.

The chart shows the right way to calculate the win rate metrics. It measures the ratio of won to lost deals in each month.

The pipeline, including deals that get pushed from one month to another, play no part in calculating the conversion rate.


Measure conversion rates by value and number

Specifically, our dashboard chart shows the conversion rate in two ways.

  • Won % (Count). This is the percentage conversion rate in terms of the number of won opportunities.
  • Won % (Amount). This is the percentage conversion rate in terms of the total value of won opportunities.

Here’s the key thing about the chart.

The chart shows that in three months – July, August and October – the conversion rate by Amount was higher than the win rate by Count.

That’s probably a good thing. It means that a greater proportion of high value opportunities were successfully closed compared to lower value opportunities.

In September the trend is reversed. It appears more low value opportunities were closed successfully. That’s something we’ll want to investigate.

The overall opportunity conversion rates are around 35% in this company. Two months – July and October – exceed 40%. That’s quite high. Is it a good thing? Perhaps. Let’s investigate further.

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Opportunity conversion rate salesforce report

Here’s the underlying report for the chart.

salesforce win rate report showing opportunity conversion rates.

In addition to the Won % (Count) and Won % (Amount), the report shows:

  • Sum of Amount. The total value of Won and Lost deals in the month.
  • Sum of Amount Won. The value of Won deals in the month.

These additional metrics are useful because they put the opportunity conversion rates into context.

For example, Shaun Yates has a 100 percent opportunity conversion rate for October. On the other hand, the Amount Won is only £5,000 – that’s small compared to the total value won by other salespeople in the month.


How to interpret the opportunity conversion report

Like any other salesforce report, we need to know how to use it.

Here are five insights we can gain from the report above. Don’t forget, we need to validate each insight through further reports and investigation.

  1. Dave Apthorp focuses on higher value deals.Dave’s Won % (Amount) is consistently higher than the Won % (Count). Actually a previous blog post tells us why that is. Dave featured in the post, The Best and the Worst Salesperson on the salesforce dashboard.

    It turns out Dave puts all of his eggs in the two or three biggest deals each quarter. He virtually ignores all the rest.

  2. John Davies has the lowest opportunity conversion rates.On the face of it, John will benefit from coaching that will improve his win rates. But we need to check that there isn’t more to it than just that. Is John focused more on new rather than existing customers? Is he operating in a new market? Or is he converting Leads into Opportunities much earlier than other salespeople and then qualifying them out at an early stage?
  3. Sarah Watson focuses on lower value deals.Sarah’s opportunity conversion rate is much better in terms of Count than Amount. Potentially she needs guidance on her approach to opportunity prioritization. Alternatively, she needs coaching and more experience in handling larger deals.
  4. Shaun Yates has consistently the highest opportunity conversion rates.Does this mean Shaun is a superstar salesperson? Perhaps. But his full-year conversion rate of 55% is suspiciously high. Potentially Shaun is keeping opportunities out of the pipeline until he’s confident that a deal is almost certainly on. Reviewing the time in stage velocity metrics will help determine this.

Take care in using opportunity conversion rate metrics

Analyzing opportunity conversion rates is an effective way of identifying the actions that are needed to increase sales performance.

However, be sure to use other reports and dashboard charts to validate the insights. Above all, take care not to promote the very behavior that will reduce pipeline visibility.

I’ll explain.

  • Sandbagging. This occurs when salespeople deliberately keep deals out of the sales pipeline until a positive outcome is likely. In our example, we might suspect Shaun of sandbagging. How do we know? Well, his conversion rate is very high. Perhaps he’s a fantastic salesperson. On the other hand, perhaps he only introduces some deals into the pipeline when he’s confident of a successful outcome. The impact is to boost opportunity conversion rates. However, the result is that managers lack full visibility of the sales pipeline and sales performance.
  • Pipeline over-inflation. This is the opposite of sandbagging. Deals that are well past their sell-by date never get closed. There are many reasons why deals do not get closed out of the sales pipeline. Over optimism that a deal, one day, will be done. Repercussions when deals are closed out. And an over-reliance by the management team on opportunity conversion metrics.

Again, the result is to distort visibility of the funnel.

So, avoid these issues by using opportunity conversion rates in conjunction with other measures. For example, track average deal size, deal quality metrics and sales velocity measures.

Use opportunity conversion to increase sales revenue

So let’s say we’ve done our investigation. We’re happy with the numbers.

Here are seven ways that opportunity conversion rates can be used to boost sales revenue.

  1. Opportunity qualification. Low conversion rates are not necessarily a bad thing. As Bud Suse points out, there’s no point expending a lot of time and effort on a deal only to come a close second. Far better to create opportunities at an early stage whilst you investigate them. Then qualify-out those where you have a low chance of winning.
  2. Share and learn. Identify the salespeople with high opportunity conversion rates. Share and learn from their experience and spread this expertise across the team.
  3. Teach. Train and coach individual reps on how to improve their opportunity conversion rates.
  4. Territory analysis. Compare conversion rates across territories. Identify the systemic lessons that can be shared across regions and territories.
  5. Customer types. Optimize sales revenue by adjusting the balance of effort between new and existing customers.
  6. Value proposition. Test the impact of different marketing campaigns and go-to-market strategies.
  7. Funnel leakage. Use conversion rates in conjunction with Leaking Funnel reports to understand how and why deals are being lost from the sales pipeline.

Opportunity conversion rate is a powerful sales metric. Use it (just don’t abuse it) to increase sales revenue in your business today.

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