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How well do you know the opportunity conversion rates in your sales team?

Because when all is said and done, there are only 3 ways to increase sales.

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

They’re all important.

“In most businesses, a small improvement in the opportunity conversion rate will yield a disproportionate increase in sales revenue.”

Measuring opportunity conversion rates (or win rates, if you prefer) helps identify ways to increase sales. And that’s a good thing.

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 actually reduce your salesforce benefits. And that’s a bad thing.

So, here’s the right way to measure opportunity conversion rates in salesforce.com and here’s how to use those reports.

(Before we get started, here’s the dashboard chart that shows whether your pipeline is growing. We’ll cover average deal size next week.  If you haven’t already done so, register for updates here).

How to measure opportunity conversion in salesforce

Let’s take an example from one of our customers (the sales reps names have been modified). It shows how to report on the opportunity conversion rate.

Opportunity conversion rate dashboard chart in salesforce.

The dashboard chart shows the conversion rate in two ways.

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

Here’s the key thing about the chart. It shows the percentage won as a proportion of the total opportunities closed in each month (i.e. won and lost). It doesn’t calculate the proportion of deals won as a percentage of the total open pipeline. Doing the latter produces double-counting and incorrect metrics.

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

That’s probably a good thing. It implies that a greater proportion of high value opportunities are being 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.

Opportunity conversion rate report in salesforce.

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 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 5 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 and 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. Or 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 on the cards. Reviewing the time in stage velocity metrics will help determine this.

Gotchas to watch out for with opportunity conversion

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

“Take care to use other reports and metrics to validate the insights you gain. Be sure you are not stimulating adverse behavior.”

  • Sandbagging. Are sales people deliberately keeping promising deals out of the sales pipeline? Do some deals only get introduced to the pipeline when the salesperson is confident an opportunity will be won? We already suspect Shaun of sandbagging. The impact is to boost opportunity conversion rates. But it also means 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 even an over-reliance by the management team on opportunity conversion metrics.

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 and share and learn from their experience and 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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