How To Improve B2B Sales Close Rates
If you’re reading this, your business is either doing great and you want to be doing better, or you’re struggling to close enough leads and looking for a solution. The information below will help in both situations.
As you already know, in B2B sales, close rates are one of the most crucial metrics in a sales funnel.
In too many cases, companies have strong lead flow, followed by a sales process that fails to close deals. Often this first shows up when they have invested with a lead generation partner and are seeing low close rates, which raises questions about whether the leads are good, or not.
When a sales process is weak, your salespeople are carrying out random acts of selling, while scrambling to close deals that are not well qualified. This approach negatively impacts the motivation of your team, which can erode morale, cause the team to fragment, and lead generation partners get fired. Nobody wins in that situation.
When close rates increase, businesses can feel more confident about growth, sales forecasts, and profitability, as well as improving team retention. Salespeople are happiest when they are making money, and investors happiest when revenue is multiplying.
How to improve B2B Sales close rates?
First, let’s talk about benchmarks. Close rates can vary widely across sectors and so it’s always good to have a comparison for your industry. If you have a team that’s mostly responding to inbound leads and leveraging content marketing to get them, Hubspot’s benchmark study will be helpful:
HubSpot analyzed close rates across 8,900 companies in 28 sectors. This involved an assessment of sales qualified leads within pipelines. HubSpot found that the sector with the lowest close is biotechnology, at 15%; whereas business and industrial has a 27% close rate. Software is at 22%, and marketing at a similar level. Mindracer works mostly with SaaS or services companies and in our experience, these rates can be beaten with a well configured sales process and well trained team.
If you’re reading this - your conversion rate likely needs work, and so here is how to think about it:
A well supported sales team knows their ideal customer and is confident to disqualify the leads that are not a good fit.
Ask yourself: Is your sales team well supported?
This state only happens when leadership has identified, and consistently references the ideal customer profile, and then openly defends the use of team time to focus on this - this means no “random acts of marketing”, and no time is invested in acquiring business outside of the ideal customer profile. The more your focus on this - the more consistent your data will be, and the more you will be able to optimize your sales.
Our friend Chris Schembra, founder of 747club.org likes to say “you can’t chase two rabbits - they will both get away”, and he’s right.
How to define your ideal customer?
It always makes more sense to start at the beginning of the pipeline by understanding what makes a good lead vs a bad lead. Once you understand that, you can develop and refine a repeatable process for working the good ones.
Review your training materials - have you clearly called out how salespeople should identify a lead they should work vs. one they should not?
Don’t be ashamed if you don’t have this - most businesses don’t.
Here’s a quick outline of the process we use, so that you can use it to get ahead:
create a spreadsheet of all the new business that you have won in the last 12 months.
company name
state
industry
annual revenue
employees
order value
opportunity created date
contract signed date
start date
additional purchases $ since initial order
role of person that signed contract
current client yes/no
cancel date
cancel reason
calculate the average initial order value of the clients you won.
calculate how long it took on average to close from a new sales opportunity to a signed contract. (sales cycle)
Look up the industry, revenue, number of employees and any other relevant data such as technology they had that's relevant to your product, of all the companies in your list - (TIP: Linkedin is a decent source for most of this info, or access Hubspot’s free CRM tool which will allow you to upload a list of domains and then autocomplete much of this info for you.)
This exercise works best when you do this for all the deals you lost, too. This will give you even more perspective on where you wasted time in the last 12 months.
Look for the common ground - what are the common factors among your best clients? Industry? revenue? size of a specific functional team? Specific technology in use?
If you summarize this data as characteristics of your best customer - then congratulations!, you just specified the ideal type of business you want to acquire, or your ideal customer.
The next step to take is to look back at all the marketing activity your company carried out in that same 12 months, to identify what was successful. This can be a granular exercise but it’s worth it - not only showing you what marketing channels work to reach your ideal customer, but also what you can repeat.
Once you have these two data sets, overall you now get to see what type of companies give you the best payday, and what the most effective marketing was to acquire them.
How to bring this to life:
To make this process work as well as possible, you will want to take a deeper look at the people within the companies you sell to that are typically part of the sales process, - the people that show up to meetings, or that get included before the contract is signed. To do this you can listen to your call recordings, or talk to clients about the specific issues they were facing before they hired your solution and how that challenge made them feel. The more you understand this the better your sales results will be.
Ultimately by documenting this, you will be able to create profiles of the people within your ideal customer that you can reference in conversations with your sales and marketing teams, and keep everyone focused on how to win their business. These profiles are known as personas, and typically have quirky names such as “Marketer Mike” or “Sam Sales” so that everyone can talk about them easily.
Updating all of your sales and marketing activity to focus on winning more of your ideal customers means that everyone can focus on getting much better at delivering leads, high impact sales meetings and stronger close rates.
You’ll see the best results by having the team contribute to creating the personas - reviewing and commenting on them in a release meeting. After that your leadership is needed to keep the team focused on being the best possible resource for your target market in every sales or strategy meeting.
If the above sounds like a project you need to do and you want some help, you should know we help B2B companies through this all the time. If you have at least $500k in revenue and are committing to growing, we may be able to help you, too. If this sounds like you, you can apply for a free consultation at this link
Want to know what we can do? Here are a few testimonials from happy clients.
In our clients words:
“Our sales are exploding” SaaS CFO.
“Brought rigor to what was a haphazard sales process” SaaS CEO
“Transformative and palpable increase in velocity and process” SaaS CEO
Typically our clients are business leaders in B2B businesses doing between $500k and $20-30mm in annual sales, they are most often founder leaders looking for help growing their sales and helping their team succeed, yet it may be too soon for them to hire a full time sales leader, or they have tried and failed to do so successfully. We help them dissolve stress and focus on solving growth challenges by keeping guidance actionable, bite sized, and with a clear definition of “done” so that progress can happen quickly.
If this sounds like you, and you would like to walk through an initial video consultation - you can apply below.
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