More Leads or Better Closing Rate? Finding Your Sales Sweet Spot
For salespeople, the constant quest for higher income boils down to two key metrics: the number of leads generated and the conversion rate of those leads into sales (closing rate).
The million-dollar question is: should you focus on getting more leads or improving your closing skills?
The truth is, there’s no magic answer. It depends on your specific situation. But before you jump down one rabbit hole or the other, let’s explore why both aspects of sales success are important.
Why You Need Both High Lead Volume and Strong Closing Skills
Think of it like this: imagine you have a bucket with holes in it. Pouring more water in (generating leads) won’t do much good if the holes are too big (low closing rate). Conversely, a tiny trickle of water (low lead volume) won’t fill the bucket no matter how well you plug the holes (high closing rate).
Here’s why you need to focus on both:
- More Leads, More Opportunities: Let’s face it, sales is a numbers game. The more qualified leads you have, the more chances you have to convert them into customers. Even with a lower closing rate, a higher volume of leads creates more opportunities for sales success.
- Stronger Closing Skills, Higher Revenue per Lead: Imagine this: you have a smaller pool of leads, but you’re a master closer. You can still generate significant revenue because you’re converting a higher percentage of those leads into sales.
Finding Your Sales Sweet Spot: A Data-Driven Approach
Instead of blindly focusing on one area, let’s find that perfect balance point – your sales sweet spot. Here’s how to do it:
- Become a Data Detective: Track your key metrics like the number of leads generated, conversion rate at each stage of the sales funnel, and average deal size.
- Analyze the Clues: Identify areas for improvement. Is your lead generation process inefficient? Are you losing deals at a specific point in the sales cycle? The data will tell a story – listen to it!
- Take Targeted Action: Based on your data insights, develop a plan. If your lead flow is weak, invest in marketing efforts or explore new lead acquisition strategies. If your closing rate is suffering, focus on honing your sales presentation skills or learn to overcome common customer objections.
The Math of Lead Generation vs. Closing Rate
I can’t speak for everyone, but in large…most sale people I coach think they need more leads when in actuality they just need to be better closers.
Let’s put some numbers to this concept and see how it applies to you. Imagine your current closing rate is 20%. That means out of every 10 opportunities you present, you close 2 deals. If each of those deals is worth $100,000, you’re generating $200,000 in revenue.
But you’ve got your sights set on doubling your income to $400,000. How do you get there? There are two main approaches:
- Increase Lead Generation (More Opportunities): You could focus on getting in front of more potential customers, aiming to double your leads from 10 to 20. Maintaining your 20% closing rate, you’d then close 4 deals, bringing you in $400,000 – mission accomplished! However, this might be a challenge if getting new leads is already difficult.
- Improve Your Closing Rate (Fewer Opportunities, Higher Conversion): Alternatively, you could focus on improving your closing skills with the aim of converting a higher percentage of your existing leads. Let’s say you bump your closing rate to 40%. Now, out of those same 10 opportunities, you’d close 4 deals, again reaching your target of $400,000. For many, when we look at it like this, most salespeople believe closing only 2 more deals is way more achievable than doubling leads.
Remember, You’re Not Alone: Boosting Your Sales Skills
Here are some bonus tips to help you excel on both fronts:
- Find a repeatable process: Seek out training and development that provide a relatable process. For both sales and marketing. Without a process it’s impossible to find the holes in the bucket.
- Become a Niche Expert: Consider specializing in a particular area of your industry. This allows you to develop deeper product knowledge and become a trusted advisor to your clients, potentially leading to higher closing rates. Plus you get more referrals which tend to have higher conversion rates.
- Look at your patterns: Lead gen and sales conversations both have patterns. Some times, leads flow hotter at one point of the year than the other other. Similar to your clients buying pattern. For some, the holidays are on fire and for others it’s “we’ll wait till next year”. Predict your patterns and you can adjust which is more important during a specific season…lead gen or closing. And for the record, no one went broke being great at both! Happy Selling fam!
Many people “talk” sales effectiveness, but few have demonstrated the ability to transfer that effectiveness to entire organizations for high impact. For nearly two decades Tony has not only shared his sales strategy to organizations all over the world, but he has consistently created high performing sales cultures that have impacted the bottom line of hundreds of organizations.