Lead to Win Rate
Date created: May 25, 2019 • Last updated: Jun 10, 2020
What is Lead to Win Rate?
Lead To Win Rate is the percentage of Leads who entered the sales funnel and are now "Closed Won" Customers. This is one of the most ubiquitous sales conversion metrics and is a strong indication of product market fit, pricing, and sales execution. It's also a key metric in aligning your marketing, sales, and product teams.Alternate names: Close Rate, Sales Conversion Rate
How to calculate
Let's say your marketing efforts generate 2,000 leads. Of those 2,000, you convert 150 to paying customers. Lead to Win Rate = 150 wins / 2,000 leads = 7.5%
Lead to Win Rate
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More about this metric
It's very important to benchmark this against the right lead classification. For example, are you calculating the ratio using all leads, or just MQLs or SQLs? Also to be noted is that Lead To Win is an account focused metrics as opposed to an opportunity metric - meaning that it is not applicable to existing customers.
In a marketing first organization, Lead To Win Ratio can be used as a measure of Lead quality, or expectation setting. A related metric, that can be more meaningful to marketing teams is to track Lead to MQL Ratio. Marketing departments can also impact close rate by testing pricing models and price points.
For most sales teams, Lead To Win Ratio is a well understood KPI, often used to measure a rep's effectiveness at converting leads to closed deals. It's important to analyze this not only by sales rep, but also by region or geography, by industry, or company size to name a few. Doing so will highly the percentage but also expose things such as length of sales cycle and where discussions got stalled.
If product is responsible for new business, such as in a high volume online business, then the Lead To Win Ratio can be used to measure trial engagement, onboarding or in-application help, and key buying journeys. Product teams will often use tools such as Mixpanel or Heap to fully understand users journeys and early engagement. True Trials, the count of trial users who came back a second time within a seven day window, is a way to get an early sense of engagement.
Benchmarking Lead To Win Ratio can be difficult because of the way Leads are generated - is it freemium, a free trial, or a paid trial. Just the same, is Lead capture dependant on a simple form, or are Leads pre-qualified with a long form and perhaps even a credit card.
Modern sales and marketing is wrestling with an ancient challenge: how to attribute leads and prospects to a particular marketing activity or channel. Even the most advanced attribution models leave room for error, since prospects may be influenced by dozens of online and offline factors. Word of mouth, for example, is nearly impossible to track, though metrics such as NPS or viral coefficient are a good proxy for this metric.
In most sales-marketing funnels, conversion rates are tracked by measuring the number of qualified leads compared to the number of new wins. This can be done by campaign, by program, by channel, or left at a high-level to encompass all leads.
An effective way to measure conversion rates is to analyze progress through a discrete funnel with defined stages. For instance, looking at marketing captured leads (those with an email or known name) versus marketing qualified leads (those that marketing believes are ready for sales engagement). This is often called a lead or customer lifecycle. Lifecycles are useful for measuring conversion rates by giving both sales and marketing a common frame of reference for the buyer’s journey.