How do you analyze conversion between sales stages?

Required tools

• At least two quarters of data — Shorter periods result in too few deals to draw any conclusions.
• Consistent use of phases — If the phases are used unevenly, you measure noise.

Calculate

1. 1.Count deals entering and leaving each stage

   For each transition: how many entered, how many moved on. The ratio is the conversion rate for that stage.

2. 2.View time in phase as well

   A stage with a high conversion rate but a long time spent in the stage is also a problem. Together, the two figures tell you more than either one on its own.

Interpret and act

1. 3.Find the weakest transition

   Where the leakage is greatest, the potential gain is greatest. One percentage point there is worth more than five in a stage that most people pass through anyway.

2. 4.Find out why before taking action

   A low quote-to-win rate may be due to pricing, competition, or quotes being sent too early. Talk to three salespeople before drawing any conclusions—the figure tells you where, not why.

3. 5.Measure again after one quarter

   Implement one measure, not five. That way, you’ll know what worked.