Definition
Time to close is a sales performance metric that measures the average length of time it takes for a deal to move from its creation as an opportunity to the moment it is won and the contract is signed. It is essentially another term for the length of the sales cycle for successful deals. Tracking this KPI helps businesses understand the efficiency of their sales process and forecast revenue more accurately.
Examples
- SMB Software Sales: A company selling a simple project management tool finds its average time to close is 25 days, as customers can make decisions quickly with few stakeholders.
- Enterprise Sales: A business selling complex cybersecurity solutions to large banks has an average time to close of 270 days due to long security reviews, legal negotiations, and multiple levels of approval.
- Performance Comparison: A sales manager notices that Rep A has an average time to close of 45 days, while Rep B’s is 70 days. This prompts the manager to review Rep B’s process to identify bottlenecks.
Advantages/Benefits
- Process Efficiency: A primary indicator of the efficiency of your sales process. A shorter time to close often means a more effective process.
- Improved Forecasting: Knowing the average time to close helps sales leaders predict more accurately when open opportunities in the pipeline will convert to revenue.
- Identifies Bottlenecks: Analyzing the time spent at each stage of the pipeline can reveal where deals are stalling, allowing managers to intervene and provide coaching.
- Resource Planning: Helps businesses better understand the resources required to support their typical sales cycle.
Related terms
- Sales Cycle
- Sales Velocity
- Sales Pipeline
- Closing Rate
- Opportunity
- Sales Performance
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