Ask any VP of Sales or CEO to explain their pipeline conversion rates. Often, they will jump right to the win rate: “We win at least 50 percent of the opportunities we get!” Not so fast. We want to know the conversion rates (plural).

Many of the qualified opportunities that turn into closed deals quickly come from referrals. These, by definition, are very late stage opportunities in the pipeline. Your conversion rate for these types of opportunities probably needs to be at least 50 percent - otherwise, you do not have a scalable business.

Most startups do not have a problem with these types of referred leads or opportunities. The major challenge they face is capturing enough new business without referrals. The first step in doing that is to understand (in general terms) the conversion behavior of both your lead funnel and opportunity pipeline.

Why do most CEOs (and even marketing VPs) avoid talking about all of the conversion realities throughout the entirety of the sales process? Because it is pretty damn ugly.

Reality Bites

Let us say that someone magically presented you with a customer database containing 1,000 highly targeted prospects. How many of these will turn into closed deals? It is a lot smaller than you may think. Let’s pour the 1,000 into my B2B conversion machine...

In the best case scenario, roughly 20-30 (yes, just 2-3%) of these 1,000 targeted contacts will end up entering the bottom of your lead funnel through a combination of (a) being reachable through cold call and/or (b) responding to a call-to-action embedded in an outbound email campaign. Of these 20-30 prospects, you should expect 10-20 percent to make it past the introductory sales call and advance into a second meeting.

Thus, in the end, the conversion rate from qualified lead to a late stage pipeline opportunity is LESS THAN 1% for B2B products that require high-touch, direct sales.

Say It Ain’t So

Given the above realities, do we just pack-up and call it quits? Of course not. Our GTM (Go-To-Market) services at 85 Advisors includes a “check-up” to diagnose your funnel-to-pipeline health to pinpoint areas that can be optimized.

However, I do have some good news. For the vast majority of startups, two very straightforward changes can be made to yield drastic improvements in conversion rates over, say, a 9-12 month period. First, make sure that your very first touch with a prospect is not soliciting a phone meeting but rather delivering something of value (with no strings attached). Sign them up to a mailing list and start providing them with infographics, papers, opinion pieces, etc. And, second, deploy your ISRs (inside sales reps) to go after prospects only after the above mentioned value has been delivered over a set amount of time.

Doing the above two simple things will accomplish three valuable outcomes:

Each time you deliver an asset directly to the prospect, you are actually creating brand awareness;
Over time, you are building-up an inbound leads list;
Your ISRs are now prospecting to more receptive leads

Remember, ISRs have the same conversion metrics across companies and product categories. Their connect rates are rarely higher than 1% on phone calls. And, their outbound email response rates (not open rates) are rarely higher than 2-3% no matter how you try to slice and dice the numbers. Compared to marketing automation, ISRs are relatively expensive. You need both to adequately perform demand generation. But, you should use the right resource at the right time.