A win/loss ratio is a measurement of the opportunities won to the opportunities lost. In SaaS terms, it compares the times you’ve made a sale against the times you haven’t.
This way, a win would be converting a qualified lead from your sales funnel into a subscriber, while a loss would be failing to do so.
Now that you know what the win/loss ratio is, let’s get into why it’s useful.
Benefits of Calculating Your Win/Loss Ratio
A win/loss ratio is a good way to assess how successful your sales are and identify areas for improvement in your process.
Imagine you sell project management software that helps people track how much time they spend on tasks. You have a handful of prospects in your sales funnel and while they all make use of the free demo, less than half of them choose to pay for a subscription. This means you’re making more losses than wins, which tells you something’s wrong.
You do some digging and realise that most of your prospects are very budget-conscious. They like the product, but they don’t want to pay for something they can get for free elsewhere.
Knowing this, you adjust your product’s pricing schemes to accommodate different budgets and start promoting the return on investment of tracking time.
You let a month pass before checking in and notice that this time around, you’ve closed the deal with most of your prospects, meaning your wins are finally higher than your losses.
In this same way, you can use a win/loss ratio to reveal how effective your sales are and use that information to make any improvements you find necessary.
Now that you know how a win/loss ratio can be useful, we’ll teach you how to calculate it.
How to Calculate Your Win/Loss Ratio
A win/loss ratio is super simple to measure manually – all you have to know is division. Here’s the equation:
Number of sales opportunities won / Number of sales opportunities lost
Your final result can be displayed as a fraction or decimal.
For example, if you had 10 qualified leads and 6 of them became subscribers while 4 of them didn’t, your win/loss ratio would be 6/4 or 1.5. The number is greater than one, so you’re making more wins than losses.
Now consider a situation where 4 of them became subscribers while 6 of them didn't. Here, your win loss ratio would be 4/6 or 0.67. This is less than one, which means you’re making more losses.
On the other hand, if 5 of them became subscribers and the other 5 didn’t, your win loss ratio would be 5/5 or 1 – so you’re making the same amount of wins and losses.
Before you calculate your win/loss ratio, decide on how often you want to do so. You can calculate it on a quarterly, monthly, or weekly basis depending on what works for you. Sticking to a consistent time frame will allow you to compare your results over time in a more meaningful way.
It’s also important to remember that your win/loss ratio is not meant to work on its own – you need to pair it with qualitative data. Once you’ve calculated your ratio, factor in other information about your company, product, competitors, and more for a better understanding of the results.
A well-thought-out approach to using your win/loss ratio will help you make more strategic decisions.
Key Takeaways
- A win/loss ratio is a measurement of the sales you’ve won compared to the sales you’ve lost
- A win would be a prospective customer from your sales funnel whom you’ve converted into a subscriber
- A loss would be a prospective customer from your sales funnel whom you have not converted
- To calculate your win/loss ratio, divide your wins by your losses
- If your ratio is more than 1, you’re making more wins than losses. If it’s less than 1, you’re making more losses than wins. If it’s 1 exactly, you’re making equal amounts of wins and losses.
