What is Stage Conversion Rate?

Stage Conversion Rate is the percentage of deals that progress to a later stage in the sales cycle. Exploring your conversion rates can help identify drop-offs in your sales process to highlight areas for optimization and improvement.

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How do I calculate Stage Conversion Rate?

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The formula for Stage Conversion rate (for any particular stage) is as follows:

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For example, Stage Conversion Rate for Stage 2 would be the total number of deals that advanced beyond stage 2 (i.e. deals that advanced to Stage 3, 4, 5, Closed Won etc.) divided by the total number of deals that advanced to Stage 2

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Let’s look at the following history of a pipeline by stage, and how many deals move through the sales process:

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In this example, we start with 100 deals and observe how many progress to later stages. There were 100 deals that entered in Stage 1, of which 85 advanced to Stage 2. Of these 85 deals in Stage 2, 64 advanced to Stage 3, and so on. Ultimately, 28 of the original 100 deals were Closed Won, with 72 deals being marked Closed Lost.

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Let’s assume that deals progress through each stage in order. SaaSGrid can handle when deals move backwards and skip stages, but we can use the data above for a simple example. With the count of the current deals in each stage, we can calculate the different conversion rates for each stage.

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The Stage Conversion Rate calculates the percentage of deals that were won from the previous stage. For each stage, the win rate is the deals in the stage divided by the sum of the deals in the stage and the deals in the previous stage. At each step, some deals are lost, at which point they exit the pipeline to the “Closed Lost” stage.

Note that both Stage 1 and Closed Lost have no Stage Conversion Rates: Stage 1 has no win rate (there are no stages before this stage), and Closed Lost category has no win rate (a deal that is Closed Lost is not “advancing” in the pipeline).

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SaaSGrid can show conversion rates over time by stage in a single chart. In the example below, note the conversion rate for the stage named ‘Id. Decision Makers’ improves steadily quarter over quarter, denoting a more successful stage throughput.

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How do I improve my stage conversion rates?

Understand Drop-offs:
See the stages where your sales process is converting fewer deals and make data-driven decisions.

Get Granular:
Dig into individual prospects and see how they move through your overall pipeline.

Pivot Pipeline Data:
Monitor close rates by segments, industry, date aggregations, and more to fully understand data gaps.

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Sales processes can be long, but analysis doesn’t have to be! SaaSGrid offers full visibility into your sales pipeline and the metrics that matter - talk to us here to learn more!