Mike Andes breaks down close ratio as the metric that matters most. A high close rate during growth shows strong product-market fit, but too high when you're optimizing for profit means you're probably underpriced and leaving money on the table.
The next KPI in the perfect business is your close ratio. And in the perfect business, the close ratio is extremely high while you are growing. I don't want your close ratio to be super high when you're trying to maximize profit. Because if you're closing 90, 95% of the deals and the proposals that you send out to customers, it potentially means you're leaving money on the table. Because if you'd raise your prices, you'd be able to get more profit margin even though your close ratio is low. But your close ratio is something you should be tracking. It's a key performance indicator simply because it's the best measurement of demand and supply in the market.
