What Is Your Sales Closing Ratio?

“What is your closing ratio?” is a question I ask of almost everybody I speak with. Nine out of every ten people I ask the question to say they don’t know. And the one person who does answer says something like:

* My closing ratios are 20 percent. or,
* My closing ratios are 40 percent. or,
* I close 80 percent of all my opportunities.

“What kind of statistical records do you keep?” I ask.

“I don’t keep any detailed records.” Is the usual reply.

“So how do you ‘really’ know what your closing is?”

There’s a long silence…

Do you want to know if your hard work and effort is getting results? Then you need to keep detailed records.

Remember: With more detailed and accurate records you’ll close more sales, in less time, and with less effort.

Looking At Closing Ratios
There are different ways you can look at closing ratios. In the broadest case, you could assume that each time you created an opportunity – where you think someone is going to buy something from you – you record it as an opportunity in a spreadsheet.

If the person did in fact buy something, you closed the sale.

Keep track of the results over time and you’ve your closing ratio.

If that’s a bit too broad, you could look at the number of proposals you make and deliver to a prospect. Keep track of the number of people who buy, and you’ve your closing ratio.

But closing ratios shouldn’t be the only determining factor. Consider these additional criteria:

* Number of times you meet with the customer before the sale closes.
* Length of time it takes to close the sale.
* Average amount of the sale.

Number Of Closes?
You may not realize it, but selling is a time management issue.

It’s important that you know how many times you must meet with a customer before she buys from you. What percentage of your sales close on the first interview? The second? The third? The fifth? Or the twentieth?

Why is this important? Because if you’ve got to have multiple meetings with the customer, you’re probably wasting a lot of time and getting very little in the way of results.

Bob, one of my consulting clients, found that he sold 38 percent of his opportunities during either the first or second meeting. But only sold another 9 percent of his opportunities in a third, fourth, fifth, or subsequent meeting.

His problem was that he was spending more than half his time calling on people a third, fourth, or fifth, time, and these people weren’t buying. Furthermore, the average size sale of those that did buy was smaller than his sales to customers who bought on the first or second meeting.

Bob drew a proverbial line in the sand: If he didn’t make the sale after the 2nd meeting, he closed the file and moved on.

This freed up hours of time – every day – that he now spends looking for new prospects. His business has soared.

Sales Cycle
A second factor to consider is the length of your sales cycle. How long does it normally take from the day you create the opportunity to the day you’ve a signed order.

Once you know what that length of time is, your challenge is to discover ways to shorten it.

Most sales people spend too much time telling the prospect about their:

* Wonderful products,
* Their years of experience in the business, and
* The huge number of customers their company does business with.

What they fail to do is ask great questions so they can discover what it is that the customer is trying to accomplish.

Because the sales rep doesn’t know what the customer’s goals and objectives, problems, challenges, or issues are, he’s unable to make a strong case that he’s offering a viable solution for the customer.

For that reason a decision is put off till a future time. With the sales rep calling every few weeks asking, “Do you want to move ahead with [insert product or service]?”

Here’s something to think about: If a customer’s got a problem, why wouldn’t she want to do something about it… today?

I’ve found the best method to identify problems is to ask great questions. Ellen, another of my clients, is a financial planner. One day she asked Sue, a potential client, this question: “What are you trying to accomplish in your financial planning?”

Sue started talking and for the next forty-five minutes she told her everything she wanted to do. When she had finished, she looked at Ellen and said, “Is this something you can do for me?”

“Sure.” Ellen said, and wrote up the order.

What Do You Earn On Each Sale?
The amount of money you earn on each sale is very important. If your average earnings are in the thousands of dollars, you can afford to invest more time in the opportunity than if you’re only making a couple of hundred dollars.

For example, a real estate broker could earn $10,000, $25,000 or $100,000 on a single transaction.

A mortgage broker could be earning $1000, $2000, or $5000 per transaction.

While someone selling insurance may make no more than $300, $500 or $1000 on a single sale.

If you’ve got to meet with someone two, three or four times to close the sale – and you’re only going to make a $150 commission – you’re not making much money, especially when you factor in commuting and preparation time.

Separate Buyers From Non-Buyers
Once you know your closing ratios you need to improve your skills so you can do a better job of identifying who is a buyer and who isn’t, in the shortest period of time.

If your prospect isn’t going to buy, you’re better off knowing it sooner rather than later. You don’t want to follow-up with a prospect for 30, 60 or 90 days and then discover you aren’t going to make a sale.

When a salesperson tells me their closing ratio is 20 percent, they’re really saying that 80 percent of their time is being wasted. If they only wasted 50 percent of their time, their business would double.

Think about this:

* When you close your opportunities, you sell 100 percent of those who are going to buy.

* When you don’t close your opportunities, you fail to sell 100 percent of those who ARE NOT going to buy.

Your real problem may not be in your closing ratios, but may be in your inability to identify who is – or is not – a prospect.

Five Ways To Grow Your Business
Here are five strategies you can use to dramatically improve your business:

1. Find More Prospects. Spend more time looking for people who need your products or services.

2. Look For New People. Get out of your comfort zone. Call on people you’ve never spoken with before.

3. Ask Better Questions. Spend more time searching for the issues that are important to the customer instead of telling  her all about yourself, your company, and your products.

4. Use The Telephone More. The telephone is a great time-saver. Spend more time calling prospects, and use the phone to pre-qualify them before you have a face-to-face meeting.

5. Prune Your Database. Remove bad prospects from your database. Stop calling on people that you’ve called on forever who have not done business with you.

– Jeffrey Mayer