In a recent interview, I was asked what companies can do to ‘boost their close ratios’ within the specialty retail market. Here were the questions as well as my responses.
Question: What exactly is a close ratio and why is it important for retailers and their employees to pay attention to their close ratios?
Response: While you may find that the definition of a “closing ratio” vary dependant upon the industry and selling cycle, broadly speaking, your closing ratio is the number of prospects you’ve met with/spoken with divided by the number of sales you made. So, if you speak with 10 prospects and make 5 sales, then your closing ratio is 50%.
Regarding the importance of paying attention to their closing ratios, retailers need to be able to answer the following questions:
• How many calls do I need to make to generate one prospect?
• How many prospects does it take to generate one sale?
• How long will each prospecting or cold calling effort take?
• How much time do I need to devote to new business development every day?
• And how many sales do I need each month to attain my year end financial goals?
If you don’t know the answers to these essential questions, that’s perfectly fine. Realize that if you do not have the answer to some of these questions, it may require doing some conscious tracking of your cold calling efforts before you are able to accurately answer them. There are many tools available today to help track these numbers. Once you do, imagine how much easier your life would be if you were able to identify the specific and measurable actions you need to take on a daily basis in order to reach your yearly income goal. Now, you’ve created your success formula. You will then be able to determine how much prospecting or marketing/advertising is needed and and the number of appointments/presentations needed each month, even each day to attain your goals, as well as the time commitment it will take to do so.
If you can measure it you can then manage it. Let the numbers in your success formula determine the amount of activity you need to put into your daily routine that will ensure your selling success. It sure beats scratching your head at the end of every month, wondering why you didn’t meet your sales goals. Now, you will have a defined, formula to follow so that you can generate the results you want. You can’t refine what you don’t define.