Closing Ratio  Did you know that knowing your sales reps’ and company’s closing ratios is really not so important?

Many people automatically believe that a high closing ratio is the measure of a good salesperson. It can be, but unless you have other information, it does not mean much. Let me rephrase it:

Knowing Your Sales Reps’ and Company Closing Ratios is important, but not the first number to know in evaluating a sales rep.

So, please, don’t get me wrong, the closing ratio is necessary to know for certain purposes; however, even more important than that is knowing at what cost your sales reps and your company is selling a service or product.

Let’s just take a real dramatic example to try drive home the point I’m making. If you exhibited at a home show, got 25 leads and closed one, your sales rep’s closing ratio would be 4/25 or 4%. If I was going solely by closing ratio, I’d say that show was a muff. However, if I spent $5000 on that show and that one sale was $75,000, it was well worth it, even though the closing ratio was so small.

Even though this sales rep had a low closing ratio, he is still profitable for me from a sales standpoint, and it is worth it to have him selling for me. Obviously I would have liked a higher closing ratio from that show, and I can start looking at what needs to be done to increase the number of closes from that show, but as you can see, this had a very low closing ratio, and yet it was profitable for me, given that the sale was made at the proper price points.

This is only one example of one sales rep and one lead source or one way of getting the sale. So what happens when you put all your sales reps together, all of your sources of leads and sales, all your closing ratios, all your costs of making a sale?

If you have a way for all that information to be laid out, then you can start examining other parts of sales, including closing ratios. If you had several sales reps at that same show, you could compare their closing ratios with each other. If one is selling at a higher rate than the others, find out what he or she is doing. Are those tactics something that can be learned by the others in your sales training? What are their gross revenues and at what price point are they making those sales? (You know sometimes a salesperson has wiggle room to lower the price in order to make the sale, but that wiggle room has to stop at a certain point where it is still profitable for the company.)

Do you have some people that are clearly better-suited to working the shows, while others are better-suited for other ways of making sales? Do you need to assign certain places and lead sources to people who are able to close at a higher volume and lower cost to you, helping them to be successful in their sales, thereby increasing your company closing ratios and sales volume?

And most importantly, do you have a way to know where your people are strong, and where they are weak? Do you have something that shows where you need to take measureable action to make all the difference in the success of your sales reps and your company?

We always say, “Winners Know Their Numbers”.

Closing Ratio Report Picture

P.S. Click here to see a layout of one sales rep’s closing ratios and cost of getting a sale.





P.S.S.  Sales Reps, what is a good closing ratio? Well, the best thing you can do for yourself and your employer is to focus on increasing the volume of sales, not necessarily the number of sales! Are you creating enough value to get the price you are asking? Are you upselling? Are you cross-selling other products or services? Are you getting back to your previous customers? How are you getting referrals?

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