I’ve been working with a client for several years now that wasn’t managing their close rate on sales and what their average transaction size was.
They purchased a sales tracking software and started tracking their closed won sales and the size of each transaction. At first, it was hard to get their sales people to enter data in to the software let alone starting tracking business. Once the sales people determined that this software was here to stay they embraced it and started entering the data. There was some noise in their sales numbers to start so it made it hard to track the sales and the size of each transaction. Pretty soon though, the data was tight and they could start seeing that their closed won rate was about 1 in 7, a batting average of just under .105 to use the baseball analogy.
The owner asked the sales team, “What are we going to do about this close rate? How can we increase it?” They realized that they were quoting everything including the people who never did business with them. They realized the purpose of giving quotes was only to satisfy the requirement of getting 3 bids before management made their decision. Those prospects had no intention of doing business with them. By starting to ask questions, they soon realized that they could stop quoting all of those types and improved their close rate to .180.
After that, they determined which types of businesses were most likely to do business with them and they sorted their sales data by industry type to help them filter all of the quotes, which were most likely to be accepted and focus on those opportunities first. With those changes made, the close rate increased to almost .275.
I’m happy to report that after a couple of years, this company has a close rate of almost .300, an average for an All Star not just a major league player. By managing their close rate, a company that used to look at $85 million in opportunities to get their revenue, along with management changes, can look at $45 million to hit their revenue target. They’ve become much more efficient and effective in their sales process.
What things in your business should you be measuring like this company to become more efficient in your sales effort? Or maybe it’s your delivery or billing and payment effort that needs improvement? Remember you can’t manage what you don’t measure. Start today!