Quit Using Close Rate

Close rate; you know, the percentage of appointments you run that end up in sales. If you are like most home improvement companies, you use this percentage to get a quick view of how your sales people are doing in the field.

But why?

Are you really getting anything out of these numbers? Most managers we have talked to sing a common refrain. “our sales people don’t result un-sold appointments”. Why is that? It could be that we’ve placed such an emphasis on close rate, regarding how we judge the abilities of a salesperson, that we’ve incentivized them to “create” the best close rate by not resulting unsold appointments or waiting to result them at more opportune times.

Judging a sales rep by close rate motivates them to NOT report the bad news. Think about this in terms of your body. If the nerves in your hand were not inclined to report pain, your brain would never register that fire was hot. One day, you might just waltz right into a house fire because you didn’t know any better.

“John, you’re being a complete idiot.”

This is what you’re probably thinking right now. “We know our salespeople aren’t resulting their appointments correctly. We run “Other” reports to figure out how our salespeople are ACTUALLY performing.”

Your response is to run MORE reports?

What if…and I mean this is a BIG what if, but what if you didn’t hang the close rate solely on your sales team? There are plenty of other aspects of your business that affect close rate. If your marketing doesn’t match up with your product offering, or is setting unrealistic expectations with your leads, that will negatively impact close rate through no fault of your sales team. If you sent a sales rep to 3 renters instead of home owners, their close rate for that time will be 0…but that’s YOUR fault. If you are truly trying to optimize your business, you NEED to know these things.

Our thinking at improveit 360 is that close rate is extremely important, but only if you have buy-in from your ENTIRE team. For that buy-in, open and honest communication is essential. Maybe Sales reps shouldn’t be judged on their close rate but should be judged on their reporting percentage. Your best and most celebrated reps would result 100% of their appointments. This way, when you run your close rate report, you get a more real-time 360-degree view of your business. Maybe the leads are weak, were they all from the same source? Maybe the sales rep needs more support, you can better support them (and identify the need for support quicker) if they are incentivized to be open and honest.

These are all aspects of a business that truly optimized companies will need to have an in-depth knowledge of. That knowledge is built on input from the field.

Your sales reps don’t run their appointments alone. They have the whole company behind them. Marketing gets them in the door, their management team gives them the knowledge to help guide their customers to the correct decision, and the good work of your production team gives them the power of referral. All these factors affect close rate. Don’t hang them out to dry when it comes time to report their results. Close rates reflect your entire company, not one rep’s one-hour appointment with a lead.