It's no secret that if you want to make money in business, you need a steady stream of customers that are willing to purchase. In other words, you must have consistent sales! In order to create that consistency, it all must begin with you knowing how to close the sale once a prospect has shown interest.
Oftentimes, businesswomen confuse sales with marketing and think that the two are interchangeable. However, they are quite different, but dependent upon one another. Marketing is the system of attracting individuals to your products and/or services through the use of advertisement, social media, landing pages, word-of-mouth and many other strategies. Sales is the process of converting a lead into a customer. If the prospect purchases your products/services, you have effectively closed the sale. However, remember that sales can only occur after marketing has taken place. This can include not only all of the marketing you did to generate leads, but follow up and actually talking with or presenting to your prospects as well.
Once a prospect shows interest in what you're offering, it's your responsibility to close the sale! This means that from the time a prospect connects with you or provides their information, you should have a system in place for walking them through the benefits of why they should buy from you.
Once you have your sales system in place, it doesn't stop there. You must then be able to present your products/services based on benefits and not features. All too often, business owners tend to brag or point out all of the features of their products/services, instead of focusing on how their products/services will actually benefit your prospects. So, it's important that you also know how to ask the right questions to assist in closing the sale. Whatever problems you can help solve or whatever pain you can relieve them of, you should focus on that and point out the benefits that will resolve their issues. When you are effective in communicating the benefits of what you offer you can then convert your prospects into customers, which will help you to have a good sales/closure ratio.
Now that you know more about the importance of having a good sales system, do you know what your sales/closure ratio is? If your answer is no, you're not alone, because a large majority of small business owners don't know theirs either. The sales/closure ratio measures the percentage of prospects that you were able to convert into sales. Figuring out your sales ratio will require you to keep a measurement of the number of people that contact you for your products/services whether it's via phone, email or through your website or landing page.
Let's Figure Out Your Sales Closure Ratio!
Figure out the number of leads or prospects for your previous month or time frame and then count the number of sales you actually closed out of that number. Next, divide your sales by the number of leads and multiply it by 100. Whatever that number is, it is your sales/closure ratio. Below is the sales/closure ratio formula and examples that will help you with figuring out yours!
Sales/Closure Ratio Formula:
Number of sales divided by number of leads x 100 = sales closure ratio percentage
Number of Leads = 10
Number of sales from leads = 5
Sales/Closure Ratio = 50%
Number of Leads = 30
Number of sales from leads = 6
Sales/Closure Ratio = 20%
Number of Leads = 50
Number of sales from leads = 15
Sales/Closure Ratio = 30%
A common question that many small business owners have is "What should my sales/closure ratio be". However, there is no "one ratio fits all rule". Of course, if you close more than half of all of the leads you receive weekly or monthly, 50% is considered good by many experts. But, there are also other factors you should take into consideration before you determine what your sales/closure ratio goals should be for your industry.
Depending on the type of product or service you are selling and where your lead came from, it will impact your sales/closure ratio. A lead that comes to you as a referral from a current client/customer is going to be easier to close than a lead that comes to you from your online marketing or advertisement. So, if you not only want to know your sales/closure ratio, but which marketing method worked best, you would need to drill down and segment the leads and where they came from. This is why on any type of intake form you should always ask how the customer heard about you.
Consistently measuring the number of leads you get and sales you close will help you to improve your sales/closure ratio over time if you take the necessary actions required to improving your sales closing system.