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Your Closing Ratio-Track It, Know It

By Steve Rak II


OK, everybody, hold on to your hats, because today we're going to talk about tracking your sales and closing ratios. Admittedly, it's not a task that most of us landscape/lawn service business owners find sexy, but unless we do it we would have no idea how many proposals to put out to achieve the sales that we've budgeted for the year.

What are closing ratios and why should you care? First let's look at what they are.

A closing ratio is a tracking tool to measure how many sales you're making compared to the number of proposals you send out. It's also a forecasting tool that can be used to estimate how many proposals you have to put out to achieve the desired amount of new sales that you want to generate.

You can also use the closing ratio data collected over the years to determine if you're a really good salesperson or not so good. If the latter is more true than the former, you can use what you've learned from the process of developing your closing ratio to make you a better salesperson.

Let's say that your idea of tracking sales and closing ratios goes something like this: a property manager, "Joe", calls and asks you to give him a bid on maintaining the property surrounding a condo just outside of the city limits. You're pretty busy on taking the call so you grab the nearest scrap of paper laying on your desk and jot down his name and phone number, stuff the paper into your pocket, and, later in the day, make it a point to swing by the property.

You work up your numbers and fax them over to Joe. You fax it because Joe says he's too busy to meet with you. He's apparently so busy, in fact, that he never calls you back. That napkin that you used to jot down Joe's initial request and phone number goes into the washer along with your pants. Goodbye to the opportunity to add the condo property to your book of business.

This isn't the best way to track your sales and closing ratios, plus, you're wasting perfectly good napkins and probably not making whoever does your laundry very happy either - I'm just saying.

Now, lets look at a simple four-step system that you can use right now to start tracking your sales and closing ratios.

1.) The Bid Lead Form: This is basically a form that you use to get all of the information on the prospect when they call or email you. (If you would like a copy of my bid lead sheet, email me at steve@rakconsulting .)

2.) The Job Folder: I use a basic manila folder and make one up for every single prospect that I am working with. Tip: Use pencil on these so you can reuse them.

3.) The Sales Log: You can either make a spreadsheet in Excel or make a list on a notepad. You will need to make five columns: in column one, put the prospect name and property name; column two, the total cost of the project; column three, the date you sent the proposal; column four, follow-up date; and column five, the sold date/declined date. You can get a lot more detailed than this, but it's a start.

4.) Follow Through: Make sure you follow this system for every job that you actually bid on.

Again, this is a simple version, but it will get you moving in the right direction to start tracking your sales and closing ratios. There are systems and software out there to help you track your sales, closing ratios and a lot more. This is an option, at a cost, of course. No matter what you do, it's important that you start keeping track of these items on a regular basis.

Now comes the fun part, the closing ratio and how to figure it with the following simple example.

Let's say that you put out 100 proposals for a total of $100,000, and your average job is $1,000. If you sold $10,000 of the $100,000, your closing ratio is 10 percent.

Again, this is a simplified version, but I hope it illustrates my point. So now you know that if you want to sell $100,000 of new work you will need to put out $1 million worth of bids to achieve that.

There are many other items that you can track and a lot more information you can get by tracking your sales and closing ratios, but getting started is the first step. Good luck and happy tracking!

The author is the owner of Southwest Landscape Management, Columbia Station, Ohio, and a partner with his brother, Jeff, in Rak Consulting. Contact him at steve@sw-landscape.com.