I was recently helping two different dealers use Sobel University systems and techniques, and they both asked the same question.
“What is a good closing ratio?”
They explained their concerns moving into the current market, which was the reason they reached out for help. As some dealers are advertising heavy discounts, stopping hiring and slowing their inventory intake, these two dealers wanted to know how they stack up. Were they losing market share or burning opportunities that would go to the competition? Did they had the right inventory, and were staffs in a strong position to continue to capitalize as high fuel prices, European unrest and inflation are on everyone’s lips?
“What is a good closing ratio?”
is not the right question to answer.
Instead, we will examine four key steps in your selling process requiring weekly inspections. With each step, you will outline goals to ensure performance and growth. Although you must regularly examine more than these four parts, they will have an immediate effect on closing ratios.
Introduction to Management
Do you truly believe if a customer does not buy from you today, you are cheating them out of experiencing:
- The best dealer in the market
- The best store
- The best-trained salespeople
- The company that will provide the best after-sale service
- The most knowledgeable staff
- The staff that will give the best follow-up
- The best company to earn their repeat and referral business?
If your answer is not a quick yes, you will probably have a hard time with this statistic: Our best customers require a 100% introduction to management before leaving the dealership.
Requiring sales staff to check in with a manager helps them better serve customers by increasing product information, discussing available market conditions and current inventory on hand, reviewing incoming inventory options, ordering possibilities and different payment options, presenting the to speak to another salesperson and directly with a manager and many more.
Tracking and recognizing the lack of manager introductions is an easy staff pay raise. If you are not tracking these, manager introductions are an easy trend to miss, given all the manager’s other responsibilities.
Sales staff likely would not check in with their manager before a customer leaves if the salesperson believes the customer will return, if the customer is theirs alone, if the salesperson does not have the best store is not the best in the market or if a manager is unavailable.
Dealers spend money on advertising to attract consumers. The dealer has operating costs to provide salespeople a chance to help customers. The customers belong to the business, not any individual salesperson. No customer should walk unless a manager talks to them.
Track Source One Opportunities Percentage
A “Source One” is a customer you have never worked with making their first trip to your dealership. Track and set customer group goals so staffing can be effective, ongoing follow-up can be inspected and future sales staff employment can be tied to both.
A salesperson with a 100% Source One ratio speaks only to new clients. This is nearly impossible, indicating the salesperson is not following up. Worse, they must be providing horrible service in front of other customers. Even a poorly skilled salesperson should at least have some customers return to them, if for no other reason than you carry quality inventory.
The higher a salesperson’s Source One percentage, the more actions you need to take.
Your goal is to have staff continually lowering the Source One ratio. Many salespeople have whole days where they work only with repeat and referral customers (0% Source One). Your objective is to have more days with 0% Source One ratios until sales staff are fresh-customer free and not relying on the front door to make a living.
If salespeople do not provide great customer service and outstanding follow-up, terminate them. There is no gray area here.
Manager Check Point Percentage
A Manager Check Point (MCP) refers to sales staff checking with their manager before showing an RV. The goal is to have a 100% MCP.
The benefits of MCP include more knowledge of inventory to show, better aged-product control, a clear understanding of financing possibilities, gaining more experience, and better customer time use. Involving a manager early also means, if the manager is needed later, they are not coming into a conversation cold.
If over 90% of deals written up become sales, but 90% of customers do not buy each visit, then you need much earlier manager involvement. The higher the MCP percentage, the more dramatic the increases to write-up and closing percentages.
Necessary Sales Opportunities Percentage
Necessary Sales Opportunities is the number of customers your salespeople speak to in a week relative to the number needed to achieve profits and sustainability.
Let’s use the number 14 (roughly two or three per day). A salesperson who speaks to 14 customers in a week would have a 100% Necessary Sales Opportunities percentage. If they spoke to seven customers the next week, their percentage would drop to 50%.
By tracking the percentage, you can isolate:
- Whether a salesperson’s presentations are effective
- Who needs training
- Who needs to speak to more or fewer customers
- Whether follow-up is scheduled and an individual priority
- Whether the right salespeople are talking to the right customers at the right time
- Whether you are staffed correctly
- Top performing salespeople always talk to the fewest customers because they have better skills and can spend more time with each opportunity. Top performers might have a 50% ratio in this area. Salespeople with a 50% rating need a rotation to get them in the game more often.
You might, however, have a salesperson who talks to 28 customers in a week, reaching 200%. This salesperson is not delivering the service quality your dealership demands. Seeing a percentage so high is an immediate call to action.
Limit this salesperson’s customer count within the rotation, require them to spend time on follow-up and to get sales training ASAP. You must then hire more salespeople. If sales staff spend two to five hours to sell your product correctly and speak with more than three customers in a day, when will they have time for development and follow-up?
Positive Reinforcement
These are just a few areas you must track weekly and monthly. I hope you can see how data tracking can increase productivity.
Some data is usually available to track your sales department, but tracking the wrong information will limit your growth. To receive a free Sales Recap form, reach out to Sobel University with the contact information below. In addition to the items covered here, the form will include other areas to track as well.
I began by saying tracking goals are imperative. Let me close with why.
With goals, we can provide positive reinforcement publicly for your top performers who are doing well. We can also encourage similar behavior in others.
Ultimately, you have one objective when tracking data: Isolate problem areas, fix them and improve your staff’s quality and competency.
Jered Sobel serves as president of Sobel University, a company providing training for management, salespeople and consumers across North America. He is best known for designing the industry-standard onboarding sales training manual and co-authoring the consumer guide to purchasing an RV. Among his previous work experiences are roles as a dealership salesperson, a general sales manager and hiring dealer staff.
