WITH SPRING just around the corner I wanted this article to be more than just a rah-rah-ree get fired up message. So this article hits on a powerful topic that will improve both your unit sales and profitability: improving your closing ratio.
What if in 2014 you could close 5 percent more of the traffic that’s already coming through your door? Let’s do the math real quick and see the impact.
For easy math, let’s use a dealership that averages 20 visitors each day and had 22 open/working days each month. (Do the math based on your dealership’s specific traffic numbers and working days.)
Twenty showroom visitors multiplied by 22 working days is 440 total dealership visitors per month. Based on a 15 percent closing ratio (440 x 0.15), this dealer would sell 66 units that month. If this dealer focused on improving the closing ratio by 5 percent, it would sell 22 more units per month (440 visits x .05 = 22 additional units) with the same traffic they already have.
Of course, this is much easier said than done, but it is absolutely realistic to accomplish. Several years ago a major OEM hired me as a consultant to help improve its dealer network’s closing ratio by 5 percent. After a lot of hard work and with some time, many of their dealers actually exceeded 5 percent and reaped the benefits of their work. Other dealers, however, thought it was a big waste of time and therefore made no changes at all to their operation. All of the dealers who tried showed some improvement, and all of the dealers who didn’t stayed exactly the same. If nothing changes, everything will just stay the same.
There’s no magic pill to increasing closing ratio, no super elixir to drink and get better, no Tony Robbins course you can listen to and then you’re better. You don’t need a new staff; they would just come in and do the same thing everyone else is doing, anyway. It just takes a little hard work and it must come from the top down. So if you have the intestinal fortitude to focus on increasing your closing ratio, here are three best practices to get you started:
Tip No. 1: Measure It
To improve anything, you have to measure it. If you wanted to lose weight but never weighed yourself, you’d get nowhere fast. That’s how it is with closing ratio. You have to know where you stand.
The best way to measure your closing ratio is with an electronic traffic log. There are too many benefits to an electronic traffic log to list here, but one benefit of this tool is that you can see how many customers each sales rep has worked with and how many of those customers made purchases, which is what you need to factor your dealership’s ratio.
The traffic log is also the best way to keep track of customers for follow-up. At a typical dealership, more than 90 percent of customers will not purchase on their first visit. You can’t afford to sit back and hope customers will return. So what can you do to get them back? Courtesy follow-up via telephone and email, and trying to keep track of this with Post-it notes and sheets of paper won’t cut it.
When a customer does return for a second time to look at the same (or similar) unit, their closing ratio jumps to more than 60 percent.
Start using a traffic log — the correct way — and your closing ratio will go up.
Tip No. 2: Follow a Sales Process
You may have heard this time and time again, and that’s because it works.
Selling is not something you do to a customer; it’s something you do with a customer. It’s not a one-time event; selling is a process. Think of it as following a proven trail that is guaranteed to get you where you want to go: more sales!
And if you’re not following a process, you’re cutting your own trail, which wastes a lot of your time and decreases your closing ratio.
Choose a sales process, roll it out to your staff and define what each step means. Follow the trail/process with every customer and your ratio will improve.
Tip No. 3: Greet 100 percent
I once worked with a dealer principal who told me that EVERY customer he had brought in a classified ad and wanted an “out the door – I’m talking cash money – what’s your best deal – discounted price.” While conducting some training at his dealership I helped work their showroom floor. Turns out no one wanted to waste their time talking with all the visitors they had who were “just kicking tires.” The owner told me, “I mean, if they were serious they’d come ask us for our best price.”
A dealership’s very best customers are the ones that do not come and ask for your best price; but you have to greet them and begin the sales process every time with every customer. If you think that this isn’t impacting your store, that your staff is beginning the sales process with every guest, inspect what you expect. This is a great way to make a dramatic difference in your closing ratio and your gross profit.
There’s an old saying down here in the south: There’s plenty of meat left on that bone. In terms of all the visitors you have at your dealership, this is true. There are plenty more prospects who will purchase something from you. You just have to make sure your staff is working to get them.
Start measuring, follow a sales process and greet 100 percent of your customers to begin the sales process with them, and you’ll achieve that 5 percent increase in closing ratio.