Most entrepreneurs seem to believe that the biggest factor in successful growth is lead generation. There may be some truth in this, but only some.
Before we I talk about how to improve sales conversation let’s look at some statistics:
The typical range of closing ratios for referral business is between 50-80%, but referrals are a very small factor in a sustainable high-growth business.
The range for warm call-in leads is between 30-70%, but warm leads are less than 5% of your qualified, addressable market.
The closing ratio for highly qualified cold leads ranges between 20-35%
And the average for semi-qualified cold leads ranges around 10%
And cold, cold leads? If you get 1%, you’re doing well.
You probably spend a lot of money and time generating leads for your product or service. And depending on your closing ratio, you may have to generate 2 to 10 leads to make a sale.
One way to dramatically improve your profits and revenues, without spending one more dime of marketing expense is to improve your closing ratio.
Here’s an example: Say it cost you $300 to get a lead, which for a high-dollar product sale isn’t bad at all. And say your service costs around $15,000. At a 20% closing ratio, you need 5 leads to make a sale, so you’re spending $1500 on leads plus 10% sales commissions – another $1,500. Total cost of customer acquisition: $3,000 or 20% of revenues. Depending on your gross margins, that’s not bad.
But now you get better at closing and increase your ratio from one out of five to one out of three, shaving $600 off your CCA. That’s a whopping 20% reduction in cost of sale, all of which drops right into your bank account.
Here are five simple tips you can implement […]