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 quickly that cost you little or nothing which will have a huge impact on your sales.
Tip #1: NEVER “SEND THEM SOMETHING”
You may have had this experience. You make your pitch and the prospect says,
“Send me something.” Because that’s how you’ve been trained, you oblige. But when you follow up a week later the prospect says, “Oh, I have your material right here, but I haven’t had time to look at it yet. Can you call me in a week?”
You can see where this is going, can’t you? As soon as you “send something” you have totally lost control of the selling process.
Instead, when the prospect says those dreaded words your response should be something along the lines of, “What is it you’d like to see that isn’t clear from our conversation?” This forces the prospect to articulate what’s on their mind, which cycles you back into the sales conversation and keeps the process on track.
This simple shift in mindset will have an immediate impact on your closing ratio. It doesn’t mean that you’ll close all those people you say “no” to, but at least now you have a chance.
Tip #2: TRACK ACTIONS AND RESULTS
“You can’t improve what you don’t measure”
Understanding this simple phrase will have a huge impact, not only on sales but your entire business. Many business owners think salespeople are a kind of “set it and forget it” resource, when in fact they require continual management.
And you can’t just measure their results – like how many new clients they bring in or how much revenue. Of course you have to track those things, but you need to keep a close eye on things like lifetime value per customer, profitability of an average transaction, leads to customers, number of daily conversations, sales cycle time, and conversations needed to close a customer.
Spend some time understanding your own sales process and develop metrics for
EVERYTHING. Its never overkill. Then start tracking. And in a way that is difficult to explain, the simple act of tracking the right things will improve your results without you doing anything else.
Tip #3 ASK A LOT MORE QUESTIONS
You ask questions to gain information. Right?
No. Most salespeople think that “the close” is where the sale happens. Successful sales pros know differently. The real reason to ask questions is that well-formed sales questions let the prospect to hear their own thinking, so that they can sell themselves.
Every one of your questions should be designed to further uncover the customer’s pain. When that pain becomes real enough for them they start to feel a much stronger need to have what you’re selling.
Each question exposes the customer’s needs, wants and lacks. They should point to the customer’s poor performance in whatever area your product or service will help them. And you keep asking those questions until the customer is practically begging you to tell them how you can help them.
Tip #4: MAKE A STRONG ROI CASE
Many salespeople think ROI is just too complicated to communicate leaving it to the prospect to figure out for themselves. This is a huge mistake because smart business owners only spend money on things they know pay them back. And if they have limited funds, they spend their money on the opportunities with the greatest returns.
Your product or service may be wonderful on its own merits, but if you don’t supply a strong ROI case, your prospect is likely to default to a “no” decision simply because they can’t justify it financially.
Figure out how to credibly communicate the ROI. Sometimes it’s easy, sometimes it isn’t. Don’t let that stop you because a strong ROI case is often the key to closing the deal. Get the prospect to believe, “This is a no-brainer” and the deal will often close itself.
Tip #5: WRITE AN OBJECTION BOOK
High-performing sales pros know that objections are nothing more than unanswered questions. And when your prospect has unanswered questions, they don’t buy.
Improve your closing by doing this: make a list of every objection that comes up in your sales process. Then turn each objection into a question. Sometimes an objection could mean more than one question, so list each one of them.
Then write out solid answers for each of those questions.
Having an objection book is the best way to make sure you can address your prospect’s concerns. After you answer the objection you can ask if there is anything else in their way of making a decision. Address those concerns as well, and then go right back into your close.
Certainly, these five tips are not the only ways to improve your close ratio; there are dozens more. But each of them will make a significant improvement. Do them all, and watch your numbers skyrocket.
As always, I look forward to your comments so please leave them below.
This may be important…
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Geoff Dodd says
Writing an objection book with objections and answers, plus asking a LOT more questions, making a strong ROI case and doing tracking, to focus actions around successes, crystallizing ‘what works,’ are great ideas to help any online marketer, thanks Paul.
Geoff, you’re welcome.