The following article was featured in the July 2011 NARI Spec Sheet

Ten ways to improve closing rates

1.    Set a goal and work toward it

Start by calculating your current closing rates in both dollars and jobs. Set goals for closing more projects, and more dollars. For example: you might be closing 45 out of every 100 proposals (a closing rate of 45%). If those 100 proposals have a total value of $1,000,000 and the 45 you close are worth $400,000, then your closing rate in dollars is 40%.

(See The Magic of Closing Rates: How closing “just one more” can make a big difference for more details on how closing rates impact your top line growth)

Consider segmenting your closing rates by home value, type of service, or size of contract in order to gain insight into buyer behavior and preferences. By analyzing sales data, a St. Paul, Minn. contractor discovered that closing rates in some neighborhoods were significantly higher than in others. In an effort to gain market share, they are focusing more of their marketing efforts in communities where closing rates are highest.

Set a realistic, but challenging goal to work toward. Monitor your progress carefully. Successful companies keep an eye on closing rates with dashboards or monthly reports. (A car’s dashboard displays information about speed, fuel, and engine status in real time. A business dashboard gives management the ability to monitor key performance data in real time.)

2.    Communicate your “why”

Find out why clients chose you, and why they would recommend you. Instead of relying only on observations and anecdotes from sales staff, develop and use surveys to gather feedback from clients. For even better understanding of why people buy from you, hire a professional market researcher to conduct voice-of-the-customer interviews. Clients are masters at telling friends and neighbors why they should (or shouldn’t) buy from you. To find out what they have to say, ask.

Overcommunicate your value proposition – your why – in as many ways and places as you can. They may not look you in the eye and ask, but buyers need to know: Why should I buy from you?

When you do something special, point it out. For example, if you include timelines in your contracts or proposals you might say something like, “Most other companies don’t provide a detailed timeline, but we are confident that we can keep your job on schedule, so we do.”

Walk your talk – Instead of waiting for the contract to be signed, find ways to build your difference – such as speed, creativity, construction expertise, or attention to detail – into your sales process. For example, if you claim "attention to detail" -- make sure you pay attention to details during the sale, not just after.

Document your results – If you can provide evidence of your reliability, professionalism or results, bring it on!

Capture client stories on video. The more you can document happy clients and successful outcomes, the easier it will be to buy from you.

Hire a professional photographer or videographer to document your work. Learn your way around a digital camera and use it!

One home performance contractor uses before and after blower door testing, a digital camera and utility bill comparisons to document how their work impacts both comfort and energy consumption.

One of the biggest mistakes contractors make is posting pictures of their work online, without an information or explanation. So buyers don’t know what they are looking at. It’s your job to help people see and understand what’s in the picture.

3.    Create excitement

Find ways to help people get excited about their project. A landscape design-build company recently started using Google Sketch-Up to help homeowners visualize their finished project. It takes many hours to render the designs, but for big projects it’s worth the investment. Past experience has consistently shown that clients who get 3-D renderings are twice as likely to sign a construction contract.

4.    Plan the next step

At the end of each meeting or interaction, effective sales people plan the next step, and often set the next meeting. Instead of just emailing a bid or proposal, schedule a time to go through it either by phone or in person. This gives you an opportunity to answer questions and respond to your clients’ concerns (a.k.a. objections).  You can also use technology to make meeting with clients easier for everyone. It takes just a few minutes to set up a Skype account or subscribe to a service like GoToMeeting. With a virtual meeting, you can meet with both decision-makers, even if they are in different locations (work, home or out of town).

5.    Take the scary out

Remodeling is your world, but it’s unfamiliar territory for a lot of homeowners.  Ask clients about their concerns and look for ways to ease their worries. For example, if they are worried about overages, show them how your design or planning process helps minimize unexpected surprises. It’s human nature for buyers to frequently choose the option with the least chance of failure, rather than the option with the greatest potential for success.

6.    Talk about budgets

If you ask a client about budget and they answer, we don’t have a budget, or we don't know, be prepared to educate them. Contractors are often uncomfortable throwing numbers around but that doesn’t mean you can’t have a conversation about working in phases, or strategies for managing costs. You can also get a sense of their comfort zone and their priorities and steer them toward a realistic budget range.

7.    Master estimating

The residential design and construction industry is not unique. In every industry, estimating and creating proposals is a huge challenge.

• Study trade and industry journals for best practices.
• Borrow from competitors.
• Borrow from other industries. (Many web development and creative service companies also use a design-build model.)
• Ask clients what you can do differently to make the buying process easier.
• Some companies use budget templates and estimating software, which they customize as needed.
• Break projects down into phases, and focus on closing the first piece. That way, you and the client have an opportunity to experience working together.
• Keep tweaking your proposals and estimates until you find what works.

8.    Nurture resting buyers

Sometimes a project isn’t won, but it isn’t lost either. You might not know if the homeowner has chosen a contractor. Maybe they put the project on hold. Converting inactive opportunities into closed projects takes two things: a plan and patience. Develop a method for keeping in touch with people who didn’t buy—yet. Schedule a sequence of phone calls, invitations to open houses, an occasional note, email or newsletter. While you can’t control when people will be ready to buy, you can be there when they are. 

9.    Find out why people don’t buy

If you know why people don’t buy from you, it can change how you manage your sales and marketing efforts. You will be surprised what you learn from people who did not buy from you – and how willing they often are to tell you why they didn’t buy. It may have nothing to do with you. Or they may tell you things you can do to make buying from you easier. Or how your competition did a better job of understanding what they were looking for. If you reach out to non-buyers, your mission is only to listen and learn, and never to sell.

10.    Use technology to manage customer relationships

Even small companies often have thousands of customers and prospects. Too often important information about clients and prospects is scattered around the company, on Post-it notes, on personal computers, in phones or in email accounts. This results in lost opportunities and dropped balls. Contact management or CRM software keeps customer data in one place. So you can manage your sales pipeline, nurture resting clients and prospects, schedule follow-up tasks, analyze sales data, and improve your closing rates.