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

The Magic of Closing Rates:
 How closing “just one more” can make a big difference

We often spend a lot of time and energy trying to create more leads. But what if you could close just one more of every 10 leads you already have?

Imagine you are a company like Sven&Sons

Sven&Sons generates 115 qualified leads each year (about 50% of them are referrals) and they book 40 jobs, so their closing rate is 35%. Their average job size is $25,000. That’s $1 million in annual revenue. What if Sven&Sons increases their closing rate from 35% to 45%? How much MORE REVENUE would they earn?
a)    $50,000
b)    $100,000
c)    Almost $300,000

If you answered C, you are correct! For Sven&Sons – a 10% improvement in closing rates would increase the number of jobs from 40 to 52, and boost top line revenue by $300,000. That’s 30% top line growth!

How will improving closing rates impact your top line?

Bust out a calculator or create a worksheet like the one below to see the impact of improving your closing rates. (The following table is based on rounded numbers.)

Challenge yourself: How much can you improve your closing rates? Even an incremental change in closing rates can make a substantial difference to your bottom line. For Sven&Sons, increasing the closing rate by 5% instead of 10% – will still produce an additional $150,000 in revenue. Suppose Sven&Sons’ net profit margin is fifteen percent. That means an additional $22,500 will fall to the bottom line.

Creating a Growth Spiral

Sven&Sons will multiply their growth with a simple two-step plan: improve closing rates and then use the additional profit to fuel marketing or growth strategies. They plan to invest the additional bottom-line dollars from higher closing rates into improving their marketing to generate more leads. Two years down the road, instead of closing 35% of 115 leads, their goal is to close 45% of 130 leads. If the average job size remains the same, then their revenue will increase from $1 million to $1.40 million.

Set a goal for your company


How much will you increase closing rates this quarter, next quarter, this year, next year? You are more likely to achieve this over the long-term by setting realistic goals.

Develop and work your plan

Identify ways you can improve closing rates. Your plan may concentrate on faster estimating, better sales tools, or keeping in touch with buyers who didn’t respond to follow-up or put the project on hold. Basically, the plan should address how to keep qualified buyers from slipping through the cracks.

A bird in the hand…

Should you try to create new leads? Absolutely. But don’t lose sight of how important it is to win clients who have already called you. It may take a while, and you may need to figure out a way to keep in touch with prospects until they are ready to buy. But closing “just one more” will make a big difference in the long run.