I talk with dealers all across the U.S. each day. Many of them are concerned about how their designers will generate more leads. The question is the same, regardless of how big or small you are, how many people you have laid off or hired, or how many designers you have. The question still remains:

## How do you generate more revenue when there aren’t enough leads to go around?

When I ask these dealers about how they are tackling their sales challenges, the topic of closing rates never seems to come up. It’s always discussion of generating more leads, more show room traffic, more word of mouth networking, or more [fill in the blank here]. The focus is always around bringing more people in the door.

## The Boat Just Left, And You Weren’t On It…

That’s when I realize they’re missing the boat. The topic of closing rates eventually does come up because I can’t wait any longer and I have to ask it. I usually get answers like this:

- “They’re pretty good…”
- “Uhmm…I would say…uhmm…[fill in guess here]”
- “I’m not really sure, but our designers have been here a while and they’re really good.”

Very rarely do I get a closing rate percentage that is actually based on solid measurement. And that’s a problem. A very big problem, actually. Not understanding your closing rates means you’re guessing. If you’re guessing on the revenue generating arm of your business, that’s really dangerous because that means you don’t know how how many revenue opportunities you’re missing.

## Generating More Revenue

Generating more revenue for your dealership can come in two ways. First, we can use the “more” concept I mentioned earlier (i.e. finding more leads). But that’s one of the hardest ways to tackle the sales challenge in a market like this. It takes time, money which you probably don’t have right now and some seriously creative marketing ideas.

The other way to generate more revenue is much easier. Yet it continues to escape many dealers. And that is to close more of what is already coming in the door. In other words, to increase your designer’s closing rates.

## Some Simple Math

Let’s take a simple example. A “Prospect” for this discussion is anyone who actually visits your showroom. A “Lead” is someone we might market to but hasn’t necessarily walked into your dealership yet.

We’ll assume the following to keep the math easy:

Avg. Job = $10,000 |

Current Avg. Closing Rates = 30% |

If 100 prospects walk into the showroom, we would expect to close 30 (100 prospects X 30% closing rate = 30 wins) sales yielding us $300K in revenue (30 wins X $10K = $300K). Of course you need to get 100 prospects to walk in your door each month which means you have to talk to much more than 100 prospects because many people you talk to won’t be interested in checking out the showroom in this market. A common rule of marketing is to apply a factor of ten if you’re not sure how many leads you need to get a certain number of prospects to walk in the door. If you want 100 people in your showroom that month, you should plan on marketing to 1,000 potential leads.

This is an overwhelming number for a designer in just one month. Their Rolodex just isn’t that big.

## A Different Way of Looking at the Problem

Here’s another way to look at this problem which isn’t so overwhelming: just increase your designer’s closing rates.

Let’s assume for a moment we could increase closing rates to 65% (I know it sounds crazy, but the high producing designers are doing this and more so you can too). Now to get our $300K in revenue, the math would like this:

Avg. Job = $10,000 |

Current Avg. Closing Rates = 65% |

If 100 prospects walk in the door and we closed 65 of them, we would beat our $300K mark by a mile(100 prospects X 65% closing rates = 65 wins, or $650K in revenue). So, let’s instead stick with our target of $300K (30 kitchen jobs X $10K = $300K) and figure out how many prospects we would need, because I want to drive home the point that you can do $300K in revenue with a lot less effort than you might think. The math looks like this:

30 jobs / 65% closing rate = 46.15 prospects (walk-ins) needed (we’ll round down to 46).

Now we only need 46 of those same prospects to walk into the showroom to get our $300K in revenue. The problem has just been cut in half, and we didn’t even take out a magazine ad yet.

## People Who Close More, Also Sell Above Average

Designers with higher closing rates are also masters at getting their customers to understand the importance (and benefits) of smart upgrades that stretch the customer’s original budget. These designers can grow a typical sale by 25% or more by just engendering trust in their relationships and educating consumers at key points in the sales process.

Factoring this in, let’s look back at our math example one final time.

Avg. Job = $10,000 * 1.25 = $12,500 |

Current Avg. Closing Rates = 65% |

## Doing the Same Volume with Less Work

The first thing to notice is now only 24 jobs need to close to generate $300K in revenue ($300,000 target revenue / $12,500 avg job).

Now we can calculate how many prospects we need to talk to get to 24 jobs with our 65% closing rates.

24 / 65% = 36.9 prospects, (we’ll round up to 37 for easier math)

Now we only need 37 of those same prospects to walk into the showroom to get our $300K in revenue. I think we can all agree this is much more manageable for a designer.

## Summary

Math sometimes gives me a headache too, but below is a summary of it all for easy reference:

Example | Avg Job | # Prospects (Walk-ins) Needed | Avg Closing Rate | # Wins Needed | Revenue Generated | # Leads Needed |

Low Closing Rate | $10,000 | 100 | 30% | 30 | $300,000 | 1,000 |

High Closing Rate | $10,000 | 46 | 65% | 30 | $299,000 | 460 |

High Closing Rate & Higher Avg Job | $12,500 | 37 | 65% | 24 | $300,625 | 370 |

There’s two major lessons to this story:

- Assuming your showroom isn’t completely dead, concentrate on increasing your closing rates as the #1 goal for your sales team
- Make the most of every sale by educating consumers so they will upgrade

The only way you can do this is to get an understanding of the closing rates for each of your designers as soon as possible. Once you have this baseline, start implementing a consistent, repeatable sales process that everyone can easily follow so you can target areas for improvement.

It’s not magic — it’s science. **Nail the science of sales first, then you can mix in the art of sales later.**