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August 11, 2008: The key behind improving the sales staff’s closing ratios

August 11, 2008
Filed under Columns

According to Pied Piper’s national retail benchmarking study, salespeople in the powersports industry ask a customer to set a future appointment and encourage them to return only 44 percent of the time.
This means more than half of our sales opportunities are never even given a reason to return to the dealership, so they don’t. After all, if we don’t give them a reason to come back, why would they?
In the automotive industry, salespeople ask to set a future appointment and encourage the customer to return 79 percent of the time, but our goal should be 100 percent of customers.
At a recent training seminar, I was asked by one of the participants during lunch, “What can I do to increase my closing ratio?” My first response was to compliment on asking such a great question, and then I explained two specific ways for someone to increase their closing ratio. The first way is by learning to improve selling skills. If we want to stay on top of our game, we must continually improve our abilities in all aspects, including welcoming customers and bypassing “just looking,” interviewing and investigating, developing rapport, building value during our presentations, handling objections and closing the sale.
The second way is equally as important as the first: Focusing on the activities and types of customers that yield a higher closing ratio. For instance, the first type of customer we’ll take a look at is a fresh walk-in lead. This is a customer that comes into the dealership but has never shopped with us before. The closing ratio for this type of customer is typically less than 10 percent, meaning that less than 10 out of 100 actually purchase. The closing ratio is so low for a fresh walk-in lead because many of them are still trying to determine what they want, and we’ve never had the opportunity to develop rapport or feelings of friendship before now.
The second type of customer is a “be-back.” Be-backs are customers that walk in to the dealership, leave without purchasing, but come back to the dealership for a second time to look at the same, or a similar, model. Now it’s important to note many customers who say they’ll be back actually never return. But when they do show up, our closing ratio can jump to 65 percent.
As an example, my family recently moved into a new house. During the transition it was necessary for us to purchase additional furniture so my wife and I began to shop. We spent many evenings and a couple of weekends looking at different furniture stores. Then, one Saturday morning, after we had been to all of the stores in a 50-mile radius, my wife mentioned she would like to stop by Rooms to Go and look at what they have again.
What do you think happened the second time we stopped by Rooms to Go? That’s right. We ended up being part of the 65 percent of be-backs that buy when they come in for a second time.
The bottom line is no matter how good our selling skills are, we can’t bat a thousand all of the time, and the majority of our leads are going to leave without purchasing. So, the question is, how do we increase the number of be-backs we work with? We have to follow up and give our customers a reason to come back into the dealership.
We really have two choices: We can attempt to set appointments and encourage our customers to return to the dealership, or we can just let them go and see if we get lucky…
By now we should know that luck is what happens when opportunity meets preparedness.
About this column
Series goal: Each column will focus on one aspect of the sales process and provide tips on improving that aspect.
This edition: Encouraging customers to return.
National average: On average, salespeople in the powersports industry ask to set a future appointment and encourage the customer to return only 44 percent of the time, according to the 2008 Prospect Satisfaction Index, an annual study conducted by Pied Piper Management Co.

Tory Hornsby, general manager of Dealership University, was drawn to the powersports industry more than 10 years ago when he turned his passion for motorcycles into a career. Hornsby worked in nearly every position in powersports dealerships before becoming a general manager at Dealership University. He welcomes your e-mail at thornsby@dealershipuniversity.com.

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