Untitled
Here’s how to monitor your closing ratio and average sale.
Published in the July 2014 issue
A penny saved is a penny earned.
Benjamin Franklin said that in the 1700s. What does it mean besides the obvious? That just a small amount every day can achieve larger numbers later.
The same can be said for your store; only I’m not talking about pennies but thousands of dollars in a short span of time.
Let’s talk about sales, and in particular, closing ratios.
If you sell three out of 10 items, your closing ratio is 30 percent. But what if we use Franklin’s approach and focus on just one small improvement a day, as in one more person to buy? What if we could get four out of 10 to buy?
That would be a 33 percent increase in sales without adding any additional advertising expense. If product sales for your store in 2013 were $500,000, that would mean sales would go up to $665,000 — $165,000 more in sales and probably about $82,000 in additional profit.
Now that I have your attention, let’s add a sweetener. Let’s show Ben Franklin what a nickel a day would do. Let’s assume your average product sale is $200. For every 10 people who come in, you sell three of them a $200 item, and your sales are $600. But if you could sell four out of 10, sales would go to $800.
And what if you could convince the buyer to take a $250 item instead? Just 50 bucks more. Sell three out of 10 at $250 per item, and sales would go from $600 to $750. But sell four out of 10 on a $250 item, and sales would go from $600 to a whopping $1,000 — a 40 percent increase!
All from selling four people instead of three an additional $50.
The extra $50 doesn’t have to come from a bigger/better item. It could be a $50 add-on.
The secret is to track activity
I recommend using a sheet on a clipboard, listing every staff member. Next to their names they need to note the dollar amount of each sale. If they wait on someone and don’t sell them, they should record a slash mark.
It’s not hard at all. For “The Store” numbers, add up everyone’s totals and do the math to work out the averages.
When talking to each staff member one on one, never compare them against their fellow workers; compare them against the store numbers. If you can get everyone to boost his average sale, total store sales will soar.
Here’s how to go about it: In our example, the store’s average product sale is $152. Who’s below that number? Patty. How do you help her? Look at her numbers; she has the second-highest closing ratio and the lowest average sale. Maybe she is afraid to show higher-ticket items and feels comfortable with just “any size sale.” Maybe she can’t see herself owning anything so expensive. So help her with how she feels about your products and their good value. Help her with phrases she can use with customers to convince them to consider higher-priced items. Maybe it’s as simple as when a customer wants to see “x” that she always brings out an additional item that’s better/higher priced, so the customer has two items to consider. Training is key.
Tell Patty: “Your average sale is $82; we need you to get it to at least the store’s average of $152.”
The store’s average closing ratio is 42 percent and Henry’s closing ratio is 30 percent. Henry’s average sale is fine and we will compliment him on that. But if we could get his closing ratio up from 30 percent to the store average, his total sales would go from $588 to $784 by selling just one more of the seven people he walked.
How to do that? There are many ways. Maybe Henry needs some help on closing techniques. Not pushy but if the customer says, “I’ll think about it” and Henry’s first response is to pull out his business card and say “thanks,” we could train him to just add another comment. It could also mean he might have to have you or someone else come over to assist on any “I’ll think about it” customers.
Turn a penny a day into nickels. Heck, dollars!