In business, if you are not growing, you’re dying. Why?
Your income will stay the same, if not going down.
You won’t have a budget to develop new products and improve the existing ones.
You can’t provide more for your employees. That leads to them looking for a better job.
You’ll lose employees that are hungry to grow.
Your competitions are always ahead of you.
Change is constant – marketing and sales techniques, new online marketing tools and apps, as well as the buying journey of your customers. In order for a company to stay in business for a very long time, it needs to grow.
If you are now frustrated because your business is slowly growing or not growing at all. Here’s what you should do.
Reevaluate your close rate and retention.
You may have added a new tool or implemented a new marketing strategy but still getting low close rate? It’s about time you reevaluate your close rate and retention.
What is a close rate?
Close rate = (total number of sales / number of leads) x 100
In order to understand close rate better, let’s discuss the meaning of a sale and a lead.
A sale is a transaction between two people/ company where the buyer receives the goods in exchange for money. A lead, on the other hand, is a person or a business that expresses its interest in purchasing your product or services.
Close rate depends on the quality of leads. There are 3 types of leads:
- Cold lead – very low interest.
- Warm lead – has interest but the buying decision is a long process.
- Hot lead – interest and would purchase right away.
Related: Assess your Sales Leads: Is it Hot, Warm or Cold?
If the leads that you are getting from either inbound or outbound marketing are all warm and hot leads, chances are you’ll have better sales. If your close rate is 60-80%, your business is doing well. But for how long?
For example:
Total sales for the month = 20
Total leads for the month = 100
You only have 20% close rate.
These numbers will pull your business down. So make sure to have enough high-quality leads to have the higher close rate. What else? Reevaluate your customer retention.
In business, your goal is to maintain a high retention rate. Higher retention rate means you have
- many loyal customers
- better customer service
What is customer retention rate?
Retention Rate = {(number of customers at end of period – number of new customers acquired during period) / number of customers at start of period} x 100
We all want a 100% customer retention rate. But having at least 85-90% is a good number.
Related: Show Customer Care with Inbound Lead Qualification
Customers come and go, regardless of the reason and you can’t do anything about it. While satisfying your existing customers, your team must continue looking for new customers to replace some of the customers you’ve lost and will eventually lose.
If you want your business to grow and stay ahead with their competitors, always keep track of your close rate and retention rate. This will help you know the problem and find out a solution before it’s too late.
