Identifying and Evaluating your Close Rates

The success of every job begins with how accurately it was estimated. In a recent webinar, we covered the topic of pricing in line with the cost of doing business. We discussed common industry pricing errors, (such as basing your pricing solely off of the competitions pricing) and several factors that should influence your pricing (such as the location of the job, client expectations, and internal factors; labor costs, production rates, indirect costs, etc.). During and after the implementation of any estimation strategy, a great way to evaluate its effectiveness is to look at the Close Rate of your company.

Gathering close rate data is simple if you use software like Aspire Software. You can create an opportunity list to view all won and lost proposals (see filter example below). If you don’t use Aspire, you simply need to identify the total # (not dollar amount) of proposals that have been delivered to prospects or clients, and the total # of those proposals that were won.

The Close Rate calculation is simple: Total # won proposals divided by the total # of proposals (won and lost). For example, if you have proposed a total of 100 bids this year, and won 30 bids, your close rate would be 30/100 which equals 30%. The target close rate varies depending on the division (Maintenance, Project, Enhancements, Snow, etc). In every situation, the higher your close rate the better. 
Now that you know how to calculate your close rate, you may be wondering how often you should be reviewing this data. The answer is often, we suggest at least once a month. Aside from reviewing this data for your company, we also suggest reviewing it specific to the sales rep. This is a great KPI to hold your Sales team accountable to.

If your close rates are low, this may be a sign to evaluate your estimator and sales rep performance. For example, it could mean your sales rep is not appropriately qualifying prospects before pushing the job to the estimator. This means the estimator won't have enough details on the client's expectations, leading to over or under-estimating. This leads to more jobs being lost, or more clients who are unhappy with the final product. A low close rate may also mean your estimator needs more training to estimate more accurately. Maybe the prices are coming out too high causing jobs to be lost. This is ultimately a chance to reflect on your team's training to ensure there isn’t something that was missed or needs to be retrained.

The reason this is so important is because you spend a considerable amount of money to employ your Sales Reps and Estimators. You need to ensure they are being as productive and efficient as possible. The higher their close rate reflects how successful they are.

If you are curious on how to set this up in Aspire, or would simply like to discuss close rates, contact us here

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