Six Steps for a Better Closing Ratio
What constitutes a great closing ratio? 80 percent? Perhaps 90 or 95?
Well, when Merlin Martin hears reports of high closing ratios, he can’t help but wonder if it’s actually an impressive stat … at all.
“Sure you’ll have 100 percent closing ratio, but you're likely not doing justice to the customer and what their car really needs,” he says.
When many shop owners ask about a service advisor’s closing ratio, it’s their way of measuring expertise, Barry Barrett, sales trainer for RLO Training, says. The only problem? Many people have no idea what constitutes a good closing ratio, he says.
Case in point: Martin’s closing ratio rests around 70 percent. But his average repair order? $820. And that’s because the shop at which he is a service advisor, Auto Tech Services LLC in Rochester, Wash.—which accepts all makes and models—focuses on improving closing ratios for higher-ticket repairs.
“In our business, we determine the closing ratio as, ‘Did we close the sale or not?’” Barrett says. “But if you’re just selling an oil service and you’re counting that as a close, that’s not a very good estimation of how well we did. Anybody can close that—my 12-year-old son could close that.”
Even if your closing ratio rests at 100 percent, both Barrett and Martin say it doesn’t necessarily mean you’re discovering and propositioning as much work as possible. Finding and achieving a quality closing ratio involves a company-wide approach, from inspections to customer service to selling techniques.
1. Improve your hours per repair order.
Improving your sales numbers starts in the back of the shop, Barrett says. A more thorough inspection process will allow technicians to find more work, which in turn allows service advisors to sell more.
Barrett says technicians should be averaging five hours per repair order. To better track closing ratio, he suggests looking at the last 20 vehicles inspected and making sure they add up to at least 100 hours of work.
If there are discrepancies anywhere, it could come down to one technician that needs to improve his or her inspection processes.
“If you take two shops with the same customer base and the same amazing service advisor, but one is finding more work than the other, which shop do you think is going to perform better?” Barrett says. “If the customer is presented more, they’ll buy more. Plain and simple.”
2. Set closing ratio goals for various repairs.
Next, you’ll want to set goals for your service advisors. On average, for every five hours of suggested work, Barrett says service advisors should be able to sell 2.5 to 3 hours. So after propositioning 100 hours of work, Barrett says good service advisors achieve a closing ratio of 50 percent—great service advisors reach at least 60 percent.
Within the overall closing ratio goal, you should set individual goals for different levels of repairs. It starts with what Barrett calls the “low-hanging fruit,” which involves oil changes, air filters, timing belts and wipers. Barrett breaks it up like this:
- Oil changes: 95 percent
- Air filters: 95 percent
- Wipers: 70 percent
- Belts: 55 percent
The next level is services, which include coolant and fluid exchanges. Most of those should be easier to proposition, in the 60–70 percent range.
Then, finally, are the safety issues, which make up most of the final estimate. While these should, in theory, be easier to sell because they keep the driver safe, customers tend to balk at the price. Barrett says, on average, if this keeps around 50 percent, your overall closing ratio should remain high.
3. Be clear on costs.
Barrett wants you to keep one number in mind when evaluating closing ratios: 300.
“I call it the 300 percent rule,” he says. “You inspect 100 percent of the vehicle, you estimate 100 percent of what the tech found, and then you present 100 percent of what you estimated.”
When selling—no matter what business you’re in—Martin says transparency is key. It’s always better to start high and work toward a price that works for the customer. Present photos to the customer and show everything that needs to be serviced on the vehicle.
“Being able to get pictures from the inspection right after we’ve inspected has increased closing ratios tremendously,” he says. “They’re able to make an educated decision quickly.”
To better earn the customer’s trust, Martin recommends giving shop tours.
“You can see the anxiety levels go down and trust go up. And then when we present what we're finding with their vehicles, it makes it very easy,” he says.
4. Form a game plan.
Achieving full transparency with the customer means presenting everything the vehicle needs, and then working with them to formulate a plan that eventually addresses all repairs. Martin says to not worry about selling 100 percent of the work right then. Even if you sell 30 percent, but create a plan to perform the remaining work down the road, then the average closing ratio will balance out in the long run. The customer will either approve the entire repair, or say something like, “I don’t have that kind of money.”
“Well how much do you have for the safety and reliability of your vehicle?” Barrett would respond. “And they usually give you a number, like $800.
“And then my next question is: ‘We do have six-month, no-interest option. Would you like to see if you qualify?’ Or I help them pick out some dates for them to come back and spread out the repairs.”
5. Evaluate performance.
You know the phrase, “You’ve got to measure it to manage it.” Well, Barrett looks at it a little bit differently.
“I like: ‘You have to measure it to mentor it,’” Barrett says.
Barrett says you should track closing ratio month-by-month. Most management programs offer the ability to track the KPI over extended periods of time.
As discussed, a higher average hours per repair order will allow service advisors to proposition more work—but that doesn’t guarantee the service advisor will close the deal on the entire estimate.
6. Train to improve.
Your evaluation of closing ratios will signal what kind of sales training is needed. If it’s an overall problem, then Barrett says it may require a full-scale approach, through training or performing mock sales in the shop.
“You’ll likely find it’s an issue of being afraid of price,” Barrett says. “A fear of what the customer will say when you tell them about $2,300 worth of repairs. It’s then a matter of coaching them out of that fear with training.”
If you prefer to get more in-depth, Barrett says you can break down closing ratios into those three different categories—low-hanging fruit, services, and safety—and find any outliers. Within those categories, you can pinpoint if service advisors are having trouble with selling a specific safety item.
“If I’m having trouble selling shocks and struts, maybe it’s because I’m going about it all wrong,” he says. “You need to sell shocks and struts based on stopping distances, and you have to be able to show the customer that it’s for their safety.”