How to Close 88% of Your Business

When I first got in the car business in the mid 80's I was told that the average closing ratio was 25%. Over the last 10 years I've been sending out daily, weekly, and monthly reports of all our stores (as many as 6, now at 4).

Some of the stores would be higher than 25% closing and others would be lower. But, when you combined them all together they were at a 25% closing ratio month in, month out. Just like clockwork.

However, since Covid over the last couple of years, the overall closing ratio has skyrocketed to close to 40%. But, what if I told you that you could close in the high 80% range?

Here's how... 

It’s simple, but simply doesn't necessarily mean easy. If you look at the various opportunities that salespeople can get in front of, you’ll see exactly what I’m talking about.  

The Lowest Closing Ratio Customer 

The lowest closing ratio customer is the one your dealer pays for through their advertising budget. The “Fresh Up” that walks on your lot for the first time is by far the lowest conversation customer you’ll ever talk with.  

The numbers range from market to market but I think we’d all agree that the first-time customer is somewhere in the mid-teens in terms of conversion. When you factor in the people that come back and close (Be Back) you’re probably in the 30% to 35% range.  

***This is assuming you count every up on your lot which we know you're not***

However, several other opportunities will convert at two and three times higher than the walk-in and Be Back. 

Referral 

If you sell someone a vehicle today and they give you some referrals you’re well on your way to higher conversations. Assuming you call one of the referrals that happen to be in the market and you set the appointment for them to come in your conversation ratio on that type of customer will be upwards of 50%.  

However, all referrals aren’t created equal. Here’s an example: Let’s say you get five referrals from your last sale. One of them is in the market but the other four aren’t in the market this month. If you stay in contact with them when they are in the market you will have an opportunity to sell them.  

In other words, let say they come into the marketing six months down the road. You’ve followed up with them for the entire time. Now that they are in the market, you’ll have a shot at their business. Assuming you make an appointment with them, what do you think your closing ratio will be with them? Suffice to say it won’t be 20 or 25%. It will be way over 50 and could be in the ’70s.  

Repeat Owner 

If you sell someone a vehicle today and then six months later, they need another vehicle, come in to see you about the purchase, your closing ratio on that deal is probably as much as 70%. How do you get repeat owners? In a word: Follow up (okay, two words). 

Orphan Owners

If you can get your hands on orphan owners this is a potential gold mine for future business. They bought a vehicle from your store but the salesperson that sold them the vehicle is no longer there following up with them (they probably didn't follow up with them while they were there either).  

When an orphan owner shows up because they have a want or need to fill and you have a solution to the problem, you’ll have at least a 50% closing opportunity.  

Service Customers 

If you can start building a list of prospects that get their vehicle serviced where you work when they come into the marketplace for a car, your closing percentage on them will be over 80%. How do you get that list? Work the service lane or get in good with a few service advisors. 

Bird Dogs 

What’s the difference between a Bird Dog and a referral? The compensation. When you sell someone a vehicle and you ask for referrals you aren’t necessarily giving them compensation for the referrals unless you tell them that you are. Personally, I rarely had to use that leverage for people that I sold.  

Bird Dogs are more well suited for people like Insurance Agents or Hair Dressers that you have a relationship with that when they send you someone that buys, they will get compensated. But having solid Bird Dog will close at a high ratio.  

Personally Marketed Customers

Anyone that you personally market and get into your store you'll have a much higher closing ratio than a walk-in from your store. When you connect with people on social media and they end up coming to see you, you've already built up a level of trust and rapport. 

Conclusion 

The best way and really the easiest way to double or even triple your closing ratios is to get in front of higher converting people. If you eliminated taking fresh traffic from your store which closes at 25% and replaced that traffic with Bird Dogs, Service Customers, Personally Marketed Customers, Orphan Owners, Repeat, and Referrals you’ll close damn near everyone that you get in front of.