“Don’t Drive With a Blindfold”
episode #693 – March 6, 2022
HOST: Lorraine Ball
Using just your P&L to decide how your business is performing is like only looking at the rear view mirror when you are driving.
It isn’t practical to drive looking only in the rear view mirror. Even if you think you know what is in front of you, sooner or later you will run into something you didn’t expect. When you run your business simply by reviewing your bottom line, you are driving using your rear view mirror. Why? Because the monthly revenue number is a lagging indicator, telling you how well you have done. There is no preview of the months to come.
Don’t get me wrong, I think it is important to look at your P&L as a score sheet, but if you want a road map, you need to pay attention other business tools which are leading indicators. These numbers tell you months in advance if you are heading in the right direction, or if a course correction is needed.
Closing Rate is one of the Great Predictive Business Tools
This simple number drives your marketing budget. The better your closing rate, the fewer leads you need and the less you need to spend on advertising. So how good are you? How often do you walk away with a sale after a phone call or face-to-face meeting? Do you get the sale 10, 20 or 50% of the time?
When you run a service business it is relatively easy to calculate your closing rate. Simply review the last 25 proposals or serious sales conversations you had. What percentage of the prospects became customers? Once you know this number, you can create plans for improvement.
How do you improve your closing rate? You can develop better sales skills or find better prospects. I recommend a bit of both. Inbound marketing and other tools help prepare prospects, educating and informing them so they come to the table ready for a real sales conversation. And sales training will help you close more of the opportunities which come your way.
Of course, you could ignore your closing rate completely and just spend more money on advertising, but that is kind of putting the pedal to the metal, and driving with a blindfold on.
about the marketing minute
Each week, host Lorraine Ball shares just a few words on a marketing topic. She boils down creative ideas, practical tips, and decades of real-world experience into a mini podcast which is always less than two minutes.
Look for these mini bits of marketing inspiration every Sunday. Then come back and enjoy the longer interviews every Thursday.