Question: What are the 4 or 5 top areas to focus on in my business to make this summer as profitable as possible?
Weldon Long; New York Times Bestselling Author:
Great question! The number one mistake I see in the summer time is that while our average close rate goes up – because the weather is helping us close business – it’s not unaverage for the average ticket to go down. People get in a hurry and they tend to solve less complicated problems and sell less efficient, less comprehensive solutions. It kind of gets lost in the maze of making a lot of money.
Think about this for a second. Let’s say on average, you’re closing four deals out of ten in the non-summer months for an average ticket of $10,000. You go out there and close four deals and you’ve made $40,000 on the ten leads. All of a sudden summer time comes along and your conversion rate goes to 60%. You’re selling six out of ten leads, that’s great right?
Unfortunately, because our salesperson is in such a hurry and we tend to start cutting corners in the summer time because we’re so busy, maybe the average ticket drops to $8,000. Now I’m selling six deals out of ten for $8,000 for a total of $48,000 in revenue. So, we can see in the slow season that we’re generating $40,000 on those ten leads and when we got busy, we generated $48,000. Woohoo, we’re doing great right?
Actually, that $48,000 should be $60,000. In other words, when your close rate goes to 60%, if you could maintain your average ticket at $10,000, you’d be generating $60,000 on those ten leads instead of $48,000. The $48,000 might be good but in this situation, the good is the enemy of the great.
It’s all about opportunity cost and opportunity lost. When we get busy, our average ticket can go down if we’re not very careful. So, what do we do about that? We have to make sure we’re sticking to the fundamentals of sales and going through training with our employees during the summer time. I can’t tell you how many times I hear, “We’re way too busy to train people during the summer time.” Well, what if you’re losing one-or-two-thousand dollars on your revenue per lead? And what if you’re running 100 leads per month? That’s $100,000 or $200,000 per month of lost revenue!
So, you have to make sure you’re not getting lost in the extra revenue just because you’re running more leads. You have to look at what your revenue could be – what it SHOULD be. And what it should be is maintaining that higher average ticket. That requires sticking to your training. In my opinion, average ticket is a reflection of your relationship with the customer, the time you spend with them, the nature of the problems we solve, and the nature of the solutions we provide.
We have to make sure that we’re not overworking our people to the extent that they can’t spend time with customers because they’re so busy. Let’s say you usually run two salespeople during the shoulder season but you could really use three or four during the summer time. What I did was make sure my service manager, my operations manager, and my general manager were qualified to run leads with our sales process. So, when we hit those months of June, July, and August and we had all these leads, rather than throwing four leads per day on my salespeople, I required that my managers go out there and pick up a lead. Granted, my managers probably weren’t as good at closing sales as my dedicated salespeople, but at least I maintained the average revenue per lead of my top performers.
You don’t want to make your employees so busy that they cut corners, that they fail to identify problems and develop comprehensive solutions. It’ll seem like you’re doing great because overall revenue is up, but you can’t be deceived. You have to make sure that you’re maintaining your average ticket during the summer time.
Another problem I see is that quality can suffer because our installers are super busy as well. We want to make sure we stick to the basics with our quality control and inspection, and making sure that we maintain the same quality of service that we do during the slow season.