The Other Ratio

Salespeople are well-acquainted with the "closing ratio." It is a metric that has been used for decades to measure a salesperson's ability to persuade a prospect. What is the percentage of deals you've closed out of the number of prospects you've acquired? This number has been the gold standard of a salesperson's effectiveness over the years. If you have a high closing ratio, you must be really good at selling. If you have a low closing ratio, well, you might want to start thinking about a career change.

There is a problem, though, with this metric: it encourages salespeople to be too picky. I've known salespeople that will only interact with potential customers if they believe that those prospects are sure buyers, just for the sake of maintaining a high closing ratio. If you only take opportunities that involve low risk of falling through, chances are, you're going to come out looking like a powerful closer. Sure, you're letting some opportunities walk but at least you can flaunt your high closing ratio and make yourself look important.

There is another ratio that I think salepeople should aspire to raise. This metric, I believe, is even more important than the closing ratio. It isn't talked about much, probably because it is difficult to quantify. It also does not correlate directly with revenue generation but, without its maximization, revenue generation is impossible. Without this ratio being high, the "closing ratio" is just a fancy number that really doesn't accomplish much in the way of sales volume. What is this mysterious ratio that I'm speaking of? The opening ratio.

What is the percentage of prospects that you acquire out of the number of prospects that you have the opportunity to acquire? What percentage of your potential customers have you gotten into the funnel? This is the question that effective salespeople should be asking. Why? Because it encourages salespeople to be proactive. The closing ratio is a productivity inhibitor--it is risk-averse. Don't take the opportunity unless it takes you. Salespeople obsessed with a high closing ratio tend to simply be order-takers. Focusing first on the opening ratio encourages salespeople to be go-getters. It is about initiating contacts, opening relationships. As a result, the raw numbers of a salesperson with a high opening ratio but a low closing ratio are most likely going to be higher.

I just finished listening to an audio book called "Poke the Box" by marketing guru Seth Goding (I'll leave the meaning of the title a surprise for those who would like to give it a listen). Seth's opening words are, "this is a manifesto about starting." And it is. It's about innovating, initiating, entrepreneurially implementing ideas without looking back. Failure is an inevitable event on the way to success. At one point in the book, Seth says that if you haven't failed, you're either incredibly lucky or you simply haven't done enough. I could not agree with this more. In terms of what we've been talking about, if you have a high closing ratio, you're either incredibly lucky or you haven't gotten enough prospects into your funnel. More often than not, the latter is true. Your fear of failure limits the frequency of your successes.

This talk about opening ratio versus closing ratio is not true only for sales--it's about life. How high do you set the bar for yourself? That is really the question at the root of this dilemma. What is the purpose of your goals if you set them so that you will always, without the shadow of a doubt, succeed? Will you really improve? But, for some of us, maybe improvement isn't what we're after. Maybe we just want to feel good about ourselves or look good in the eyes of others. We want to be seen as someone who always accomplishes what we set out to do, even if we rarely set out to do anything. At least we'll be dependable, right?

No, that's not enough for me. Of course, I want to accomplish what I set out to do. But the raw number of successes is what matters to me, regardless of how many failures it takes me to get them. I am not impressed by the deceptive statistic the closing ratio offers me and nor do I expect anyone else to be. I want to succeed at the things that others are not even willing to attempt. I want to be proactive. I want to pursue every opportunity. This endeavor is what will make me better in sales and in life. The closing ratio is secondary--an afterthought. I want to be focused on starting. I want to increase my opening ratio.