In 2006 the supersonic economy of the last several years slowed, and with it, the market for real estate and home improvements. In our company's case, we spent $20,000 more on marketing and generated 20% fewer leads.
I mention real estate and home improvements together for a reason. During the housing boom, it was easy to get listings. Now that that market has cooled, a lot of the real estate agents are going to go away.
Same's true for home improvement. The days of easy leads and sales easily closed have been curbed.
Although we had 20% fewer leads in 2006, our company generated about as much revenue as it did in 2005. Specifically, we logged about $4 million sales in 2005 from 1,636 leads, and almost exactly as much in 2006 with 1,299 leads. Average lead value in 2005 was $2,300 vs. $3,000 in 2006. How? We upped our (issued lead) closing ratio from 21% to 24%.
DIAL FOR DOLLARS When I ran leads, I closed more than $3 million annually. I did that by running lots of appointments. If I didn't sell the job, I left a proposal and followed up. In some cases I'd pull in the prospect's driveway, unannounced, two weeks later. I also made a Three Call Rule for myself. I'd call every unsold prospect back three times. The third time I'd leave a message saying: “Mr. Jones, could you do me a favor and please call me back to just let me know either way? I don't want to keep bothering you.” Most people did. I followed up because I was determined to close.
So, how did we improve the closing rate at Capizzi Home Improvement? Two ways. First, as the number of leads declined, we went over every aspect of the sales process to find ways to enhance the salesperson's performance. Then we applied what we'd learned.
Second, I wrote a script and had our three sales reps get on the phone and call their unsold prospects. The most common objection from prospects was that our price was higher than they thought it would be. Whatever their comments, we'd still ask three questions: Were you satisfied with me as your estimator? Were you confident that our company was reputable? Was the proposal clear and to your satisfaction?
The point was to generate dialogue, which is what a salesperson should be doing.
Finally, the salesperson would tell the customer that Tom Capizzi had requested we call to let them know we were offering a promotion and that work contracted for at the promotional price could be scheduled later in the year, so they could take advantage of the savings and actually schedule the job and pay for it at a later date.
TRACK THE RESULTS I made our sales reps track their stats. One, for instance, made 38 calls in one session. He left 19 messages for callback. Twelve people indicated that they'd bought the job from someone else. He booked three appointments that night, and three more for the following month. This same sales rep, Aaron Roderick, has sold more than $150,000 worth of business in the last 2.5 months by way of these proactive outbound calls.
As a company, we generated $17,000 the first week we started making these calls. I realized that if we called our unsold leads every week, we could bring in an additional $900,000 a year.
Slow times require that you change the culture of your sales organization, and that means the mindset of individual salespeople.
That happens when a salesperson understands how much more there is that he or she could be doing to generate additional business. If you're not on an appointment, you should be on the phone prospecting. The warmest call list is your unsold proposals and/or former customers. Economic gravity won't pull you along as it has in the recent past. —Tom Capizzi owns Capizzi Home Improvement, in Cotuit, Mass.