It’s an interesting discussion. If I were starting a company from scratch, I would track, but not incent closing ratio. The reason is because as soon as it becomes a KPI, the top-right desk drawer gets filled with guest cards that will never be entered. I saw reference to this above, but the guiding metrics should be revenue per unit, vacancy loss and acquisition cost. If you are filling vacant units quickly, at an RPU that is at the top of the yield curve and doing so without over-spending on advertising, that is what produces NOI.
When I was on the property side we had a class-A asset that had 15% closing ratios. It was very expensive for the sub-market and got a ton of walk-in’s. People’s jaws would hit the floor when they found out the price; consequently, the closing ratio was very low. But the property did great and the team was excellent!
Conversely, we had this property in San Diego that you could barely find if you knew where it was! Our closing ratio there was often 60%.
Closing ratio isn’t ever bad or good on its own. It’s reflection of your site teams which is what this post is trying to assess, but more importantly, it is a reflection of the nature of the asset. I would rather a leasing team increase tours by 20% (which will lower closing ratios) as that will produce more pricing power without any additional cost. There are much better metrics than closing ratio for assessing performance (showing set ratio, shows per week/month, managed leads, task completion %). These are all core metrics that show the building blocks for sales excellence (or lack thereof).
