Topic: What do you use as a healthy bench mark for closing ratios within your organization?

Question-
What do you use as a healthy bench mark for closing ratios within your organization?

I have alway thought 25% as a standard but look forward to your feel back!

In my organization, it is 40% standard.

Courtney, It's depends the market, but 25% is an average that we see in the urban Class A lease-ups. (South Florida). We performed one in Fort Lauderdale with a closing ratio over 50%. On Class B and C that ratio can be higher.

yup! 40% here...if the industry is 30% with proper training and enthusiastic staff you should be able to expect more =)

Our standard was 40% for leasing. Leasing Managers, Marketing Directors, etc. were expected to close higher - at 50%+. When you push for good closing ratios (and get them), it significantly reduces the money you need to spend on marketing (there's also an argument here though that marketing needs to be working to drive qualified leads - we all know how unqualified traffic kills closing ratios). Here's an example: Let's say a property needs to get 5 leases and they want to get those 5 leases from a PPC campaign (just one traffic generation example). If the on-site team closes at 40%, the ad budget would need to be set at about $1700/month. If the on-site team closes at 25%, the ad budget would need to be about $2700/month (this assumes the same lead-to-tour ratio, click through rate, etc. for both scenarios). Just improving the on-site closing ratio by 15% makes that much of a financial impact. That is $12k over the course of a year. I wouldn't be happy with a 25% closing ratio and would push to get that up to around 40% if you can.

40%

80

Closing ratio is arbitrary. I would rather see a lower closing and leasing at rates above market than higher closing using concessions.

That’s a perfect opportunity to tie commissions to market rates. We incentivized leasing staff so that when they rented apartments at market or maximum rents, they made more money in commissions. If they rented apartments with concessions, it naturally decreased the amount of their commissions. It was a win-win for the property financially AND the leasing teams. They think twice about offering concessions or needing them as a sales crutch when they see how it affects their pay. They loved it. Of course some market conditions make it nearly impossible to rent without concessions and that’s a whole other story.

40% at Maxx - Reno’s make it a little different at certain properties.

I think it should depend. Our goal is 30%. We have a super competitive market and a lot of Lookie-Lous because we are in a cul-de-sac with not one, not two but THREE other apartments who share a road with, not two but THREE other communities and around the corner from our sister properties, which means you could sneeze on NINE communities. These 2 properties close around 25% One competes with us, the others are a price point below so we get a lot of unqualified walk-ins. At another communities, we see a higher closing ratio of 40-50%. At our tax credit we get 200 leads a month (without spending very much money) so the closing ratio is lower. At our high end for the area property, it's back to 30-35%.

I would love to see 35%-40% but our average remains around 25% - there are some properties who hit 30-35 but it’s not the majority. Many of the markets are so saturated - were fighting for traffic.

I believe about 33% should be the minimum acceptable closing ratio. But you cannot judge it on one month alone. Too many factors outside your control. I would look at it quarterly for an average of 33%. Less than that, time for more training, secret shops, and a good review of your qualifying standards and marketing plan. Higher than that? They deserve some sort of recognition, either through higher commissions or a quarterly award.

My issue with closing ratios is that they can often be manipulated by team members who don’t enter in all of their traffic whether accidentally or intentionally. If I see consistent super high closing ratios, I become suspicious. All that to say, don’t undervalue the 30% closing ratios. Look at other factors like exactly how many people they are moving in, how are they performing on shops, what are prospects saying about them on surveys, etc.

nailed it! Human error (intentional or unintentional) is a big part of what is so hard about evaluating performance. There are some systems that help track and report on not only leads that have been assigned to agents, but also the actions and activity the agent has taken in engaging with the lead. Teams utilizing these are thriving!

25%

I thought 35 was average.

30%

I tend to think differently, focus on traffic and leads. More traffic, more closings. You can’t close the prospect that’s at the property next door. But to answer the question, every professional sales exec is usually pleased with 10% to 20% closings.

We like to see 33% but it’s a struggle to know the real numbers because we know not everyone puts in all of their traffic.

Every company I've worked for wanted 50%. Remember to always ask in the end... So, we found your perfect apartment home, ready to fill out application? You can use my computer and apply online now before it's gone! I'd hate for you to miss out waiting another day. My coworkers showed this same unit today and could be gone by tomorrow. What's the old saying? The apartment you looked at today, someone saw yesterday? Can't remember exactly but you get what I'm saying. KNOW your competitors, what they are offering, and beat it with service even if your prices are a little higher, they'll lease because of you. Tell them, introduce them to your team!! Be personable.

33% minimum but prefer 40%

is this for all traffic? Like phone/internet included? Or is your 30:40% based on face to face conversion?

closing overall

I have been in industry 33 years n still hard to get leasing team to enter calls ...

with tracking systems like pop card, lead2lease, knock etc I don’t seem to have calls not accounted for. It’s more that we are in a tight market, low over all traffic and/or unqualified traffic.

It’s mainly criminal and I am not comfortable budging on the qualifications when it’s felonies and violent crimes

never budge on declines just for # ... we get those looking months or years in advance which cannot be closed .... the struggle is real lol

I am not. I agree it’s a long term impact for a short term solution.

9:3:1 Rule

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).