Why does conversion on a sales floor swing from month to month, and how do you raise a low or falling rate?

The short answer

In our experience most month-to-month swings in a floor’s conversion rate come from causes other than a change in how well the floor sells: the batches of leads the floor is sent, the economy and the time of year, who was on the phones, and chance. A new batch of a different kind of lead can move the overall rate even when every agent sells as well as they did last month. That is why one month is so hard to compare with the next.

So before you change anything, find out which of those moved. Check the definition of a sale, split reaching people from selling to them, and compare each kind of lead with last month on its own. That tells you whether there is a real fall to fix, and where.

Why conversion swings

• The batches you are sent. In our experience most floors depend on the leads they are given, and some batches are good and some are bad. In our experience a new batch of leads is one of the most common surprises: newly eligible customers, a marketing push, a list that has just been cleaned. In our experience different kinds of lead close at different rates, and newly eligible customers, callbacks, first-time and repeat customers can each close very differently. When the mix changes, the overall rate changes with it.
• Who calls in already sold. In our experience a customer who saw an offer and has already decided will buy from whoever answers. In our view a month with more of them lifts the rate without anyone selling better.
• Interest rates and the economy. In our experience a change in interest rates, or in how people feel about the economy, can change how customers respond very quickly, especially for loans, credit and insurance. In our view the floor often sells no worse; the people on the other end simply feel differently.
• The time of year. In our experience holidays, the weeks before Christmas and other seasonal patterns can move results in a way that repeats from one year to the next. A December compared with a November can look like a fall that is really the calendar.
• Who was on the phones. Leavers, new starters, holidays and schedules change which agents take which leads. In our experience a floor that loses experienced agents, or runs short at the times its best leads arrive, sees it in conversion within weeks.
• What counts as a sale. A change in how sales are recorded, or in when a sale is counted, moves the rate on paper. What counts as a sale.
• Small numbers. A team that makes a few dozen sales of one kind in a month can see that number move a lot by chance alone.

The mix trap

A floor’s overall rate can fall even when every kind of lead closes as well as before, or better. Suppose one kind of lead closes well and another closes poorly. If next month’s list is mostly the second kind, the floor’s overall rate falls, even if every agent sells a little better on both.

A well-known example is not from sales. P. J. Bickel, E. A. Hammel and J. W. O’Connell looked at graduate admissions at the University of California, Berkeley, for fall 1973 (Science, 1975). The overall figures showed what they called a clear but misleading pattern of bias against women. Department by department, few showed a significant difference, and about as many appeared to favour women as men. The overall gap came from women applying more often to departments that were harder for anyone to get into.

On a sales floor, the departments are the kinds of lead. An overall rate that mixes them can tell the wrong story, which is why a bad month should be read kind of lead by kind of lead.

What to check first

1. Check the definition. Make sure a sale was counted the same way in both months, from the same systems.
2. Split reaching people from selling to them. Fewer contacts and fewer sales per contact are different problems with different fixes. More contacts or better conversion?
3. Compare each kind of lead on its own. Describe each batch by what in our experience affects how it sells: where the leads came from, how old they are, how many times they have been called, and any score they came with. Then ask what changed. Put sales per contact for each kind next to last month’s. If each kind held steady and only the mix moved, the floor is selling as well as before.
4. Check who was on the phones. Look at leavers and new starters, and at how many agents were available when the leads arrived.
5. Ask whether the numbers are big enough. If one kind of lead had only a handful of sales in each month, read it over a longer period before you act.

Explaining a bad month to leadership

In our experience leadership usually sees one number. In our view the most useful thing a floor manager can do is show what sits under it:

• The rate by kind of lead, this month against last, so it is clear whether the floor sold worse or the leads were different.
• This month’s rate on last month’s mix. Work out what the floor would have converted this month if the mix of leads had stayed the same. If that figure held steady, the fall was the mix.
• The trend over several months, not one month against the one before, and the same month last year where the season matters.
• What changed outside the floor, such as interest rates or a new lead source, so a fall caused by the market isn’t blamed on the agents.
• What you are changing, and how you will know. One change at a time, measured against a control group run in the same weeks. How to prove a lead routing change worked.

What raises a low or falling rate

Once you know the fall is real, and where it sits, these are the levers a floor holds:

• Call new leads quickly. Does calling a lead within minutes raise conversion?
• Put each lead with the agent most likely to close it. In our view agents differ most on the leads that need persuading. Why some agents close more on the same leads.
• Coach on the kinds of lead where each agent trails, rather than on one overall number. How to raise sales per agent without hiring.
• Staff for when your best leads arrive, not only for an overall service level.

Change one thing at a time, and measure it against a control group. Otherwise next month’s swing in the mix will hide whether it worked.

Where agent matching fits

Agent matching works on the second lever: which agent works each lead. BestPair decides which agent works each lead from the floor’s own call and sales history. People make every call, and scripts and offers stay yours. Any gain is measured against a control group run in the same weeks, so a change in the mix of leads can’t pass for a gain, or hide one.

Sources

• Sex Bias in Graduate Admissions: Data from Berkeley: P. J. Bickel, E. A. Hammel and J. W. O’Connell, Science 187, 1975; the classic example of an overall rate that misleads when the mix changes.