Mike Andes explains that a company’s close ratio is the primary indicator for whether it should operate in growth mode (maximizing customers) or profitability mode (maximizing margin). He distinguishes service-based businesses—where close ratio matters most and raising prices can reduce an overly high close rate—from product-based businesses—where online conversion rate (cart-to-checkout completion) is the analogous metric.
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In my opinion, close ratio is the best determining factor of whether a company is in growth mode or in profitability mode and maximizing for the most margin or trying to maximize the number of customers that they are bringing in the door. Now, close ratio is great for service based businesses, but when it comes to product based businesses, you can look at things like conversion rate when it comes to people that actually put things in their checkout in an online shopping cart and how many of them actually continue with the transaction. When it comes to service based businesses, if someone is struggling with cash flow and they're also telling me they have so much work they don't know what to do with this is like the number one thing I'm talking about is you need to raise your prices to bring down your close ratio. Your close ratio should not be at 80, 90%. If you're struggling on cash and you have tons of leads lining up and you have, you can't even get back to all the work that's coming in the door.
