Pull-through rate

The core ability of a salesperson is to close a sale transaction. This means convincing a customer to buy goods or services, rather than dithering over a prospective purchase and delaying closing the deal. The ability to close a deal can be measured with the pull-through rate. The sales manager should use the pull-through rate on an ongoing basis to measure the closing capabilities of his or her sales staff. The outcome of the measurement may be additional sales training, or the termination of those salespeople who have not proven to be sufficiently capable. Every effort should be made to retain those employees generating a high pull-through rate.

To calculate the pull-through rate, divide the total number of initial customer contacts into the total number of customers from this group that placed orders. The measurement can be further refined by excluding repeat orders from existing customers, and can also be broken down at the level of the business unit, region, or salesperson. The formula is:

Number of customers placing an order ÷ Number of initial customer contacts

For example, the sales manager of Colossal Furniture wants to determine the ability of his sales staff to sell the company's oversized furniture to the people entering its stores. The stores use automated counters to track the number of people entering each store, and order forms are used to track the number of orders placed by store. He compiles the information by store, which yields the following information for the preceding month:

 Store  Orders Placed Initial Customer Contacts Pull-Through Rate
Ann Arbor 142 189 75%
Boston 319 560 57%
Chicago 241 636 38%
Denver 417 952 44%

The table reveals that the Ann Arbor store has an excellent pull-through rate. The sales manager decides to investigate the sales staff at this location, to see if any best practices or training methods can be copied from there to the other stores.

The pull-through rate is best employed in high-volume environments where there are many customer interactions. It is least useful when multiple sales people may be involved in a customer contact, so that assigning a successful sale to a specific salesperson is more difficult.

Related Courses

Business Ratios Guidebook 
CFO Guidebook