Strategy & Execution

You’re Up to Bat – What’s at Stake?

Think of a hit ratio as you would a batting average.

The hit ratio provides information about how many times you can expect to get on base when you step up to the plate. And conversely, how many times when you’re at the bat can you expect to be called out?

The higher the hit ratio, the more successful you are at closing business. It follows that more opportunities you can close, the more effective, productive, and financially rewarded you and your firm will be.

CALCULATION

So, how is a hit ratio calculated?

George, from the previous blog, had 30 opportunities last year. He closed, or won 8, and lost 22 of them.

His hit ratio is calculated by dividing the number of wins by the total number of opportunities he had for the year.

8 Wins / 30 Opportunities = 26% Hit Ratio (win rate)

Eight wins divided by 30 sales opportunities equals a 26% win rate or hit ratio.

DIMINISHED VALUE SNAPSHOT

To reinforce the importance of protecting your time, confidence, reputation, and money, Beyond Insurance created a tool called the Diminished Value Snapshot™.

This tool helps you to calculate your hit and miss ratios.

Sample Producer

   
   

 

 

A.

Estimated number of new business opportunities (per year)

 

15

 

 

 

 

B.

Estimated number of hours per opportunity                                   

 

40 hours

 

 

 

 

C.

Estimated total annual hours invested for new business opportunities

 

600 hours

 

(A x B; new business opportunities x total hours per opportunity)

 

 

 

 

 

 

D.

New business “miss ratio”

 

70%

 

 

 

 

E.

Erosion of Time (C x D; total hours invested x “miss ratio”)

 

420 hours

 

 

 

 

F.

Hourly rate (projected)

 

$200

 

 

 

 

G.

Diminished value (F x G; erosion of time x hourly rate)

 

$84,000

 

 

 

 

The average producer’s new business “hit ratio” is 30%.  His or her “miss ratio” is then 70%.  It is not unrealistic for a producer to allocate 40 hours or more working on a middle-market new business opportunity in performing tasks including, but not limited to, coverage reviews, claims analysis, contract and lease reviews, market research, the bidding process, and final proposal design. 

Assuming a producer works 50 hours per week, his or her erosion of time calculates to more than 8 weeks of diminished value in a given year. 

Now, you see how time, confidence, reputation, and money are at risk.

 

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