Do the Math

Do the Math

Have you ever wondered why some people say that “sales” is a numbers game?

Do you know how many prospecting calls you need to make to land a deal?
Do you know how many people you need to talk to in order to close one sale?
Do you know how many times you have to call a prospect before they will meet with you?

If you know the answers to all of these questions, good for you, but you are probably in the minority. Most sales people have a tough time figuring this out, not because it’s difficult, but because they don’t pay attention; read on to see how easy it is to decipher your own equations. Now, I am not a numbers gal, but I can tell you that with some relatively simple math, you can figure this out for yourself. We’ll call the process the 3 B’s…Blueprint, Behavior and Barometer. In short:

* Set goals for both results and activities.
What do you want to achieve and what will you do to make it happen?
* Do the work.
Momentum, inertia, you name the word, but get in the game and implement your plan.
Hope is not a strategy!
* Measure your success.
Look at what worked and what did not work and then reset goals based on your findings!

Follow along, but pay close attention, because we have to backtrack a little during the first step.

Let’s say you want to earn $100,000 this year. Here are the first few steps, I’ll follow with the math.

1. Review your compensation plan, subtract your base pay if you have one, and figure out how much in commission you need to make in order to make your goal.
2. Determine your average commission per sale/order/deal.
3. Based on your compensation structure, you may need to figure out new business versus existing customer business if you have an “account management” piece. To do this if applicable, determine what your monthly existing client piece is, on average.

Now, think about how much new business you will need to bring in so that you can reach your goal.

Here’s the math:
• GOAL = $100,000 gross income
• BASE SALARY = $30,000
• COMMISSION = $ 70,000

Divide this by 12 to get your monthly goal unless you are paid on a different schedule, and then do the math accordingly. In our example:

Are you still with me? Now we take the number you came up with earlier, your average commission per sale/contract/order, and start doing some easy math. Let’s say for example, that you average (your average could be different than the next person given potentially different compensation plans) $350 in commission per closed deal.

$5834/$350 = between 16 and 17 closed deals per month, let’s round up to 17.

Now you can consider how many of these need to come from new business, and how many might come from existing clients, again, based on your compensation plan.

So that represents our results goal, 17 closed deals…now let’s examine our activity goals.

What activity is required to get to 17 closed deals on a monthly basis? If you have a maintenance component to your commission, you need to create two activity pathways, one for existing customers, and the other for prospects. Some examples of activity goals include:

• Prospecting calls
• Appointments/interviews
• Referrals
• Account reviews (for upsell)
• Door knocks or visits (depending on your industry/sales culture)
• Email follow ups
• Etc.

Here is what our Blueprint looks like so far:

Revenue Goals = $100000
Commission Goal = $70000
Monthly Commission Goal = $5834
Monthly Order Goal: 17 (Split between new and existing clients if applicable)
And…activity goals for all notable sales activities in your field.

Now it’s time for…

Implement your plan and execute on achieving your activity goals. For many sales people, that will start with the phone. If you already know what your highest return sales activity is, start there!

Behavior is the hard part…this is where you have to do the work. Stop doing things just to feel busy. Assess your behavior personality. Are you the type of salesperson that likes to feel busy, even if the chances for a good result are slim? Are you ruthlessly protective of your time, and only exert time and energy when you can be certain of a positive outcome? Whatever your personality is, you need to get into thoughtful, productive activity that delivers results for you. But you have to do the work. If you are reading every new book or blog searching for the newest latest sales “silver bullet” you will turn grey and get old doing so, but you will be very well read! In case no one has told you yet, there are no silver bullets or magic wands in sales.

And now where the rubber hits the road…

This is what separates the top sales people in every industry from the next tier down. Top sales professionals know exactly what their highest return activities are, and then they do them over and over again. Low return activities are either jettisoned totally, or prioritized so low on the totem pole, that they are rarely ever gotten to.

Track your own activity and the corresponding results for at least 30 days. How many cold calls did it take to schedule one appointment? How many referrals lead to a sale? Did your door knocking wield any results? How many conversations/interviews did you need to conduct to close one deal?

You have to measure (that’s the Barometer part) what you have done, what worked and conversely, what did not work. So, look at it this way…how long did it take you to get an order/deal? Typically it takes between 5-7 times before a prospect will make a buying decision (meaning we need to gently stalk them 5-7 times before they will send us a deal). For example, it may break down like this:

To schedule interview appointments, on average you’ll need to:
• Make 75 prospecting calls per week to schedule 10 appointments per week (these can be via phone or in person)
• 10 appointments conducted breaks down to basically 2 interviews per day
• 40 solid monthly appointments conducted with prospects, and likely –
• At least 17 prospects will direct a NEW order/deal your way!
• Always schedule a few more interviews per month because some will likely reschedule, cancel or not show.)

Your numbers may look different based on your own assessment of your activities and results, but all of the information is valuable. The more you know about your conversion ratios, the better able you’ll be able to improve identified skillsets. If it takes you 75 calls to get 10 appointments, imagine if you could get more effective on the phone, and turn 75 calls into 20 appointments? Knowing what results your activities produce give you the information with which to make improvements. Instead of reading the next guru’s idea of a silver bullet, you can pick up a book on advanced cold calling techniques and perhaps pick up something useful!

The 3B’s are a circular process. It never stops because times change, behaviors change, and industries change. While one activity may produce results today, there is no promise that it always will. Stay on your game, continuously assess your activities and results, and be willing to make the necessary changes so that you can always come out ahead!

Create your Blueprint, execute on your plan by doing the work and Behaviors that you know will bring in business, and use the Barometer to measure your outcomes. Assess, adjust, and do it again. Keep this up and you will know the best return on your time invested activities to continue to grow your business!

Let’s talk about it…post your goals on the blog…tell the world, make it real! And let’s offer each other some help to make those goals a reality!!

Grow Big or Go Home!