Archive for August 2011
I thought I’d share with you one of the exercises covered in my sales workshops. It attempts to uncover how well someone knows their business (or sales territory) with respect to some key numbers. I argue that unless you track and know these numbers, decisions you make regarding how you spend your time (assess your priorities) are suspect.
For the moment I want you to consider the work you put in to create new business. That is business from people who have never ordered from you in the past. Forget repeat business from loyal customers for the moment.
So get a blank sheet of paper and answer the following questions. You should be able to do this off the top of your head, or worst case refer to your CRM system or sales tracking spreadsheet. (If you don’t have either of these alarm bells should already be ringing)
- What is the average value of a customer order?
- When it comes to the customer making a decision about your quote / proposal, what percentage say “yes” to your offer?
- How many quotes / proposals do you put out in a year?
- What percentage of your meetings / customer interactions result in you producing a quote / proposal?
- How many meetings / customer interactions do you have in a typical week?
Based on your answers to the above you should be able to calculate your annual new business turnover (drop me a line if you need help with this). Another interesting calculation is how many first meetings do you need in a year to get this level of turnover (ditto).
You can also repeat the exercise for existing customers (and include the frequency they buy from you) to get your turnover for repeat business. Add the new business turnover to the repeat business turnover and that will give you the total annual turnover for your business. Simple? No! Rarely do people actually get close to their sales target / quota / business turnover. Only those who ‘know their numbers’ get close to a figure that is credible.
Why is this important? Well, I argue that unless you know these numbers it’s hard to make an informed decision about where things might be going wrong when business takes a bit of a downturn. Or if that new initiative (e.g new promotional activity, new sales presentation, new pricing structure etc.) is having the desired effect on the key numbers.
Yet, there are companies and sales people out there who do not know their numbers, but still feel comfortable making predictions, or giving out new targets like “Your target is up 8% this year” or “We need to change our split of new / repeat business to more like 50/50″ or “We will deliver double digit growth…”
And those questions (and many others) relate to the big strategic stuff for large companies. But let’s make it more focused on the individual for the moment. Knowing your own personal numbers – do you ever look at them and think which ones you could do something about improving? Or, more interestingly which are the important numbers to focus on?
For those of you who struggled to write down the answers to the questions at the top of the blog – what are you waiting for?
Start tracking and knowing your numbers now.