Industrial Sales

Selling is not just a Numbers Game!

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Anyone who’s been in sales for more than 3 days has heard this mantra: “Sales is a Numbers Game!” You’ll close more deals if you make more phone calls. Make sense? Well, yes and no. Indeed, it stands to reason that the more calls you make, the more sales you’ll make – the Law of Large number says so. Or does it? Let’s say you have a quota of 10 widgets to sell each month.

Effective Cold-Calling

Assuming (and this is not a stretch, I’m sure you’ll agree) that you’re operating in an economy where the phones are no longer ringing off the hook. How many calls do you have to make to sell those ten? How would you figure it out? Well, one way would be to pick up the phone and start dialing. And dialing and dialing. At some point – let’s say the 27th day of the month – you’re up to 7. Think you’ll get to ten?

Your colleague already has – she hit 13 six days ago! “Why haven’t?” you wonder. So to find out (and maybe get a tip or two to save you from the boss’s wrath in 5 days), you go over to your colleague (who, fortunately for you, is more gracious than most) and ask if you can compare notes.

Sales calls and numbers

Specifically, you want to find out how the heck she managed to close 13 deals to your 7 in the same period (mainly because you’re pretty sure you’ve made more calls than she has). What you learn astonishes you – not that she made fewer calls than you did (you already figured that). Still, she made 90 more occasional calls (30%)! Not only that, 45 of those calls (32%) resulted in discussion with the prospect, and 13 of those (29%) resulted in a sale.

Your numbers? A whopping 230 calls! But just 50 (22%) of which resulted in discussions, and of which just 7 (14%) have closed. As you’ll see, your 230 phone calls and 50 meetings are not in vain. You were neither as effective nor as efficient as your colleague. Without a doubt, you have your job cut out for you!

Sales is not strictly a numbers game. It is a game of percentages and ratios.

What matters most are not the absolute number of calls you make, meetings you conduct, or presentations you give. It is the success percentages you have at each stage and the time and expense you put into each of these activities.

Each ineffective or inefficient call, meeting, or presentation lowers your ratios so that, in the end, the primary percentage that your company cares about – profits generated/year – suffers.

Sales percentages

OK, so it’s all about percentages. What, then, are the percentages – the ratios – you ought to be monitoring for yourself? They include:

• the percentage of calls it takes you to get through to a prospect
• the percentage of initial conversations with a prospect that results in an initial, exploratory meeting
• the percentage of initial, exploratory meetings that advance to a full presentation with all players
• the percentage of full presentations that result in your being shortlisted, and for which you prepare a proposal
• the percentage of proposals you close

Sales managers are concerned with generating profitable business also attempt to monitor the cost per dollar of revenue generated (a measure of salesforce efficiency). Since the objective of any enterprise is not simply to generate sales but to generate profitable business.

This, of course, encompasses the cost of servicing and supporting the new customer and revenue from upsells and cross-sells.

As the example at the beginning of this Tip illustrates, it is vitally important to monitor your ratios. Those of you who are Sales Managers already know this – you can’t be everywhere at all times watching over your reps. To diagnose where an underperforming representative is struggling, you must rely on the complex data above ratios.

For example, if a rep is not submitting the number of proposals his peers are, how can you know where to begin coaching him if you don’t have the data – the ratios – to tell you where the breakdown is.

Is it because he’s not making persuasive presentations and is, therefore, repeatedly being eliminated from the shortlist? Is it because he is not proposing a compelling enough solution to move his contact to the next stage – a full presentation in his initial meetings? Or is it as simple as the rep hates prospect and is not making the requisite number of prospecting calls per day to keep his pipeline full?

Sales ratios

Without knowing the ratios, the manager is in the dark and cannot counsel his reps. But, conversely, knowing the ratios points him to precisely the area where he needs to coach the sales rep to get him where he and the representative want him to be.

If you are a salesperson, start keeping track of the ratios shown here. Yes, it’s a pain, and it takes time. But you are a professional, and a professional takes the time to analyze their performance. You can’t do this without the data. So invest the few minutes it takes in tracking this information.

If you are so inclined, it may help create a simple spreadsheet with formulas that automatically calculate the ratios on the fly.