Generally sales people don’t need help with setting the big goal for the year. In fact, for many, its already done for you – by management! What I do find though is that many many clients have a harder time meeting their business goals. And, I’ve discover that the trouble starts with the expectations that people set for themselves, because they’re often unaccompanied by a plan of action. For instance, some people make the mistake of saying “I want to close a million dollars this year,” but then admit they have no idea how to do that. Here’s how sales professionals like you can develop a workable plan to help you meet your business goals.
Discover your averages
Consider the following field-tested approach used by top-ranked sales professionals in organizations of all sizes. Find out what the average size of a deal is in your line of work-this isn’t always easy to determine since your might have projects that vary in dollar value from $500 to $50,000. But look sales overall and determine on average how much the customer buys. That information ought to be available through your accounting officer. Your CRM or database might track this as well. Next, divide your quota by that sales average you’ve uncovered and you will instantly have a lock on the number of sales you need to close to meet your goal. If, for example, you aim to generate a million dollars next year, and your average deal is $100,000, you’ll need to close ten sales within that time.
Focus on your prospects
Next, consider how you can fine-tune your sales goals to focus strictly on new prospects. For example, if your target is to generate a million dollars in sales this year, and you know that 20% of your annual business comes from existing customers, subtract that sum from your quota. Now you only have an $800,000 target that is strictly focused on new business-it’s instantly a bit easier to reach and a more accurate representation of the goal that you are setting for yourself.
Find a MAD profile and know your closing ratio
Once you know the number of sales that you need to achieve, your next step is to learn your closing ratio-from qualified leads to closing a sale. A qualified lead is someone who fits what is often referred to as the MAD profile:
- they have the Money and are prepared to spend it on your products or services;
- they have the Authority to make spending decisions; and
- they have the Desire to use what you are selling to solve a problem.
Next, determine a ratio or percentage of how often one of these MAD prospects results in a closed sale. Memorize that number and make it yours. Keep in mind that for successful salespeople who have been in business for several years, that average tends to be approximately one-in-three, or 30% closes out of all qualified leads. That fact is important, because it gives you a sense of perspective. Even those who are at the very top of their game in sales will not expect to close every deal. The very best performers might have a two-to-one closing ratio, but even then, the conditions will lean in the direction of losing more business than you are winning.
Break those big numbers down to size
With your closing ratio written down, your next step is to look at the number of leads you need to generate. With a three-to-one ratio, let’s say you need 300 qualified leads. But that’s when numbers can start to intimidate you. So we break that figure down. One of my sales-training colleagues calls this the “Swiss-cheese technique”-just keep slicing at what you’re working on until it becomes a reasonable size to manage. For example, to find one qualified lead (on average), you need to dial the phone 25 times. You’ll have to exclude wrong numbers and voicemail intercepts from that sum, but it’s still a goal that is suddenly much easier to reach…as opposed to saying that you have to reach 7,500 people by phone to uncover 300 qualified leads this year. But stick to your daily goals, and you’ll reach that amazing sum.
You will encounter days when you might talk to more than 25 people, and others when you might fall short. That’s why averages are important. With perseverance, preparation and attention to details, your closing ratio will likely improve so that it grows, for example, from 25: 1 to 25:3. That’s great news! When that happens you’re unlocking the most important ingredient to sales excellence-selling more in less time.
Whatever your numbers are, some weeks you will have exceptional results and others will be disappointing. Keep track of everything. You may find that your week-by-week figures don’t reveal the great success that your month-by-month results do. Ultimately, it is your actual results that count more than any average metrics.
Examine your sales results often because those figures can reveal not only how well you’re performing in meeting your sales targets. They also can give you a glimpse into areas where improvements are warranted. You might be exceptional in conducting cold calls and generating a high number of qualified leads from a small number of calls-but you might also have a disappointing closing ratio. Whatever the issue, it’s something that you can troubleshoot either on your own or with the help of sales training or a mentor.
When you’re at such a junction in your work, that’s when you should revisit your goals and make changes where required. While your original plan might have called for only one sales-training course this year, on examining your monthly sales record you might conclude: “Wow…I really need to attend a course on cold calling, because I’m making 50 calls and getting only one qualified lead.” So you cancel your sales-training course and sign up for one that’s devoted just too cold calling.
By keeping a close eye on your sales performance figures, you’ll gain important insight about where your efforts are really paying off and you’ll also be able to quickly recognize where more work is required. Every step you take in this process leads you somewhere or tells you something. It’s up to you to decide how to act on those facts so you remain focused on the goals that you’ve set for yourself.
Here’s to a profitable 2010!