What's Your Magic Number?
The most successful businesses and certainly, sales departments have identified their Performance Measurement Goals that directly effect the outcome of a particular process. Then they measure the competency ratios in line with them.
How often do you determine if you are on target with your business sales?
A good example in the sales process might be how many times you advance the first sales appointment to the next phase, whether that’s a demonstration, a site visit, a survey or a proposal. Another measure is how many times you gain a new customer once the first gateway is passed. And when you do gain a new customer, what’s the average revenue you achieve? That’s certainly an important measure. Because if your average revenue per sale is 40% less than the average peer success, you might want to find out why and take focused action to improve it, as you’re leaving money on the table.
On a practical level, measurements can provide management with what is needed for marketing and product development, detect problem areas in sales performance and signal the need for strategic or tactical modifications and even an all-out intervention through performance training.
Perhaps the most overlooked measurement is the individual Magic number; how many new weekly sales opportunities must be generated. Think of the magic number as the fuel in your gas tank needed to get from point A to point B. It’s directly proportional to how far a distance, how fast you drive and your average miles per gallon. Your sales process Magic number is a derivative of your average revenue per sale, 1st appointment to proposal ratio, closing ratio and revenue goal. It’s your Activity indicator and it should be at 100%.
The following are some tips for improving several sales process measurements.
If your current 1st Appointment to Proposal ratio is below 65%:
1. Internally define what your Next step objective of the 1st appointment is; a demo, a site visit, a survey or a proposal. Then train to a process and measure the outcome.
2. Decide to start at the Top with the fiscal authority that can call the shots.
3. Avoid selling your product on the 1st appointment. Instead, outline your diagnostic steps to evaluate the fit between your solutions to their business objectives.
If your current Closing ratio is below 65%:
1. Ask pertinent questions to what the prospect company’s decision-making process is, what the internal criteria for change is and what players need to be involved for evaluation.
2. Communicate a timeline and set a specific date for the 2nd appointment before leaving the 1st appointment. Encourage that all management players be present at the next appointment.
3. List risk factors for each management player and develop strategies, tactics, and tools for direct communication to them.
4. Have relevant industry and title reference letters available for Real-time credibility.
The goal is to get your activity measurement to 100% through:
1. Setting realistic goals
2. Develop a training process in line with prospecting scenarios and best practice communications.
Ultimately, sales trainers and management should work in concert to create a new culture by replacing random sales routines with specific measurement capability training. Then build supporting tools for learning and application. It’s all about your Magic Number.
Brenda Lane-Oliver is an author, coach, speaker. Contact her to discuss obtaining your magic number.