This week I’ve been helping a new client with an ambitious business plan. Sitting with her and looking at numbers was a great reminder that every successful businessperson has to have a solid understanding of those numbers. How many times have you seen an episode of “Dragon’s Den” where a pitch was shot down in flames because the presenter didn’t know all the figures?
It’s exactly the same in sales. In order to be successful, you need to know your numbers. Of course, if you are your own boss it’s easy to see how this can be useful, but if you work for someone else, treating your job like a business and getting to know the numbers can help you get more results and earn more commission.
I’m going to assume, if you’re running your own business, that you know your fundamental financials – revenue, margins, costs, etc. But let’s now look at the key sales metrics that every salesperson should know and be able to measure themselves against to stand the best chance of improving performance.
Many salespeople satisfy themselves with simply tallying up the number of sales they made each week, month, quarter or year against a target that may or may not have been carefully planned. But on its own, that figures doesn’t help us to measure and improve performance. We need to delve a little deeper. Here’s a summary of the areas we covered in more depth in this last week’s Saturday Sales email. If you’d like to receive a weekly email with advice and tips on sales, prospecting, and more, then you can sign up here.
10 sales a week looks fantastic on paper, but if those 10 sales are bringing in small revenues are they moving you ahead against your earnings goals? Your business and your personal success should be measured against revenue.
If you know that you average small-revenue sales, then you need to make more sales to hit the target, or increase the value of each sale. Knowing which option is best is the key to planning your activity effectively. You wouldn’t get in your car and drive without knowing how much petrol you needed to get to your destination, and it’s the same in sales.
But most salespeople fail to measure the difference in their revenue between new and existing business. New business is harder to win but brings in bigger revenue. Existing business is usually quicker, but tends to be incremental and therefore smaller revenue.
Knowing the split between these means you can target yourself even more sharply by knowing how many new and existing business deals you need to win to hit the numbers.
Unless you’re lucky enough to have a miracle product or hugely popular business that people flock to, you’re going to have to go out and win those customers.
By analysing how many sales you currently win, and working back to how many first meetings you needed to get them, and then even further back to how many prospects you called to make those meetings is great knowledge. Assuming everything else stays the same, you now have a number for how many new prospects you need to find to end up making a sale. If you need to increase your sales by 20%, you now know how many additional prospects you need to find to increase that number by 20% too.
How many times when you ask a prospect to sign on the dotted line do they say yes? Even the best salespeople don’t win every time. If your strike rate is 50% (well done if it is!) and you need to make two sales per week, you’re going to need at least four closing meetings in the diary. Don’t have four in for the week after next yet? Time to hit the phones!
These might not be closing meetings, but if you are in front of a prospect and talking about your product or service then you should be tracking it. If you’re in front of a prospect and not talking about your product or service then that’s not being productive. It might be great after-sales care, or tidying up some loose ends, but it’s not something you should be tracking as part of your sales activity as it won’t lead to potential business.
Are you measuring these metrics every week or month to ensure that your’e on the right track to hitting your sales targets? If you want to hear more, here’s my video about measuring your progress in sales –
Of course, collecting all this lovely data and then not doing anything with it is the ultimate waste of time! The idea is that you get an understanding of your own sales performance and then see where you can do better.
One thing that can help a lot with this is using a good CRM system that can handle most of this number crunching for you. But you can also put together a fairly simple spreadsheet to get a handle on your numbers right now.
Do you religiously track your stats? Have you got any tips or tricks to share about analyzing performance? Would you like some help setting targets, assessing performance, or putting a CRM system in place? For questions on these or any other sales topic, please do get in touch with me by email via firstname.lastname@example.org or through any of the social networks: Twitter, Facebook, Instagram or YouTube – search for ‘jameswhitesales’.
Don’t forget to let me know if there are any specific topics you’d like me to cover in these blogs or on YouTube channel, too. And remember, you can sign up to the Saturday Sales email list and get weekly advice and tips straight to your inbox.
Here’s to a positive week ahead and some great progress towards hitting your goals.