We all know that there is more than one way of looking at things and that we can gain enormously by occasionally looking at things from a different perspective. However, for some time I’ve noticed how many business owners see sales as some sort of black art, so for those that see sales very much in that light then let me share with you a very different approach.
For sales can be seen as a science and “Yes” you’ve read that correctly, sales really can be seen as a science although not perhaps as an exact one like maths or physics.
It all starts from the salesperson appreciating the “Farmers formula,” what you sow then so shall you reap. In business you are likely to have an Annual target, let’s take that figure and write it at the top of a blank page. For most sales personnel that is likely to be measured in terms of Gross profit (GP).
Illustration
Just for the purposes of illustration I’m going to work with the example of sales person who’s been targeted to bring in £100k over a full year. Of course your target might be higher or lower, but I hope you’ll agree this isn’t a bad starting point.
The next stage is to start breaking this down so we can get a better handle on the immediate future.
Month by month
Dividing the £100k (or your annual figure) by twelve will give us a monthly target. In our case we come out with a monthly figure of £8k and a remainder of four thousand which can be easily split and allocated to two slightly longer and often busier months namely March and September. That leaves us with a monthly target off £8k for ten months of the year and £10k for the two months already mentioned.
Deal by deal
One very useful calculation to make even if you weren’t focusing on the science of sales would be to establish what is your average GP per deal? This is of course difficult if you’re new to sales or if your marketplace or product portfolio has changed dramatically in recent times. Even so an educated calculation can and perhaps should be made. This figure will of course be a very personal one, but again just for the working example I’m going to suggest a figure. Let’s work on the basis of an average deal bringing in two thousand pounds GP.
The next calculation we make is a very simple one, we take the monthly GP target and divide it by the average GP per deal which will tell us how many deals a month we need to do in order to make target. In our working example we’ve divided the monthly target of £8k by the average deal of £2k GP giving us a requirement of four deals for the month. Obviously the greater the financial target or the lower the average value of a deal then the greater number of deals that are needed to achieve our figures.
Appointment by appointment
Now it gets really interesting because we need to know how many new appointments or first time meetings we require to get a deal in the first place. You may or may not be surprised to learn the national average for capital equipment salespeople in the UK marketplace is some five new prospects to one deal. Your strike rate or conversion rate might be higher it may well be lower. The important point here is we have to work out how many new prospects we need to get in front of in order to make target.
Call by call
At this point you may have already leapt ahead and realised the obvious next step is to calculate how many prospects you need to canvass in order to get your required number of first appointments. In our working example the salesperson would need twenty new meetings every month. That might not sound like too stiff a target until we remember we will have to make good use of the rest of the time to make the calls to get the appointments.
If you’re operating in the small and medium end of the marketplace you will almost certainly need to make somewhere between 25 and 50 “cold call” phone calls to arrange just one meeting. You can take that figure forward and work out how many calls a month you need to make and how much time you will need to devote to looking for new business in order to make your target.
Finally | Work smart
Experienced and successful salespeople know that it all starts with applying yourself. Once you’ve mastered the ability to work hard then it’s not so difficult to take the next step and learn to work smart. At anytime you can go back to the science of sales and adjust the figures. Get yourself a good supply of leads, maybe referrals and you’ll need less new first appointments from cold calling. The same goes if you can improve your conversion rates, most of us find we can convert a higher proportion of referrals than leads from other sources.
The science of sales operates just like the “Farmers formula” we can quickly calculate how much seed we need to sow in order to reap the harvest we desire, and that is the secret to achieving any goal. You must first break it down and work out how you’re going to get there. Sales isn’t a black art practised by a few who were “born” that way. Sales is a skill or set of skills that can be practised and perfected and sales can if we want be considered a science. You’ve probably heard this expressed before as sales is “a numbers game,” well I think we’re making the same point. The more you put in the more you will get out.
The Science of Sales -
• A) Annual target (GP) =
• B) Monthly target (GP) =
• C) Average GP per deal =
• D) New deals required (b/c) =
• E) Average meets to deals ratio = 1:5 (unless you know your own)
• F) Number of meets required (d x e) =
• G) Number of calls to make appt = 50 (unless you know your own)
• H) Number of new calls required per month =
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