Your Sales Numbers Are Key
No matter how many times you here it, people still don’t want to understand that sales is a numbers game. If I take two sales people of equal ability, the one that makes the highest number of contacts will always sell more, produce more revenue, and make more money. As a sales manager it’s important that you have a good understanding of how to interpret your sales numbers. Understanding your sales numbers is important to the success of your sales team. It’s also important in insuring you reach your sales goals.
To better understand what your sales numbers mean and before you start planning for the future, you need historical data to establish data points. For example, if I have a goal to make X number of sales and X amount of revenue this year, I’ll need to look at the sales numbers to determine:
- How many prospects I will need,
- How many presentations that will take, and
- What our average sale should be.
If your team has been selling for a while, you can pull these answers from the sales numbers in your historical data. If you have no history, establish realistic data points for your goals. If you’ve already started the data collection process you should have the sales numbers. Now, apply that data to make sure it’s serving your needs. Let’s say you’ve established your team goals, and based on those goals, you may need to answer some or all of the following questions. To determine which questions apply to you, consider your goals. In this example, I break it down to four categories: Defining Quota Attainment, New Business Development, Sales to Existing Clients and Territory Development. Keep in mind when looking at your sales numbers that, when applicable, you should answer these questions for your team as a whole, as well as for individual salespeople or territories.
Defining Quota Attainment:
- What was the team quota last year?
- How was the quota distributed per salesperson or territory?
- What was the team’s percent to quota last year?
- What was the percent to quota for each of your team members?
- What is the team quota for the planning year?
- How will you distribute the quota by salesperson or territory?
New Business Development:
- What is the profile of your top clients? If you haven’t read it, look at my Blog post Customer Profile To Improve Results.
- This could be industry, size or number of employees. It is the profile of the type of customers you want.
- How many prospects for new clients did your team develop last year?
- How many new clients did you develop last year?
- What was the team-closing ratio, prospects to closes, last year?
- What was the team-closing ratio, presentations to close, last year?
Sales to Existing Clients
- What was the total number of sales to existing clients?
- What was your average sale price to new clients?
- What was the amount of your average sale to existing clients?
Territory Development
- How would you define your territory? (Geographically; vertically; by city, state, county or zip code?)
- How many new accounts should each territory produce in the planning year?
- How many existing clients do you have in each territory?
- What are the key accounts you expect to grow this year?
This is a sample of the type of information and data you’ll need to collect to be able to manage by the numbers.
Putting it Altogether
Now that you have looked at the sales numbers and gathered all the data you can establish a base line for performance. As an example:
Your sales numbers from last year may have said that you had 120 leads which converted into 75 prospects. Your lead to prospect ratio is approximately 62%.
Of those 75 prospects you made delivered 45 proposals. Your ratio of prospects to proposals is 60%. This means that 60% of you prospects turn into selling opportunities. To take it one step further, you delivered 45 proposals and made 22 sales. This means shows your closing ratio to be approximately 48%.
Now that you understand what the sales numbers say, you have a tool that you can use to better manage by. Look at your sales numbers and check to see how may presentations your team needs to perform each week to reach its sales targets. The sales numbers don’t lie.
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Related podcast:
SMW 002 Developing your strategic sales plan – Part One
SMW 003 Developing your strategic sales plan – Part Two