Selling is a numbers game.
Thus, the first things I learn from new clients is how they measure sales activity, manage contact information, and evaluate the size of their target audience. "We need to do a better job at handling all that," they reply dismissively–often before asking, "So what can we do to increase sales?" They incorrectly regard measurements of activity and sales results as separate issues. You cannot improve sales without attending to the supporting statistics that link to end results. It simply can't be done!
Top sales operations treat the sales division of a company no differently than the accounting, inventory, delivery, and operations units, all of which are managed with behavioral protocols and operational statistics. Here are statistics and concepts to think about as you pursue top-line results:
1. Estimate your target audience. You need to understand the battlefield from 30,000 feet if you want to win the war. This begins when you measure the total opportunity available in your market. Look up the number of total housing starts and then evaluate the sales opportunity available by product category. For example, if you are in a market with 2,500 housing starts, then the total product opportunity equals average product sale per home times 2,500. If remodeling purchases in your market equal new construction, then you can double the product opportunity. Conduct the same analysis by every product category. (Go to www.buildingleaders.com/index.php/free-resources/white-papers/ for a free market share calculator spreadsheet.)
2. Establish your sales market share goals by product. Historic sales goals, particularly during the boom times of the previous decade, were arbitrary percentage sales increases. Individual sales growth by product was a mantra rather than a mission. Today, you must set goals based on a realistic analysis of the market. More important, your goals must be based on activity to which salespeople are willing to commit.
3. Estimate closing ratios on new prospecting activity. Most organizations don't track this. Worse yet, salespeople are prone to engage in false bravado by overestimating their closing ratios on new prospecting opportunities. I use 10% as a starting point with clients and recommend you do the same. After a year, you'll be able to insert a more accurate percentage.
4. Manage activity, not results. If you know you'll only get 10% of your target, then you need to prospect for 10 times your sales increase goal ... by product! The problem for most sales organizations is their focus on short-term results. Desperate times create desperate actions where each individual sales opportunity is treated as a "must have," leading to price reductions and service concessions that erode profits. A well-managed pipeline, on the other hand, creates choice, perceptions of abundance, and the confidence that, while you won't get every sale (or even most), you will get your fair percentage.
5. Measure reality, not fantasy. The tendency for salespeople, once an accountability system is put in place, is to fudge numbers. A prospect ought to be considered a lead only when a dialogue has begun and at least a mild interest in your services has been expressed. Create the right criteria by which your team of salespeople can objectively agree that a sales lead is, in fact, a "lead."
The beauty of managing the metrics behind the sales numbers is that it provides an objective way to discuss improvements and a means to adjust performance before it is too late. In the end, selling really is a numbers game ...but it's one you must proactively play.
Rick Davis is president of Building Leaders Inc., an LBM advisory firm specializing in sales management training. He is an international speaker and author of Strategic Sales in the Building Industry, a BuilderBook publication. 773.769.4409. E-mail: firstname.lastname@example.org.