Sales is both an art and a science. The art consists of the finesse that it takes to speak smoothly, steer a conversation, and promote your product or service in a way the person on the other side hangs off your every word. Unfortunately too many people focus on the art and not enough on the science. The science consists of knowing how many new contacts you need to approach every week or month, and how many follow up meetings you need to have in order to get to the sale. Both can be taught, however if you only focused on the science you would still make the sales, it’s not necessarily true of the art.
Start With The End In Mind, And Work Backwards
One of the first things I do with all my clients is start with their target revenue for the year. We then break down the annual goal into a monthly revenue target. For instance, if a person had a goal of $120,000 per year, they would break it down to a monthly goal of $10,000 in revenue.
What’s Your Average Sale Worth?
Most people have a variety of goods and services they sell, each with a different price point. This can make high level planning difficult if we were to break down how many of each product you would need to sell at its associated revenue. For simplicity’s sake I like to use the average sale value. This does not have to be the exact average, you may choose to focus on your top product. For instance, if you sold products at $100, $500, and $2,500, and the $500 was the most commonly purchased product, you would use the $500 product.
The Number of Products To Make Your Year
Use your average sale revenue and divide it into your monthly goal to determine the number of products you need to sell. Using our example above a $10,000 monthly revenue goal divided by a $500 average price point product would equal to 200 products every month. You could argue that 200 is not a true number because there is still the $100 and $2,500 price point products, but if sold more $2,500 products you would hit your goal even faster, which would be excellent! If you sold more $100, you’re going to see this trend and adjust your focus before the end of the year.
How Many People Do You Contact?
If you already know you average closing ratio, the number of people that connect with you or your product and end up purchasing, great! Use that number. If you don’t, use the average rule of thumb. If you are an e-commerce only business, with no direct sales channel, your close ratio averages around 3%, which would mean you would require 6,667 monthly visitors to achieve the sales you need. However if you incorporated a sales strategy, one where you were calling and meeting with prospects, that number rises to a minimum of 13%. In order to sell at least 200 units every month you would need to connect with 1,538 people every month. Although this number can seem daunting, if you break it down to a per week basis, it becomes 355 connections. If that seems unreasonable, you can either increase your average sale or increase your closing ratio with sales training. With the right selling strategy you could see an increase in closing ratio as much as 68.7% or even more. If you were to achieve that, you could reduce the number of people you connect with down to 67 people per week.
Understanding your close ratio may seem like a boring activity, but by arming yourself with the right information you can better use your time, and have a greater understanding on how you can achieve even more sales faster.