In the early nineties I employed a salesman on a short-term 10 week contract. I gave him a sales target of £10k and suggested we meet each Friday to review progress. This was my plan to achieve sales effectively…
Expecting great things, Steve got stuck into work but at the end of week 1 reported zero sales. I was a little disappointed but accepted he was still ‘learning the ropes’. Promising improvement, Steve worked solidly throughout week 2 only to report a total sales figure of £250 the following Friday.
In my mind I had expected £1k a week, so he was now nearly £2k behind target. I was less diplomatic with Steve and told him that things had to improve in week 3 since his fees were costing me dear.
We never got to the third Friday. Steve resigned on the Wednesday complaining the targets were impossible and I wasn’t providing enough support. My plan to achieve sales effectively was in tatters.
What went wrong?
The project was a complete failure. But the experience provided huge learning value. Whilst I should have given Steve more guidance and help, the real problem was actually the way the targets were being set and measured.
Linking targets with time is wrong because sales rarely ever flow in a consistent manner. It’s like the hitchhiker trying to achieve a set distance each hour. It’s pointless because the opportunity to travel is heavily dependent on other key issues such as route choice and the volume of passing traffic.
To plan to achieve sales effectively, sales targets need to be linked to consistent ‘sales activity’ and what are called ‘key ratios’. By doing this it’s possible to be much more scientific and thus confident about eventual sales outcomes. To help you learn faster (and without suffering the pain I experienced) read this excellent article about sales activity ratios and/or follow the example explaining key ratios below.
Jane Johnson’s online specialist furniture
Jane sells specialist furniture from her website. She sets herself a new business sales target of £100,000 for the year. She knows that the average sales value of her product is £1,000. As such, she needs to make 100 sales to hit her target.
After some analysis Jane calculates that for every three new inquiries she receives, she sells one item. She also works out that to generate one inquiry she must send 5 emails or letters to qualified prospects. And Jane knows that her qualified prospects materialise from bought lists. Further analysis reveals that emailing 100 people from these lists generates 10 qualified prospect returns.
As part of her plan to achieve sales effectively, Jane writes this information down. She now needs to calculate the work required to achieve her target:
100 sales are needed at an average value of £1,000
1 sale from 3 inquiries 1:3
1 inquiry from 10 qualified prospects 1:5
1 qualified prospect from 20 unqualified prospects 1:10
Based on this information and resultant key ratios, Jane quickly establishes that for every 150 people she contacts she will make one sale. Therefore, as long as she contacts 15,000 people over 12 months, she will hit the target. Sounds a bit steep but it’s quite possible?!
By doing some maths, Jane knows that she has to contact 1,250 people a month in order to reach her goal. Confident in her own ability and strategy, Jane sets to work. Her first task is to source and purchase on-line databases that reflect her target audience; then she has to construct succinct emails and ensure 1,250 people are targeted each month with a well constructed message.
As long as Jane remains consistent and disciplined and learns and adapts as she progresses, she has a far better chance of achieving her targets compared to Steve. Doubtless through the year Jane will experience highs and lows (because sales results are never even) and therefore it’s vital she perseveres when the going gets tough.
Key Learning Points: To plan to achieve sales effectively, set your own sales targets based on buyer behaviour data. Link targets to sales activity (key ratios) rather than time, because you have greater control over the outcome and much more confidence in the process. Be consistent & persevere.