A friend and colleague pointed out to me that I frequently refer to the Math of Success in sales when I write, but I don’t have one article dedicated to the topic. Well here you go, an entire article dedicated to the magical Math of Success. You can download a worksheet template to use with your sales team and put this into practice immediately. This is the Sales Manager’s remedy for having to nag salespeople to do more, get more appointments, send more proposals, and close more business.
You have probably heard the phrase “sales is a numbers game.” Well that is absolutely true, but maybe not in exactly the way you imagine. Successful salespeople do not just endlessly (and mindlessly) smile and dial. Nope. They have a plan based in math, called the Math of Success.
Here’s how it works:
1. Start with a goal. How much revenue or how many sales does a particular salesperson need to generate? It can be company assigned ─ however, it is much more powerful if you insist that your salespeople walk through an exercise of goal setting for themselves. What is it, that if they had the money they would buy or do? Get them to be honest and somewhat realistic . . . but don’t allow them to think too small. It could be material things or it could be generating enough business so they could take Friday afternoons off to spend with their family. Help them identify what’s important to THEM. It helps to break it down into a monthly goal to make it more manageable too.
2. Have them calculate their average sale in terms of dollars and in terms of incentive dollars in their pocket. If they sell disparate products or services they may need to calculate a couple of average sales numbers for those different products.
3. Calculate how many average sales are needed to produce the incentive they need to reach their personal goals. This is where it is best to keep in mind that the goal should be something attainable in a reasonable time frame. So if they want to buy a house and save up $50,000 to do it and it will take longer than a year, be sure to break down their goal into a one year reachable increment.
4. Analyze their closing ratios. They need to know their closing percentage. The easiest calculation is to determine the closing ratio off of first appointments or discovery meetings. In other words, what percentage of deals (within a typical sales cycle time frame) close out of the total number of discovery or first conversations? Note these are not attempts to talk but actual real dialogue where the prospect is willing to discuss their situation with you. If 25% of first conversations become customers then they know that they need 4x the number of first conversations to meet their closed business goal.
5. Determine the appropriate activities to produce an adequate number of discovery or first conversations. Make sure the salesperson commits to a measurable set of activities to produce those first appointments.
There you have it, the often-mentioned Math of Success ─ or as some people refer to it: “Backward Math” or the “Success Recipe.”
It is simple to calculate. It may not be easy to execute, but the math is simple. Walk through this individually with each of your salespeople, so that they understand it, and more importantly are invested in it. Now hold their feet to the fire on the activities that they committed to. Use this calculation to remind them of how their sales activities tie to THEIR goals and the nagging can end.
Download your copy of our Sales Math of Success worksheet to improve your sales results here:
Here are a few of the blog posts where I've referenced the Math of Success:
- How to Run Effective Sales Meetings: 7 Tips for Sales Managers
- A CRM Alone Won't Fix Your Sales Management Problem
- How to Effortlessly Manage a Seasoned Salesperson
- CEO as Sales Manager: Do You Have What it Takes?
- Referral Gathering for Sales: Go Old School or Go On Social?
Image credits: © Can Stock Photo
© Copyright Gretchen Gordon All Rights Reserved