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Sales is not strictly a numbers game  it is a game of percentages. Of ratios. What matters most are not the absolute number of calls you make, meetings you conduct, or presentations you give. It is the success percentages you have at each stage, as well as the time and expense you put into each of these activities. Each ineffective (doesn't get the desired result) or inefficient (takes too long or costs too much) call, meeting, or presentation lowers your ratios so that in the end, the primary ratio that your company cares about  profits generated/year  suffers.
OK, so it's all about percentages. What, then, are the percentages  the ratios  you ought to be monitoring for yourself? They include:
 the percentage of calls it takes you to get through to a prospect
 the percentage of initial conversations with a prospect that result in an initial, exploratory meeting
 the percentage of initial, exploratory meetings that advance to a full presentation with all players
 the percentage of full presentations that result in your being shortlisted, and for which you prepare a proposal
 the percentage of proposals you close
Sales managers, who are concerned with generating profitable business (as we all should be), also attempt to monitor the cost per dollar of revenue generated (a measure of sales force efficiency), since the objective of any enterprise is not simply to generate sales, but to generate profitable business (which, of course, encompasses the cost of servicing and supporting the new customer, and revenue from upsells and cross sells, but that's a subject for a future Tip...).
As the example at the beginning of this Tip illustrates, it is vitally important to monitor your ratios. Those of you who are Sales Managers already know this  you can't be everywhere at all times watching over your reps. In order to diagnose where an underperforming rep is struggling, you have to rely on the hard data the above ratios provide. For example, if a rep is not submitting the number of proposals his peers are, how can you know where to begin coaching him if you don't have the data  the ratios  to tell you where the breakdown is. Is it because he's not making persuasive presentations, and is therefore repeatedly being eliminated from the short list? Is it because in his initial meetings he is not proposing a compelling enough solution to move his contact to the next stage  a full presentation? Or is it as simple as the rep hates to prospect, and is not making the requisite number of prospecting calls per day to keep his pipeline full? Without knowing the ratios, the manager is in the dark, and cannot provide counsel to his reps. Conversely, knowing the ratios points him to precisely the area in which he needs to coach the rep, in order to get him where both he and the rep want him to be.
Action item:
If you are a sales person, start keeping track of the ratios shown here. Yes, it's a pain, and it takes time. But you are a professional, and a professional takes the time to analyze his or her performance. You can't do this without the data. So invest the few minutes it takes to track this information (if you are so inclined, it may help to create a simple spreadsheet, with formulas that automatically calculate the ratios on the fly. If you're the old fashioned type, or don't have easy access to a computer, jot it down on paper and use a calculator to compute the ratios). How you do it is not important; that you do is. If you are a sales manager, be sure you're monitoring and analyzing your sales people's activity. Demand that they keep track of and provide you with this information on a regular basis. Use the ratios to spot trends before they become problems, and as a diagnostic tool to pinpoint problems that are already manifesting themselves.
In the next issue we'll focus on the two levers touched upon here for improving your performance  effectiveness and efficiency  and how you can increase both to your and your company's benefit.
Good Selling!






 
