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For your eyes only ... about your sales
For your eyes only ... about your sales
Don't open this article if anyone is looking over your shoulder.
Why? Because I'm about to give you one of our best-kept secrets we're using at Brand
Launcher to turn around sales with our clients that you can do on your own. Keep this one to yourself because it will give you an advantage like you've never seen. Best of all, it doesn't cost a dime to do.
In fact, it's helped one client increase its monthly revenue 12% earlier this year. It helped another client increase 30% in just 2 months. And it's helped countless others increase their sales as well.
I'll show you how - plus I'll give you a tool to help you do it yourself!
Look, everyone knows they should be tracking performance, measuring results, managing against objectives, blah, blah, blah.
Here's the truth - not many small and mid-size business owners track their performance, and those that say they do, don't do it well. It's both an art and a science, which makes it tough. And what makes it even more difficult is that it's different for every business, which is often why companies hire us to help them develop the tools they need to manage their performance.
Don't worry. I'll share with you how you can do it yourself and of course if you need assistance give us a call and we can probably help guide you.
Why is this so important? See for yourself. In a book titled, What they Don't Teach You at Harvard Business School: Notes from a Street Smart Executive, the author, Mark McCormack cites a study in which students were asked if they had goals and then they followed up with them 10 years later to determine how they were performing.
What do you think the researchers found? You would assume that those students with goals did better, but how much better? Here's what they discovered:
- 13% had goals
- 84% had no goals
- Only 3% had written goals
Here's what is really interesting. A decade later, they found that the 13% who had goals were doing twice as well as the 84% who had no goals. That's impressive. But what about those who had written goals? Did they do any better? You bet they did! The group that documented their goals did 10 times better. That's huge!
Simply by writing down what they wanted to accomplish, students increased their performance by ten times compared to those who had no goals at all. They took the time to write down their goals and as a result they were more committed to them. Most people aren't willing to do that. The power to make a commitment like that is mind-blowing!
The same is true in managing your business. The secret is to develop Key Performance Indicators and then measure your company's progress against your KPIs. In the past, company's often used a 'Command and Control' approach to manage their business. Managers told employees the tasks that needed to be done and controlled their work by measuring their progress to ensure the job got done.
Today, we prefer to use a 'Trust and Track' approach style of management in which managers trust that employees will do the job and then track performance in an effort to help them improve.
I'm not going to lie to you. Creating KPIs is not easy. It's one of the reasons why many companies don't do it well, if at all. Why? Because you have to put a stake in the ground and say these are the things we care about most and we're going to measure the performance of our employees, our managers and our company based on the KPIs.
Former CEO of eBay, Meg Whitman famously said, 'If it moves, measure it.' That may be overstatement but you get the idea. If it's worth doing, it's worth tracking. What we've found is that you want to concentrate on the 3-6 most important KPIs that make the biggest impact on your business.
1. What is your monthly revenue goal?
2. How many sales are needed each month to reach that goal?
3. Based on your closing rate, how many presentations or proposals do you need to make every month to reach the sales goal?
4. How many qualified contacts do you need to get the desired number of presentations?
5. How many leads do you need to get the desired number of qualified contacts?
Once you determine your objectives you can then track the behavior that will help you reach them. The idea is to work backwards starting with the end in mind. Deconstruct your sales process so you can break down the activities that matter most to your business.
The following example is based on our work with a client that I can't identify because of client confidentiality. The client said they were tracking their sales process but like most companies they were only tracking end of month results. They weren't tracking the KPIs during the month and they weren't tracking goals for every activity. Nor were they tracking it for each employee.
For example, let's say the company is selling software services to small businesses and they wanted to increase sales by 20% from $500,000 each month to $600,000. The company has 10 sales reps. We deconstructed the sales process to determine the KPIs and determined realistic goals for the sales reps that we could track every day.
As you can see, you can track how each person is performing every month against your KPIs. For example, Steven is exceeding the sales goal and thought he was doing great, but in reality his sales in dollars is 33% below the goal. Why? Because his average sales price is only $2,000, far less than the $5,000 needed.
Laura, however, is making fewer sales and making fewer proposals but the average sales price is $9,000 - nearly twice the sales goal.
Based on the KPIs you can manage the behavior and activities of your employees. From our example, we know that we need to work with Steven on selling higher priced products. If he increased his average sales price by just $500 he would increase his total sales 20% each month! And if Laura closed just one more deal a month, she would increase her sales 12.5%!!
Try developing your own KPIs. Ask yourself: What are your sales goals? What steps need to happen for you to reach those goals? Then measure each step in the process to identify the strengths and weaknesses.
Stay tuned, because next week I'll show you how to use your KPIs to change behaviors among your employees and turn your company into a compelling company! You won't want to miss it!
Always taking you from where you are to where you want to go,
Jon Goldman, President