What’s Your Plan, Stan?
I’m paraphrasing a line from Paul Simon’s 50 Ways to Leave Your Lover, which I’m sure most of you readers are too young to remember. But, it is that time of year when salespeople need to start developing a plan for the next year. Unfortunately, and I probably should say tragically, this is the time of year when salespeople realize they either won’t make their goal for this year and/or can’t make their goal for this year.
However, New Year’s resolutions will kick in; and many salespeople will say things like “this year, I need to sell smarter” or “this year, I need to sell harder”. In either case, the salesperson making that commitment is damaging their opportunity for success in 2016. More often than not, these sorts of New Year’s resolutions evaporate more rapidly than the traditional ones that focus on getting on a diet for the next year.
Let’s apply the rules of The New Math of Sales Excellence. You can’t have a plan without metrics. New Year’s resolutions are wishes; they aren’t plans. So, I’m going to walk you through an exercise in the next few paragraphs that I refer to as backwards planning. Let’s start with the year-end goal for 2016 in mind.
How many accounts do you need to close in 2016 to be successful? Or, how many transactions do you need to close in 2016 to be successful? Once you have either of those numbers in mind, you can start your backwards planning exercise. Based on your historical success rate, how many quotes or proposals do you need to produce to get one new account or one new transaction?
So, what you need to do is multiply the number of accounts or transactions that you need by the average number of quotes or proposals per sale, and that produces the number of quotes or proposals that you need to make.
So, for instance, if you need to get 100 transactions next year and your hit rate is 1 in 3 closings per proposal or quote, you need to have a plan in place to produce 300 quotes or proposals in 2016.
Moving up the funnel (remember, we’re doing backwards planning), how many first meetings with new customers do you need to conduct in order to earn the right to create a proposal?
Again, let’s assume the ratio is 3 to 1. Then, we know we need 300 quotes and we know that every third first meeting gives us a quote, so you now need to multiply 300 times 3 and that produces a goal of 900 first meetings during the course of 2016.
Now, the next step is typically 10 to 1 or even worse. That is the number of prospecting cold calls, phone calls, emails, et cetera that you need to launch in order to get a first meeting. So, if we need 900 first meetings and the ratio is 10 to 1, then you need to have 9,000 emails, cold calls, tradeshow encounters, face-to-face meetings, networking encounters, et cetera to make your goal. Once you’ve estimated the number of touches that are needed to produce a first meeting, you now have a plan that enables you to do the work necessary to be successful.
The vast majority of salespeople don’t do this type of backwards planning. Consequently, they are forced into what I refer to as the cheerleader mode of motivation. In other words, they’re going to work harder, they’re going to work smarter. They don’t have metrics, so they can’t fine-tune their process. This leads to trying to remedy a problem with a sledgehammer. It only works if your problem requires a sledgehammer.
Let’s build metrically managed processes and adhere to the philosophy of The New Math of Sales Excellence, in order to help you get to where you want to go in 2016.