To understand the "sales numbers game," we need to briefly discuss the different stages common in most sales cycles.Prospecting
Prospecting is where the sales cycle begins. It involves identifying potential customers using whatever qualifying methods that help you determine who is and who is not a potential customer. A big part of prospecting is not only identifying potential customers, but actually calling on them. Prospecting calls can be accomplish several ways, including phone calls, direct mail and face-to-face visits.
Getting an AppointmentOnce your prospects have been identified and contacted, the next step is to secure an appointment. Getting an appointment is generally a sign of interest on behalf of your prospects and each appointment set should be seen as a victory.
Submitting a ProposalIn most sales cycles, you will need to deliver some sort of a proposal to your customer that spells out your proposed solution or product along with the price.
Close the Deal
Each step in a sales cycle leads up to you closing the deal. If you did a thorough job with qualifying the customer and designing a proposal that matches the customer's needs and handles any objections, then you should be all set to close the deal. This, of course sounds much easier than it really is but closing a sales cycle in which you did not do a good job with the steps leading up to the close is significantly more challenging.The Numbers Game
While some may argue that there are more steps to a typical sales cycle than what is presented here, these 4 steps provide a solid summary of a sales cycle. To understand the numbers game part of sales, you need to start with your goals. In other words, with a full understanding of your compensation plan, determine much money do you want to earn in your position. Once you are clear on how much total comp you want to earn, figure out how much you earn on a average sale. If you are too new to the position to know what an average sale pays, ask your co-workers for their average income per sale.
Once you know the average commission for an average sale, divide your total desired commission income by the average sale's commission amount. The product will be the number of sales you will need to close in a year in order to hit your income goal. To serve as a simple example, let's assume that you need to close 50 sales per year to hit your income goal.
Next, determine how many proposals that you deliver result in a closed sale. Again, if you are new to your sales position, reach out to your co-workers to find out how many proposals usually end up with a sale. Using our above example of having to close 50 sales to hit your goal, let's assume that you need 5 proposals to close 1 deal. In our example, you will need to deliver 250 proposals in a year to hit your income goal.
The next step is to determine how many appointments you need before finding a customer who is ready for, and qualified for a proposal to be designed and presented. To keep things clean, let's assume you need 2 appointments before finding a prospect to propose to. Using our example numbers, you will need 500 appointments per year to arrive at 250 proposals.
The last step is to find out how many prospecting calls you will need to complete. Again, determine how many prospecting calls (cold calls, phone calls, etc) that you need to secure a customer appointment. Let's say that you need 5 prospecting calls to get 1 appointment.
Putting the Numbers All Together
Using our examples above, we will assume that you need 5 calls to set 1 appointment, 2 appointments to deliver 1 proposal and 5 proposals to close 1 deal. Once you have your total number of sales needed to hit your income goal, just work backwards to arrive at your specific numbers. In our example, you will need 1,500 prospecting calls to secure 500 appointments, that will yield 250 proposals, resulting in 50 sales.
You will need to determine your own numbers to make this work for you. Once you have your numbers, you can design your days with much more focus. If you end up needing to make 1,500 prospecting calls per year, you should break this number down to monthly, weekly and daily activity standards. If you work 250 days per year and your numbers show you that you need to make 1,500 prospecting calls, you will have a daily target of 6 prospecting calls per day. Seeing a small number like "6 calls per day" is much more motivating than working towards hitting 1,500 calls in a year.