Manage by the Numbers

This week’s blog is for all the sales managers out there. Most of you have received no formal training and were successful sales reps that got promoted into the sales manager position, most likely because the sales force grew or the current sales manager left or got fired. If they got fired, it was most likely because they were promoted from sales with no training as well and tried to just get everyone to do what they did, not necessarily what they should do.

So what should they do? Great question. The best answer is hold everyone accountable to the numbers. The problem is that sales people hate numbers – by nature, they are more creative than analytical, and that’s why they became sales people, not accountants. What numbers should they be accountable for? First, their annual sales revenue number. Great, everyone has that, but how do they hit it? You need to have them break it down to the smallest denominator. Sounds like 6th grade math, right? What I mean by that is you need to break down what it takes to make a sale, just one sale. When you know how many meetings it takes, how many decision makers you need to speak with to set those meetings, how many dials it takes to set those meetings, then you can take the number of sales it takes to hit the annual revenue number and work backwards to see how many dials you need to do each day. Let’s break that down:

One widget sells for $10,000.00, your sales goal is $120,000.00 per year. There are 12 months in a year, so they need to sell 1 widget per month. You know that your close rate is 10%, so they will need to go on 10 meetings per month to close a deal. You know that they need to talk to 10 decision makers to set one meeting, and you know that they need to make 20 calls to talk with one decision maker. Based on that information, in order to sell 1 widget per month, they will need to make 2,000 calls per month – which breaks town to 500 calls per week or 100 calls per day – to hit their revenue goal. It’s that simple! Of course, as your reps get better, their numbers should be able to adjust downward. This will allow for them to make even more sales and increase their earning potential. And your job, of course, is to track and hold them accountable to these numbers!