I know that a productive sales force is one of the keys to our success. It”™s time for them to put things in gear. I worry that things may be too comfortable around here. Any suggestions?
Good news is that there is a sales team in place. Any company looking to grow has to have people in place to help bring in new business. Now it”™s time to figure out what your company needs. Put your sales people on a mission. Compare the payoff of sales to the cost of acquisition.
Here”™s an example of how to calculate a sales goal.
Ӣ LetӪs say that the sales person costs $100,000, including salary and benefits, travel costs, desk, phone, managerӪs time, etc.
Ӣ Assume that the companyӪs gross profit is 60 percent of revenue.
Ӣ Assign a minimum standard multiple of 3 times cost to what a sales person should bring in.
Ӣ Multiply sales personӪs cost of $100,000 x 3 (minimum standard multiple) = $300,000.
Ӣ Divide the $300,000 by the companyӪs gross profit of 60 percent to get a revenue goal = $500,000 minimum revenue sales goal.
”¢ Compare that to what sales people in your company and industry are already producing today ”“ is that high, low or in the ballpark?
Ӣ Adjust the goal up if you think thereӪs room to produce more. Resist the temptation to bring the goal down to make it more realistic. If youӪre not making money on your sales peopleӪs efforts, you have to figure out what else to do.
Now work backward. What”™s an average sale for your company? Divide the minimum revenue sales goal by the average sale. That”™s the number of sales per year this sales person has to produce.
Wondering how many sales people you need? Figure out the company”™s overall sales target for the year. Deduct the amount of revenue that will just roll in the door from existing clients, from the website, any other non sales-force-related activities. The remainder is what the sales force has to bring on board. Divide by the minimum revenue sales goal per person. That”™s the number of sales people you”™ll need, if all sales people are just hitting minimum performance.
Want to break through to more than minimum performance? There”™s real value in giving people challenges. Gather your sales team to brainstorm how they could kick sales into high gear.
When measuring and managing people it”™s best to know how high to set the performance bar. Take a look at what people on the sales team have produced in previous years. Find out what competitors demand of their sales personnel.
Take a look at how sales conditions have changed over the past few years. For many companies the sales cycle has gotten longer. The number of sales per sales person has also gone down as sales people spend more time nurturing potential sales along a longer path to close. That”™s lost opportunity, unless you can shorten the sales cycle.
Is there anyone on the team who seems to be getting any performance breakthrough? What can be done to model their behavior, attitude and skills?
Maybe it”™s time for some sales training. Everyone gets rusty. Getting into a structure to exercise and build sales skills could be exactly what the sales team needs to get their game on.
Make it clear what you expect. Make sure people know you”™re watching what”™s going on. Put performance reports in a place where everyone can see what”™s going on. Don”™t hesitate to make changes if someone isn”™t trying.
Ask people to make incremental performance improvements. Increase sales results a little each month. Push for one more sales call, one more prospect, one more referral request. They”™ll add up over the course of the year.
Looking for a good book? “52 Sales Management Tips, The Sales Managers Success Guide,” by Steven Rosen.
Andi Gray is president of Strategy Leaders Inc., www.strategyleaders.com, a business- consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it to her, via e-mail at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of Ask Andi articles.
