Enter A Formula To Calculate The Daily Total In Dollars Make 2009 the Year You Reinvent Your Sales!

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Make 2009 the Year You Reinvent Your Sales!

Every January, everywhere you look—magazines, newspapers, TV—everyone talks about how to take the plunge and get a “new you” transformation. Reinventing yourself should be more than a new outfit and haircut. Why not start by making changes where it really counts – in your sales results! More sales in 2009 means more commissions…which means you’ll have more money to really spoil yourself later.

The first step is to know where you stand at the end of 2008. Like most sales professionals, you can quickly tell how much you closed last year and how much you earned. But have you stopped to consider how producer were you This is a question worth pondering.

Recently I conducted a survey with my clients—many of whom were in leadership positions—to determine their biggest sales concerns. The overwhelming answer was sales productivity. In other words, how much revenue each team member can generate per period, and how we can make it better.

You can chart your sales productivity daily, weekly, monthly, quarterly or annually. Given that we have just completed the calendar year, you now have a great opportunity to look at your own or your team’s productivity for 2008.

There are two ways to do this…

1. Watch your ratios

At a minimum, sales reps should produce 6-9 times what they are paid. The best companies earn a ratio of 10-12 times what they pay their sales staff. If the total take-home pay (commission and salary combined) for a rep is $100,000, then the best reps generate at least a million dollars in sales. Yes, these numbers are moving targets. You need to factor in account accelerators, new hire bonuses, among other factors, but it’s still a reasonably accurate measure to use when evaluating sales productivity.

Let’s test your own productivity for 2008. What was your total take-home pay (ie, salary and commission)? What was your total revenue number for 2008? A simple division will tell you whether your productivity level was moderate or high. I recommend that managers conduct that test for each team member, as well as for the entire sales team.

2. Check your sales ability

Another way to look at productivity is to analyze your 2008 sales force. Do so by multiplying the following:

(# of Rep.) X

(Average hours you work per day) X

(Number of weeks you work per year) X

(% of sales time) X

(closing ratio)

For example, if you worked 10 hours per day, 52 weeks per year, spent 100% of your time in sales, and had a 100% closing ratio, your sales potential would be exactly 520. This, of course, is completely unrealistic. number, but it illustrates how this type of analysis is performed.

Realistically, most sales people work 8-10 hours, 46-48 weeks per year. Sales time per day is a big variable. The main question is how much time you spend talking to customers. Many sales people report that 30% of their day is spent talking directly to customers—and I think it could be as high as 60% and as low as 10%. If you are unsure, estimate that 50% of your time per day is spent on sales and the other half is spent on meetings, lunches, driving, talking to colleagues, entering data into CRM, research or general administrative work. Enter this number as a decimal in the formula.

Close ratios can be as low as .008 (125:1), and as high as 0.5 (1:2). It depends on whether you are cold calling from the Yellow Pages (which has the lowest closing ratio) or growing your business based on referrals (which have the highest closing ratio). Be honest with yourself and make sure you consider the closing ratio from net new contacts—not just the closing ratio from the offer stage.

Now that you have your sales force number, you can set some goals to improve it. Try to get close to that unrealistic 520 number we mentioned earlier! What to improve first? For starters, think about increasing the number of weeks you work in 2009. That number should decrease, not increase. Also, there is no point in adding sales reps to the equation if your sales force is already very low. Instead, consider the following activities.

Customize your number of hours of sales – Can you outsource some non-sales tasks to others so you can increase the number of hours you spend per week in front of customers? Consider outsourcing low-return tasks (eg, expense reports, preparing slide decks, editing).

Improve your closing ratio – Are you asking for referrals from customers every day? Can you target your market to a smaller niche? Can you improve your qualifying steps? Do you have a targeted marketing program to help the right customers find you? Are you reaching out to your existing customers at least once per month?

Sure, we all want improved productivity, but if you don’t know how productive you were last year, how do you know what to improve? To reinvent your sales in 2009, you must know your 2008 benchmark. Once that is established, you can choose the right activities to improve. You must measure results at each step, and make decisions based on the numbers – not your gut feeling. As I do every year, I invite you to set a goal for yourself for 2009, and send me your implementation plan. I’m happy to hold your feet to the fire every month—just a friendly check-in to see how you’re doing!

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