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Now that you’re familiar with the Law of Averages and with several of our sales words, let’s look at how the numbers impact each other. We call these our “Vital Stats.”
Calls
First of all, you will invariably make a certain number of sales calls each day or week. Let me ask you a question: Assuming you’re not being given any qualified leads other than the ones you find yourself, HOW many appointments will you set if you make ZERO calls in a week?
Answer: ZERO! (It was a trick question!) But the point is, the very first MAJOR number you need to record is HOW MANY calls you are making each day and
week.
Appointments Set
From the calls that you make, you will then start setting appointments (unless you’re in phone sales.) If you make 200 sales calls this week, and set four appointments, then your appointments set ratio is four divided by 200 or 2% This means that for every 100 sale calls you make, you’re going to set (on average) two appointments. So if you wanted to double your appointments set in a week, one way to do so would be to double your sales calls. (The other way to do it would be to improve your sales skills to be able to set MORE appointments with the calls you make.)
Closing Ratio
Your closing ratio is simply HOW MANY of your appointments result in a sale. Our company has two different closing ratios it looks at. First, we look at the closing ratio from the actual appointment. In other words, HOW MANY deals is a rep closing AT THE actual appointment? The other closing ratio we look at is the total closing ratio from all appointments regardless of WHEN they close. So in the second example, a sales rep may finally close a sale from a demo he presented three months earlier. And although the rep didn’t close it at the appointment, he did finally close it later.
Dollar Per Sale
Each month, we look at the total sales by each person and the entire team, and calculate the average dollar per sale. WHY? Because we can analyze if someone is doing something at an extreme. For example, Joe New Guy might come on board and start averaging a dollar per sale that is only half the average of the rest of the new team. We can then look at Joe’s sales presentation and find out why he’s having a lower dollar per sale. Conversely, a sales person may be two or three times above the average dollar per sale, so we’d like to know what they’re doing differently to accomplish a higher dollar per sale!
Back-Out Ratio
Every sales person will experience back-outs or canceled orders. We periodically look at each person’s average number of back-outs and compare it to the company average. We try to find trends that can either help the team improve or ways to help an individual rep improve (or decrease) his back-out ratio.
Now let’s look at a couple examples. One, Joe New Guy just started in sales last week. His associate, Jill New Girl started at the same time.
Calls
For the first 90 days, Joe came in with 1500 calls. Jill finished with 2500
Appointments Set
Joe set 30 appointments his first quarter, for a 2% appointments set ratio.
Jill set also set 30 appointments because her appointments set ratio was lower at
1.2%
Demos
Even though Joe set the same number of appointments as Jill, he actually only had 20 demos. Ten of his appointments fell through.
Jill completed 29 of her 30 appointments
Sales
Joe closed 20% of his demos for a total of four sales.
Jill’s closing ratio was at 24%. She closed seven of her demos.
Dollar Per Sale
Joe’s average dollar per sale was $14,000 for a total of $56,000.
Jill’s average dollar per sale was $12,500 for a total of $87,500.
Two very different sets of numbers, but who, in your opinion, is the “better” sales person? Looking at the sales revenue, Jill’s in the lead. But let’s look at a few other ratios that could be cause for concern. First of all, Joe’s calls were a lot lower then Jill’s. If Joe had been doing a lot more appointments than Jill, this might make sense. But he wasn’t. This could mean that either Jill’s working harder or is getting more done with less time. It could also mean that Joe might be getting off schedule during the week.
The second concern is Joe’s demo to appointment ratio. Either Jill’s REALLY
good, or Joe needs some help setting better qualified appointments.
Joe’s Dollar per Sale is higher then Jill’s Joe might be able to give some pointers to Jill about how to get her number up; and Jill’s total number of sales was almost twice as high as Joe’s!
Since this is only the first 90 days of Joe’s and Jill’s employment, it’s way too soon to be able to tell who’s going to be the most successful. But for newer sales people, it is a very good sign if the sales person has a “healthy” number of calls. Because the newer sales person needs to work on establishing great habits and being productive with their week. And since a newer sales person typically won’t have too much else going on, they should have the highest number of calls EVER during the first quarter. Sales people who have been in an industry for a while typically make less and less calls. They simply don’t have the time!
Now that we’ve looked at some examples of numbers, let’s get you ready to start recording yours!
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