Sales Success is a Numbers Game

There are a number of key skills which will help you to be a more effective and successful sales person or account manager. One key skill is to recognise that in the final analysis sales is a numbers game, regardless of the business for which you work or the types of customers and products for which you are responsible. This principle is usually true for assessing the performance of a sales person or sales team, which usually amounts to the simple question ‘did you hit your number?’ However, it is also just as true at the outset of the sales process – the planning phase.
If the 80/20 rule is based on looking back on previous sales performance to ascertain where and how you need to spend your time in the future, this skill is based on looking at the other end of the spectrum by working out how many opportunities you will need in order to generate your sales in the first place. The quotation at the start of this chapter helps to illustrate the key difference between average sales people who base most of their activity on reacting to customer requests and market changes, and the most successful sales people who are highly proactive in their approach to managing their business and creating opportunities.
How do I play the numbers game?
Most sales roles involve the achievement of specific goals, generally in the form of an overall sales revenue target for the year, quarter or month, and usually one big number. Sales targets can be daunting, whether you are new to the profession or a relatively experienced sales person. Success rarely means being given easier goals in the future. You will be expected to hit a bigger target next time round because you have proved that you can reach or exceed your current target, and can be relied upon by the business to generate growth when others in the organization may have failed.
There are two parts to playing the numbers game. Firstly, break down your overall goal (the big number) into smaller goals based on specific customers or products. Repeat this process until you have identified a series of distinct but manageable goals based on achieving a series of smaller numbers. To illustrate this with a straightforward example, imagine that you have been given an overall annual sales revenue target of £500,000. If you have 100 customers, you could immediately set a smaller goal of £5,000 revenue from each customer. If you have 50 key products, you could work on trying to achieve £10,000 for each of these product lines.
This is clearly a very simplistic model of the process, as it is unlikely that every customer will have the same spending power or every product will have the same revenue earning potential. If you have some previous experience of these customers or products, or some hard information on previous performance, you can apply the 80/20 rule, establish which customers and products provide the greatest opportunities, and assign the largest goals or numbers to each of them. Referring back to our basic example of a £500,000 target and applying the 80/20 rule rigidly, you could set a goal of £20,000 in revenue from each of your 20 biggest customers, or £40,000 from each of your biggest product lines. The other 80 smaller customers would each have a goal of just £1,250 and you would plan your activity accordingly. If you took the 80/20 rule a step further as previously discussed, you could identify a handful of key customers which could be given a target in the region of £80,000 each (based on an assumption that 64% of your revenue is likely to come from just 4% of your customers).
However, sometimes you do not have this prior information or experience, especially if you are new to a role or if you are exclusively trying to generate new business from new customers. This is where the second part of the numbers game comes into play – how many opportunities do you need to create in order to reach each of your smaller goals or numbers? After all, not even the best sales people manage to close every opportunity that they create or receive!
Determining how many opportunities you need to create will depend on a number of factors –
 The likely value of each sale or deal – larger orders may mean that fewer opportunities are required to reach your goal.
 The chances of closing each sale or deal – the lower the chances, the more opportunities you will require.
 The number of potential customers for each product within your territory – by definition, more customers should mean more opportunities.
 The contact method used for these customers – client visits may be more effective in generating sales opportunities than a direct mailing or an advertising campaign, but this tactic may not allow you to explore every available opportunity due to time and travel constraints.
 The size of your overall goal – the larger this number, the more opportunities you are likely to need.
With this information to hand, you should be in a position to make a decision as to how many opportunities you need to create in order to reach each of your smaller goals, and ultimately your overall target.
What is the right number?
Of course, there is no exact right number of opportunities – it depends on your own particular set of circumstances, based on the factors described above. However, as a very broad rule of thumb, you may find it helpful to start your planning based on the premise that you will convert 15% of your opportunities into sales during the course of your sales cycle. So for example, imagine that you are a sales representative who has been given a new business goal of £150,000 for the year. Using 15% as your anticipated conversion rate, you should be aiming to target £1 million worth of new business opportunities. If you close 15% of these, you will hit your goal of £150,000 for the year. As suggested earlier, some industries will have lower or higher conversion rates depending on the profile of the market and the types of products being sold.
If this figure of 15% seems low and the volume of new business opportunities required seems worryingly high as a result, try comparing this figure with response rates to direct mailing campaigns, which after all are simply another method of identifying sales opportunities. According to recent research in the UK across all industry sectors by the Direct Mail Information Service, the average response rate for a direct mail shot during 2006 was just over 5%. In fact, over a third of direct mail campaigns during this period had a response rate of less than 3%. If you were to rely on direct mail to generate £150,000 of brand new business, you may have to target at least £3 million worth of new business opportunities, and probably a good deal more in order to have a good chance of success. Within the context of these figures, a sales conversion rate of 15% for a sales person or account manager is fairly good and should be manageable in most circumstances.