Sales Conversion Rates? Take the primary conversion rate: the ratio of the number of contacts you have to make and the number of business opportunities won from these contacts, e.g. you may have a primary rate of 1 new opportunity won from having made 20 new contacts. Such rates can be applied to the whole sales process. Three key rates are given in the example below.
If you do know your rates, that’s great, but what do you do with them? Do you apply them to your prospecting activities, your marketing, your pitching, negotiating and closing? If you can do anything to increase your conversion rate even slightly, how much difference would that make to your success and income?
If you don’t know your conversion rates, how can you know if what you are doing is really effective, or mostly a waste of time? How can you set targets that are realistic and achievable? How do you decide what works and what doesn’t?
Take this example:
A company has worked out that it needs another £120K of business over the next 12 months; apply your own figures, this applies to any size of business.
How many new opportunities need to be identified to achieve this figure? If you don’t know your conversion rates, you will have to guess. So, let’s assume conversion rates are known.
We know that the average spend of our customers is around £5K, so, straight away we can say that we need to find 24 new business opportunities.
Conversion rate 1: How many quotes or proposals result in an order? Say 1 in 2.
- So we need to have given (2×24) 48 quotes to have the chance of winning 24 new orders, resulting in £120K of new business.
Conversion rate 2: How many meetings result in a request for a quote? Say 1 in 3.
- So we need to have had (3×48) 144 meetings to have the chance of receiving 48 requests, …….resulting in £120K of new business.
Conversion rate 3: How many contacts made will result in an agreement to meet? Say 1 in 5.
- So we need to have contacted (5×144) 720 people/businesses to have the chance of agreeing 144 meetings…….resulting in £120K of new business.
This is, of course, the classic ‘Sales Funnel’ approach. Do you see how it works? With just three known conversion rates, you can work out how you might achieve your target. In this case you will need to contact in the region of 720 prospects in order to achieve your contacts. If you are just one person operating in sales this could be a problem! If there are a team of you; say five sales people, then we are back to 144 meetings each which need only be 2 or 3 per day.
However, it should be remembered that a sales person’s life is not just calling and then meeting customers. There is planning and preparation, prospecting and analysis of the list of targets. Then there is pitching outside of the meeting and writing the quote or proposal. Some negotiation is bound to be needed and there are many skills in closing. Beyond that there is the client management and development needed to retain and grow the customer loyalty and ‘spend’. With a team of 10 in sales, the overall targets will, of course, be proportionally higher.
This is just a quick demonstration of how knowledge of your conversion rates will help you to plan, devise strategies and manage your resources to make sure your targets can be met in the right time frame.
There are a number of key techniques for improving these conversion rates which will help you to hit targets or even exceed them. For instance, what would it mean if you improved conversion rate 2 from 1 in 3 to 1 in 2, i.e. if you were better at pitching and matching the need? Or, what difference would it make if you improved conversion rate 3 from 1 in 5 to 1 in 3, i.e. if you were better at making contact and making good first impressions? Believe me, it would be significant! If you would like to hear more about these techniques for improving conversion rates and how to apply them to your business, please contact Andy at Salient.
Sell more and get a growth spurt!
Turnover lower than you’d like? Plan for a growth spurt by selling more. How to sell more? For starters, try these five simple tips;
1/ Start with existing customers and see if they want more – apply the Pareto Principle: 80% of your revenue comes from 20% of your customers. Call the 20%!
2/ If they still like you, ask for referrals and testimonials! – personal recommendations give you more credibility and will attract more new business.
3/ Check that the market wants what you provide by asking a couple of key questions – use Survey-Monkey or similar. Responses may show you need to tweak, or even change your offer to make it more attractive.
4/ Check where you have sold successfully in the past, identify the common sector, product or need and target that with renewed enthusiasm. This may not be the top 20% (above) but it could be the easiest sector to target and win new business.
5/ Devise a product variation or amalgamation and make it a special offer of some sort to attract new interest. You could make it part of a short, or longer marketing campaign.
These are just a few of the many ideas and strategies that can be applied to your business that will make a positive difference to your sales figures.
If you want to increase your sales figures, come along to the Salient half-day Workshop or full-day Masterclass on 17th or 18th March 2016. Discover many more ways of selling more, and how to apply these and other practical and simple growth strategies to your business.
Come along to ‘HOW TO SELL MORE’. There will be more than 20 tips on how to sell more. Use just a few of these and your business will soon have a growth spurt! More details here.
Do you really want it?
Lots of money; holidays; cars; clothes; lifestyles…..?
Do you really want it, or do you just want the end result, the reward? Do you want the omelette but are not prepared to break a few eggs and spend time whisking?
Everything of value to you has to be fought for. A struggle is often needed to move forward. This could entail time; working all hours, repetition; over and over again until you get it right; changes to relationships; being with patient people who share your dreams, and so on. Whatever you do requires effort. How much do you want that dream, that wonderful end result that will make you happy? Are you prepared to struggle to achieve it, to work through the process time and again and again until the outcome is secure?
I meet many people who claim to have a dream, a goal, an objective, but have not yet asked themselves these questions. In fact, too many have not even made a plan or mapped out the route they would need to take to get to where they want to go. (Have you?)
Here’s an example (names and figures have been made up to protect the guilty):
John wants to be successful – how successful John?
John’s dream is to achieve a turnover of £100,000 in 5 years – where are you now John?
So, John needs to find and win £85,000 of new business within 5 years – really?!
That is as far as John gets with his dream.
John’s approach is to keep doing what he is doing to make the business grow.* He believes that “opportunities will arise along the way which will boost the business”.
Hands up who is surprised when, in 5 year’s time, John is turning over £32,000, and most of that is from a couple of clients who are personal friends. John’s expansion plans are on hold.
Did John achieve his dream, his goal? No. Why not? Probably because he chose a goal without considering the process, the effort, the struggle that would be needed to set his sights that high.
Every dream has a cost. That cost includes the time and effort, the loss of focus elsewhere, the reduction of short-term-gain in favour of long term benefit. Likely there will be disappointment, fatigue, despondency, even despair in yourself, and possibly those close to you. Is it worth this struggle, or is it likely to damage other things you value more; your family, friends, principles, standards, enjoyment?
If you have considered all this and it is worth it, then go for it! Or, as I read on Facebook last year: ‘Don’t downgrade your dream to match your reality, upgrade your faith to match your destiny’!
However, if the process, the struggle, the ‘pain’ proves too high a cost; lower your sites. You can still win, and enjoy the journey.
* Albert Einstein’s definition of insanity: doing the same thing over and over again and expecting different results”.
Has anyone else noticed this? ‘Sales phobia.’
A contact of mine who runs a business that provides professional training to education, public sector and professional bodies, was telling me that his clients appear to have adopted sales-avoidance strategies. I suspected this was a wind-up until he told me that, for some, their new term for this was ‘Customer Engagement’. Others had replaced sales and selling with the catch-all of ‘Business Development’. I had previously heard of a consultant in the south of England effectively demoting sales by saying it was part of the discipline of ‘Business Strategies’.
Sadly, there may be a simple reason for this; bad experiences of being sold-to and more people are expecting to be given the ‘hard sell’ As a result they do not respect the sales process or people who sell.
Having spent 20 years in field sales and sales management, I have been very aware of the pressure that senior management put onto their sales teams. In the companies I worked for, it was always ‘do whatever it takes to win the business’. In the extreme, one MD said to a colleague of mine ‘if you don’t win the business, don’t bother coming back’! This culture fostered some terrible sales practices, all based on pressure, manipulation and worse.
At the same time, business-to-consumer sales was facing growing and tougher competition and so, instead of offering better service as an enticement to buy, they too adopted pressure selling techniques. We all remember the awful reputations gained by car and double glazing salesmen!
Unfortunately, I believe that, while some improvement has been made, pressure selling is still rife and the sales discipline as a whole has become tarnished by these unethical practices. The culture is also perpetuated by the likes of The Apprentice, and, occasionally, even Dragon’s Den., i.e., if you don’t do what is expected, if you don’t win, you are humiliated and you are out.
When selling, how far would YOU go to protect your income, your standard of living?
I suspect that this continuing culture has caused the name change. Perhaps our own professional bodies should take notice and make solid pronouncements against pressure selling techniques. Perhaps not enough has been done to ‘clean-up’ sales with clearly defined boundaries of what is ethical and what is at least ‘dodgy’. I feel passionately about ethical selling and have flown the flag for some years now, but I too come across very negative attitudes towards selling and sales people in general.
I aim to bring back enjoyment and satisfaction in selling by teaching a clear and clean sales process that is open and understood by all prospects.
In the words of Robert Louis Stevenson; “Everyone lives by selling something”. Often this is just selling ourselves; making a good impression; having a positive impact. If we cannot do this without being devious or manipulating our prospects, then clearly we cannot be trusted and perhaps we deserve the demotion to a sub-discipline.
In short, ethical selling must inherently be more successful, especially in the longer term.
- Pressure selling is less likely to result in repeat business or referrals.
- Building business relationships and selling ethically reduces the need to keep looking for new customers.
- Customers who don’t enjoy buying from you are less likely to come back for more.
- Keeping existing customers AND finding new ones will build a business far quicker than if you constantly have to look for new opportunities because former customers have voted with their feet.
If we don’t all start flying-the-flag for strong, ethical sales, then fewer people will respect it, expectations will remain negative, and we will all become ‘customer engagement’ experts!
Do you have a ‘Sales Phobia’?
Let me ask a different question:
Does the idea of selling cause you to palpate or procrastinate?
Do you fear a prospect rejection, or worry about making a fool of yourself when asking for the business?
If the answer is yes, you may have a sales phobia.
Unfortunately, I fear this is becoming more common. I am doing my best to change business culture to accept that sales can and should be ethical, simple, jargon-free and enjoyable! I achieve this in most cases. However, there is a risk that this phobia is becoming institutionalized. It should be a high profile and honourable profession. Don’t let the gainsayers try and tell you otherwise!
Selling can be even more fun than buying!
The most common issue found relating to sales growth:
Having presented many courses on various sales and business-related subjects in a variety of lengths, I have found a few issues that arise that prove common to all my clients. Perhaps the most important of these is the need for the sales individual or team to become proactive as opposed to reactive in their approach. In many cases, sales leads are obtained from responses to marketing effort or repeat business. This is excellent, as it means that the market has seen the value being offered and is keen to purchase. However, maybe due to new competition, or failing customers, this can result in reduced turnover. They have recognized that relying on existing clients or responses to marketing can become risky and unpredictable. Moving to a more proactive approach will help ensure all sales opportunities are found, targeted and won.
What do we mean by ‘proactive’? How can we be MORE proactive?
Identify two key aspects:
The markets you are serving already, and
The markets you would like to serve.
…or, put it another way….
Your existing or past customers, and
Simple strategy for being proactive in sales;
1/ Decide the best balance for you of existing customer and new customer business. You need both! One for ‘bread and butter’ income; to cover the ‘overheads’ and more, and the other for business growth and future strength.
2/ Revisit existing or previous customers on a regular basis. Calling is best; sending a newsletter is the minimum contact. Never miss an opportunity for repeat business or to cross and up-sell. Lack of such contact allows the competition to ‘move-in’.
3/ Choose your new markets and prospects carefully. Make sure they are likely to have the need, the money, and that they are likely to appreciate the value you offer.
4/ ‘Seed’ that market; make sure your business is known to them before you make contact, by;
- identifying likely decision makers and sending them publicity materials, or,
- using the internet, finding a mutual contact and asking for a referral, or
- invest in exposure in their trade press or institution website, or,
- any of the above and more…..
5/ Following number 4 above, any contacting now will be far less cold. If you have gained a referral, they will be happier to take the call. If you haven’t, you can at least refer to your article or letter in the publication or website related to their industry. It doesn’t have to be a ‘cold call’!
This is just one approach you can use to help you find new customers and win new sales.
Being proactive should also include actions to:
– plan where to target new prospects
– regularly monitor and review your carefully chosen KPIs to ensure positive progress and growth
– ensure customer satisfaction and loyalty
– prepare responses to possible criticism
– prepare contingency plans in case the unexpected prevents progress in your chosen direction
- There are many advantages to being more proactive, you have;
- Higher profile with existing customers and new prospects
- Warmer contacts!
- The chance to target and win far more business opportunities
- Greater credibility and respect in the industry or market
- More resilience against competition
- More market knowledge, particularly in future trends.
So, don’t wait for them to come to you. In market downturns, this can be fatal. Be proactive, ‘go-and-get-it’!
As my late Father used to tell me; “The door to success is labelled ‘PUSH’.”