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Sales is absolutely a Numbers Game! © 2007 David Peterson
As my career as a salesman,
sales manager, and small business owner has unfolded I have
had the opportunity to interview 100s upon 100s of sales
candidates and look at many business opportunities.
As a sales manager I will
describe the job to a prospective candidate. I typically sense
that I have a good candidate if they ask what it takes to be
successful at that job.
The number one quality that a
candidate needs is an obsession with the numbers. To use the
old cliché – sales is a numbers game.
Every sales representative and
every business owner needs to know how many phone calls it
will take to get a prospect. They also need to know how many
prospects you will need to get a customer.
These are two totally different
numbers.
A raw email list or a raw call
list in your hands is not a prospect list. A raw list is a
list of suspects. Once you get the suspects engaged into your
sales process you can then and only them classify those people
as prospects.
This is where a lot of new
business owners fail. They fail to recognize the difference
between a suspect and a prospect. They fail to recognize there
is a ton of effort required to produce a prospect.
Before you can classify someone
as a prospect you first have to call or email the 100 suspects
on the list provided to you or bought by you. You then have to
call a different group of 100 suspects’ everyday. After
about a month you will get a feel of what type of numbers that
your list of suspects will provide.
Since every type of suspect
list you use can be of a different quality you have to keep
track of that number as it presents itself to you.
This can be very boring stuff.
But if you plan on keeping your sales job or if you plan on
getting your business off the ground you have to read on!
Let’s look at an example:
An entry level MLM or Network
Marketing list may cost you about $5 per 100 leads. These are
typically the email only list. If you emailed 100 people every
working day with this same type of list that would cost you
about $100 since we typically have 20 working days in a month.
Over our month you would have
sent out about 2,000 emails. Of those maybe 9% of the people
were impressed enough to open the email, and then 2% of those
people that open the email actually “clicked through” to
your website. Of the 2% that went to your site maybe 25% of
that click through group converted to a Prospect by filling
out an RFI (Request for Information) on your website.
Here is the breakout of the
numbers in this example:
- Total Cost = $100
- Total Number of Suspect
Leads = 2,000
- Total Impressions (2,000 *
9%) = 180
- Click Through Rate (180
Opened Emails * 2%) = 3.6
- Conversion Rate (3.6
Prospects / 2,000 Leads) = 0.18% (that is 2/10ths of 1% if
you are counting)
- Cost per Conversion ($100 /
3.6 prospects generated) = $27.78
- If you are following me
right now in this example then for every prospect you get
engaged into your sales process it will cost you $27.78.
- Now it gets easy. We
actually have 3.6 prospects to call.
For every 3.6 prospects we call
maybe 1 will actually allow us to proceed with the sales
process. And that 1 prospect eventually closes and becomes a
customer.
Here are the numbers to close
the sale.
- Total Cost = $100
- Total Number of Prospect
Leads = 3.6
- Total Calls = 3.6 (If you
don’t plan on calling them stop right here, you just
through your $100 out the window.)
- Total Closings = 1
- Close Rate (1 Customer / 3.6
Prospects) = 27.7% (not bad!)
- Acquisition Rate ($100 / 1
Customer) = $100
The bottom line in our
“numbers game” is that the cost to acquire a customer
(Acquisition Rate) in our example is $100. For every one
hundred dollars you spend you will get one customer.
The other calculation in our
“numbers game” is that my Cost per Conversion on this
suspect list is $27.78 per prospect lead.
Neither one of these numbers
should be surprising. To succeed in sales you have to know
what the numbers are.
There are only two ways to know
what the numbers are and really only one or those two is the
absolute sure way to know the numbers.
#1 Ask!
Ask your boss, your up-line,
or other business owners. Try to network with other people
selling your same product. Ask the person selling you the
suspect list.
#2 Test!
Testing is the only way to be
sure what the numbers will be. Since each type of suspect
list you purchase will have a different Cost per Conversion
and a different Acquisition Rate you have to test the list
to know for sure.
Either Ask or Test. Do not
go into your new opportunity blindly.
Imagine going into a new job
and not realizing that it will really take 100 calls to get 1
customer. If you are not used to making 100 calls then you
have applied to the wrong job posting.
Imagine starting a new Network
Marketing business and not realizing that it will cost $100
and take one month to get one customer. Do you have $100 to
spend? Do you have a month to wait? Can you spend $200 to get
2 customers in a month? Will two customers produce enough
revenue to cover the cost?
Sales is absolutely a numbers
game! Do not go into your new venture blindly. Go in with an
open set of eyes on target. Know what your Acquisition Rates
and your Conversion Rates are before you go broke or get
fired.
Sincerely,
David
Peterson
Author
of:
Been There - Done That
David
Peterson's Search Engine Optimization Guide
Please
send all correspondence to: questions@usreference.com
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