It's certainly predicated on how you measure performance. What is sales performance based on and what does it mean to maximize it? What would we be maximizing? For most of us in this profession, especially for the managers and the company leaders, sales performance comes down to putting up numbers. It comes down to achieving our goals and objectives, hitting quotas, hitting specific targets either monthly, quarterly or ultimately yearly that contribute to our company's overall revenue. So, sales performance comes down to dollars and cents, or euros, or whatever other currency you want to measure this by. But I want to break it down a little bit further than this because just saying let's do more business and increase your revenue, I can’t get my arms around that. I find that when salespeople just think needing to put up more revenue, what they do is they just throw more hour sat it, it becomes like a numbers game. We think if I put a few quarters in the slot and pull the handle and I get a hundred thousand dollars per month, then I'll get more quarters in and get more money out. That might be true but there's a limit to this. I’ve personally found that I can only work about maybe 20 or 21 hours a day, that is the maximum I can do. So, at some point we have to think about not just selling harder or selling more, we have to learn how to sell better. And we have to learn how to think about what can I do or what can I change about the way I behave to produce greater revenue results without just throwing more time at it. Here are a couple of things that I’ve found that really help salespeople to think about the things that they can contribute to more revenue. My concept is this: I find that there are just four things that we can do to increase revenue, and if we think about these four things we can increase revenue without necessarily just working harder.
1. Deal Quantity. How many sales transactions or how many deals can you do in a month or quarter or year? In essence we’re saying, can we do more deals? Now, I'm not talking about just throwing more hours of this, what I'm saying is can we work the same 12 hours a day we’re working now but close more deals. Start by looking at how many deals you’ve done each month for the last six months, look at the number of opportunities that you’ve closed. Is there a trend there? Are you more effective at certain times of the year?Are there more transactions we can do within a certain period throughout the fiscal year versus the seasons that we sell across? See if you can find any trends over the last 12 months in terms of the quantity of opportunities. Then we should be asking ourselves, what is it that's keeping us from doing more? If I’m averaging 12 transactions, what's keeping me from doing 14? Why can't I do 15, 16, 18 or maybe even 20? The answer to that question – the impediments or what's holding us back from being able to do more – is a very effective exercise to give some thought to. Most people would sit down and think this through and say that one thing is time management. If I could get my arms around doing more of the right things in the day and wasting less time, maybe I could do more deals. Maybe it has to do with your own capacity to manage business. Maybe it’s learning how to manage more deals at once, leveraging some tools like CRM or other kinds of planning tools that make you more effective so you can better manage 12 deals at a time instead of managing 10 deals at a time. There are a variety of things that are holding you back but there are many things that you could potentially do or change so that you could increase the quantity of deals you can do every month.
2. Deal Size. This is the average size of the transactions. So, we look back at the last 12 months we take all the opportunities that we closed and we say how many euros or how many pounds on average were each of these transactions? Figure it out. If my average transaction over the last 12 months was 21,000 pounds, that's a great place to start, a good benchmark. I don't know how that compares to other people on your team, we might find that there are some that are able to do much larger deals and transactions. If so, I want to find out how! In other cases, because of the territory or product focus that others have you may not be able to compare yourself to others, but compare yourself to yourself. Ask yourself, what is it that's keeping me at only 21,000pounds? Why can’t I do 25,000 pounds on average? What's keeping deals small? Why aren’t I growing more of these to be bigger transactions? Why are these so many little pieces of business, why can't I do the bigger bites? And as you think about things that are impeding or constraining the size of deals you might be able to identify some things and that you could do or change that would help you to grow deals. One thing that’s really common for most salespeople is cross-selling and up selling. It’s looking at every opportunity in the pipeline and saying what can I do to make this one a little bit bigger? How can I add something to this that the customer already needs? How can I talk to the customer about upgrading to the next level of service that would be of value to them? How can look at every opportunity in our pipeline and try to grow the size?
3. Deal Velocity. What we’re speaking to here is how fast opportunities are moving through your pipeline. You can measure this very simply by saying what's the average number of days from identifying an opportunity until I close it? That’s the average length of your sales cycle and it can be a great gauge of velocity. While there are a few exceptions, of course, some move really fast or one moves really slow and that might skew the numbers, but in general it's very useful to look at the average length of my sales cycle because then we can ask ourselves some important questions. What is it that's keeping deals moving slowly? What slow deals down and causes them to stall or get stuck? What is it that's keeping things in my pipeline and is causing them to get stalled and to slip from May to June to July to August? What is it that's extending these sales cycles or making the customer’s buying process somehow longer than it needs to be? If we can look at the things that are causing that we might be able to ask ourselves, what can we do about it? One example is that deals tend to get extended and slip when we don't understand our customer’s buying process well enough. When we don't understand enough of the people, don't understand enough of the steps of the buying process, that's when things tend to slip from month to month. That's when we don't really know how fast things are closing and extends the length of our sales cycle. So, one suggestion is the better we know our customer’s buying process, the more quickly we can help to manage and facilitate those processes and move things through our pipeline more quickly.
4. Deal Predictability. This is basically saying how sure am I that something is really going to close? You can measure this by looking at win rate. You could just simply look at all the opportunities I was working on this past month or this past year and see how many of them actually came closure? How many did we win? We might come up with a number to say that my win rate was 22%, 39%, 58%, everyone will have a different win rate. And, again, you may not be able to compare it to your peers for a variety of reasons, but we can compare to ourselves. We can ask ourselves what can I do or what can I change that would improve that. We started this course by thinking about what is it that makes deals unpredictable, why don't we know when they’re going to come to closure? Again, here it might point to not understanding the process well enough. Maybe I haven’t met enough people in the account. I can't anticipate or predict when or if this is going to come to closure and getting to know more people and asking more questions can help you predict. That’s just one of the ways that can be done.
These four areas, quantity, size, velocity and predictability are four areas that we can start to focus on and think about, all of which will contribute to greater revenue. Even if we just saw a little bit of a movement – four percent increase in quantity, three percent average deal size increase, and another two percent faster movement through the pipeline and we won five percent more. Well add those together, there’s a 14% increase in revenue simply by focusing on changing or improving these four areas just a little bit each.
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