Sales and Measuring Results
Olympic champions don’t just “happen”. They measure their results in competition and in training, constantly aiming to do better.
Results measurement provides feedback. Feedback produces CHAMPIONS!
While most businesses measure sales and profit, I am always surprised how many don’t measure other critical areas of their business performance which contribute to their sales and profit results. They are surprised when their sales dry up for some reason and rush off desperate promotional programs and special offers to get themselves back on track.
Yet, as with athletes, these measurements are the most important way for business to make real progress.
Like athletes, any business needs to measure and work on specific parts of their performance to ensure the best final result.
Athletes build muscle in weight training, endurance and aerobic fitness by running and all these measurements contribute to their actual performance results.
THE GLACIER MEASUREMENT SYSTEM
For businesses, I use the “Glacier” analogy.
The snow falling on the top of the mountain is Stage 1.
The snow then compresses, forming ice and starts a slow decent down the mountain – Stage 2.
At the end of the glacier the ice melts forming a stream of water which cascades into the valley below – Stage 3.
The “glacier” is an analogy for the areas of performance we need to measure to maximise our sales and marketing performance.
STAGE ONE – SNOW FALLING
The “snow” is the leads and enquiries generated from the organisation’s advertising, promotion and sales activities. Sales staff should be actively looking for and contacting prospective customers too by cold calling and referrals from current customers.
The overall “snowfall” of leads must be measured against past performance to make sure that the promotional activities are working and that the number of enquiries is growing or at least maintained.
Each enquiry received should be logged and monitored by management to make sure that where ever possible it results in a sale or the establishment of a prospective customer in the future. This should be a part of your businesses “prospect” database
Individual members of the sales team need to be measured separately and encouraged to look for prospective customers and to make contact with them.
STAGE TWO – GLACIER FORMATION
Only a percentage of the snow forms into glacial ice, just as a percentage of customer enquiries turn into customer visits to your store, requests for quotations or sales opportunities. If you know this percentage then you can monitor your results and take action if the percentage starts falling. When you have a clear idea how long it takes for quotations to become orders as well, and how big a “bank” of current quotes you have, you can predict your sales in advance.
STAGE THREE – THE GLACIAL STREAM
The glacial stream is the actual sales result every month, compared to the previous month and to performance in past years.
Typically, most businesses measure the sales flow in the stream, but forget the snow on the mountain (enquiries) and the size of the glacier (quotes) and projects awaiting finalisation.
Over the years a business can show a clear percentage relationship between the snow on the mountain, the size of the glacier and the resulting sales stream, also, the time taken between initial enquiry and actual sales.
As a business manager, like an athlete, your objective is to increase the sales flow at the end of the glacier. To do that you must make sure more enquiries (snow) are created and turned into potential sales (glacier) via quotations. These must be followed up to maintain the size of your glacier.
For a glacier the time between snow falling and the stream at the end, can be measured in hundreds of years.
For businesses, the time between first enquiry and actual sales varies according to the industry.
What is important to remember is that if you increase the flow of enquiries, through advertising or promotion, you eventually increase the flow of sales.
If you increase the number of enquiries turned into quotations or appointments, you increase the flow of sales. Finally, if you turn more quotations into sales you gain again.
And …. those gains even if small individually, have a major effect on your final turnover.
Let’s say you have 1,000 enquiries per month, you normally quote on 500 (50%) and convert 100 (20%) into sales.
If you get just 10% better at everything the result is amazing.
You now have 1,100 enquires. You quote on 55% (10%better) of them (605 quotes). Instead of converting 20% you now convert 22% (10% better) into sales. Result: 133 sales.
A 33% increase in sales volume by doing everything only 10% better.
MEASUREMENT GIVES YOU ADVANCE WARNING
If you measure only the sales stream and your problem is lack of enquiries (snow), it can take a long time before you can take corrective action (advertising) to increase enquiries and finally bring your sales volume back.
Far better to monitor the enquiries every month, so that you can fix the problem, as soon as volumes dip.
Many businesses don’t seem to understand the relationship between promotional / advertising budgets and sales. But it’s easy.
If you want to set up a budget to achieve $X sales volume, then you reverse the glacier calculation based on past performance, to give you the level of enquiries (snowfall) you need to generate.
This, then, equates to the level of advertising and promotion activity you need to budget for, to get those enquiries.
Allow for this expenditure in advance and you will keep the stream of orders flowing steadily.
THE MANAGEMENT TASK
If you are measuring your enquiries, quotations and sales and there is a change – good or bad – you should look for the reason and take action. That’s the management and marketing job.
If your enquiries don’t turn into quotes or sales appointments at your usual percentage, you might be taking too big a margin. Investigate!! You already have the figures. All you have to do is to set up an Excel Spreadsheet and begin measuring your results.
Start the Feedback Process today
and breakfast with the champions tomorrow!!
SOME THOUGHT STARTERS
- What do sales staff look like? Uniforms / Embroidered shirts
- How do they act? Professional / friendly / what works?
- What authority / resources do they have to look after customers / correct problems?
Are there KPI’s in place for sales follow up, telephone answering, goods packaging and delivery times, service delivery, complaints handling, accounts contact, re-ordering contact times, etc.