Working Backwards

Steven R. Covey taught us to think with the end in mind. Decide what it is you want to accomplish and work backward from that point. This means that we must have a dead line for our goals. So many of us decide we want to accomplish something but we never give ourselves a time frame in which to complete the task.

After 17 years in the Automotive Sales business, I am used to deadlines; they come at the end of every month, at the end of each quarter and the end of each year. However, it is best that we breakdown those deadlines into shorter time frames that push us to reach our full potential. We will go through a sales example so you can get the point.

In car sales, most salespeople have a number in mind that they would like to sell by month end. This isn't an arbitrary number, but normally associated with a bonus level. The average salesperson when asked will be able to tell you they are going to sell X (whatever that bonus number is) that month. But most will not have any idea how they are going to there. For the example let's use 16 as the number that we are trying to achieve. For the sake of the conversation we are going to work on a 30 day month; if there are 31 days in the month it just means you have an extra day to hit your goal.

Sales/Opportunities = Closing Ratio 

The first question that needs to answered is what is your closing ratio. Don't cheat yourself here; be real. How many deals have you closed in the last 3 months, divided by the number of opportunities you have had to do business. Again, don't cheat yourself; count each person that you were in front of; just because you were not strong enough to overcome "Just looking" does not mean they were not a opportunity. Just because you could not get past the "gatekeeper" to get to the decision maker does not mean this is not an opportunity. Make sure you count all your opportunities to do business. Do not let your pride get in the way of your closing ratio. You don't need to make this number public, but once you know it you can work on it as well. It is important to make sure that you use at least a 3 month period so that you take out any anomalies from month to month. 

Goal/Closing Ratio = Number of Opportunities

Now that we have determined your closing ratio we need to determine what it is going to take to get there. This is where we determine how many opportunities we need to be in front to reach our goal. This time we are going to back into the number by dividing your goal by your closing ratio. For example, our goal was 16 and let's assume that our closing ratio is 25%. The formula would look like this: 16/.25 = 64. You need to be in front of 64 opportunities this month.

My next post will continue the equation and give another real life example where you can work backwards toward your goals. Now go figure out your TRUE closing ratio and the number of opportunities you will need to reach your goal.