Can a Mouse eat an Elephant?

In my last post we talked about your closing ratio and the number of opportunities you need to reach your goal. As a reminder the formulas are: Number of Sales/Number of Opportunities = Closing Ratio and Sales Goal/Closing Ratio = Number of Opportunities needed. Now let's look at the rest of the equation. 

How many working days this month?

This answer seems easy, but most people miss it the first time through. Yes there are 30 days in the month, but most of us work a 5 day work week not a 7 day week. With that said you probably only have 20 to 22 working days depending on what day the month starts and ends. Once you determine your working days you can then determine how many opportunities you need a day.

Number of Opportunities/Working days = Daily Plan  

Now when you get up everyday you have a goal for the day. I need to see at least X number of opportunities. Now we could stop there, but the next logical question is: How do I get in front of X opportunities today? You can now take this same principal and drive it backwards to get that answer as well. What actions lead to that face to face opportunity? How many phone calls do you need to make to get that appointment? How many emails do I need to make to get that phone call? How many visits do I need to make before I get the face to face with the decision maker?

Real Life Example

Now let's look at an easy real world situation. I have a salesperson who wanted to by new bedroom furniture; simple enough but he did not want to go into debt for it. The first thing we needed to determine was a timeline for this goal and how much it would cost. He decided that he wanted to get this done within 6 months and that it was going to cost $1,200. The next step was to back into the goal and break it down into a realistic timeline. Based on the numbers he needed to save $200 a month and at the end of month 6 he would have the funds. Given his average commissions this translated to less than 1 car extra a month, so he applied that 1 car to his formula above and within 5 month he had saved enough to get the bedroom furniture. He did the same thing to save for a down payment on a house as well!!

Can a Mouse eat an Elephant?

Yes, one bite at a time. The key in all of this is going to be your daily tracking (small bites) to reach your goal. You need to have the discipline that every day you are going to track your opportunities, phone calls, emails, or whatever the ACTION is that will get you to your goal. Tracking the actions that will get you to your dream is the "secret" to getting there once you have determined how to get there. If the boss tells you that you need to sell 17 widgets this month, the task might sound overwhelming, but if you break it down to the daily level, or even an hourly level, it becomes less of a mouthful. Now when broken down to the daily level, you know that you need to see 3 opportunities today, that becomes realistic.

Now it is time to work backwards into your goals and make those actions bite-sized pieces.

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.