How to make sure you achieve your sales goals
Meeting sales objectives is crucial for the success of any business, but many entrepreneurs don’t know how to give themselves the best chance of hitting their numbers.
“A systematic, structured approach to sales is the way to reach your sales targets on a constant basis,” says Nigel Robertson, Senior Advisor, Financing Products at BDC. “You need to rely on objective, solid factors, not hunches and guesses.”
Figure out how many prospects you need
Robertson suggests a model based on answers to the following questions:
- How many sales do you need to close each month to hit your profit goal?
- What is your average closing rate—the percentage of prospects who eventually buy from you?
- How long on average is your selling cycle—from the moment you meet a new prospect to closing the deal?
Let’s assume your business is targeting annual sales of 100 units; your closing rate is 10% (meaning that one prospect out of 10 buys from you); and your selling cycle is three-months long. That means your sales team needs to have at least 250 active prospects in the funnel at any given time to reach its sales targets.
0.1 (success rate)
= 1,000 prospects per year
“While you need a total of 1,000 prospects to flow through over the course of a year, you need to keep your funnel topped up with 250 active prospects on any given day,” Robertson says.
Another rule of thumb is that active prospects shouldn’t be older than your sales cycle. “So any prospect that has been in the funnel for more than three months should no longer be considered active and be replaced by a new one.”
Keep the sales funnel full
“It’s good to review your sales funnel each week,” Robertson says. “That way, you avoid getting to the end of the month and realize you’re 50Y new prospects short.”
At the beginning of the week, the No. 1 job for salespeople should be to schedule appointments so they can add new prospects. If you have a three-month sales cycle and only 249 active prospects, it won’t be long before your sales dry up if you don’t add new prospects to your list today.
“Many people think sales is all about instinct,” Robertson says. “In reality, most successful salespeople are disciplined, organized and rely on data. This helps them to be consistent in their sales efforts.”