John had been doing very well in sales.
But he knew he could do better. So he called and asked for some business help. He was making a very good living, but felt that he wasn’t focused. He wasn’t spending his time, effort, and energy in the right places.
John was running on two cylinders – which weren’t running very smoothly – and was still making over $100,000. For years he’d said to himself, “Imagine what I could do if only I could get focused and manage my time better. Then I could make some ‘real’ money.”
When asked what his closing ratios were, John pondered the question for a few moments, then said that he didn’t have the slightest idea. He had never kept any kind of statistical records.
We then asked more sales-related questions:
- What is the size of your average sale?
- How many sales did you make last year?
- What was your biggest sale last year?
- How much money did you earn on it?
- What was your smallest sale last year?
- How much money did you earn on it?
- What is the profile for your ‘ideal’ client?
- How many sales do you close on the first meeting/call?
- The second? The third? The fourth, fifth, sixth, or tenth?
- What is your best source for leads?
- What are your sales, profit and income goals for this coming year?
John thought about these questions for a few moments, and with a puzzled look on his face, he said in a soft, quiet voice, “I don’t know the answers to most of your questions, but if you’ll wait a moment I can dig up the answers to the others, I just don’t have that information at my fingertips. He continued, “I was never much into record keeping. For the most part, I’ve just been flying by the seat of my pants.”
If you want to be successful, you must run your business like a business. You need to know:
- Who are your best (most profitable) customers
- Where they came from
- How much they spent with you
- What are your most profitable products
- The average value of your sales
- Your closing ratios.
You should have the answers to these questions at your fingertips. Without them, you’re like a sailor who is in the middle of the ocean without a compass, sextant, radio, radar or GPS.
You’ve no idea what direction you’re going. Because John didn’t keep any records, he didn’t know where he was, and as a result he didn’t know what changes he should be making in his business planning.
Over the next few weeks John started keeping sales records. He recorded the names of the people he met with, what he thought they would purchase, the dates he met with them, whether or not they bought from him, and the amount of the sale. As we studied his records, we noticed something very interesting in his spreadsheet:
He was closing about 23 percent of his sales on the first interview, 12 percent on the second interview, and 6 percent on the third interview. When he met with a prospect a fourth, fifth, or subsequent interview, only 2 percent of those people ever purchased.
And those were his smallest, least profitable sales. John had been trained in the “everybody’s a prospect” school of selling and had always followed the “I’m going to call on them ‘til they buy or they die!” sales methodology.
As John reviewed his records, he noted that he was closing 37 percent of his business opportunities on either the first or second call, and only 8 percent thereafter. As we considered this interesting fact, we talked about how much time he was investing in following-up on these opportunities. For the most part, the people who bought on the first or second meeting were typically easy sales. They were fun clients to work with, and many of these customers became friends.
But the 63 percent who didn’t buy on the first or second call were typically much more difficult to work with. They didn’t return phone calls or respond to voice or e-mail messages. They tended to cancel or postpone meetings. They just weren’t easy to work with. We asked John, ”How much time are you spending chasing these people?”
John thought for a moment and said, “I’ve been spending almost 60 percent of my time chasing people who aren’t buying. And the few that do buy aren’t usually worth the effort…in that they don’t often become long-term customers. It’s almost like they’re giving me an order just to get rid of me.” As he spoke, he appeared to have an “Ah-ha!”
A smile came across his face as he realized what had been keeping him from making the commissions he really wanted. He was wasting the majority of his time chasing people who were never going to buy from him.
We then discussed the ‘novel’ notion of not calling a prospect after the second contact. If they haven’t bought, move on; look for a better prospect. We spent the next few sessions working on John’s telephone techniques and helped him perfect his Elevator Speech.
We spent time improving his networking skills so when he went to business and industry meetings he could meet more people, make more friends, find more business opportunities, and close more sales.
Over the past few weeks, John’s results have been startling. Because he’s more focused on finding people who are in the market today, he’s not pushing himself on those that aren’t interested. He’s using the telephone much more effectively to find prospects and qualify them. His closing ratios have improved…and he’s making more money.
And best of all, he’s got more time for his friends, family and himself. He’s no longer working harder, and he’s not just working smarter. He’s working less.
Brad Sugars founded the brand Action International in 1993 when he realized there was a disconnect between business advice and implementation. The answer was Action! Brad Sugars created a business coaching company so that business owners throughout the world can realize their goals in business. Today the company is known as ActionCOACH. To learn more about business, visit Brad Sugars Review blog!