You’ve heard by now that sales is a numbers game. Whereas I highly believe in quality over quantity, knowing your personal KPIs in sales is vital. My manager taught me how to “back into my number.”
Let me show you this equation so that you can set clear goals for yourself.
If your quota is $500,000 and you want to sell $1 million you have to know how to get there. Ask yourself:
- What’s my average revenue per sale?
- What ancillaries can I attach to increase my average revenue per sale?
- What is my average discount percentage? How quickly could I increase my average revenue per sale if I decrease my discounting by 5%? 10%? 15%?
- What is my close rate?
- How many deals progress from intro call to discovery (meaning, they’re qualified prospects)?
- How many deals progress from discovery to demo?
- How many deals progress from demo to proposal?
- How many deals progress from proposal to close?
- How many deals do I need in my pipeline in order to sell $1 million?
- How many discovery meetings do I need to run to have enough deals in my pipeline to sell $1 million in a year?
- How many outbound prospecting activities do I need to conduct every week to book enough discovery meetings to reach my pipeline goal?
- Which prospecting activities yield the highest number of appointments set?
Here is an example of how to “back into the number” based on answers from the above set of questions.
$1 million sales goal
$27,800 average revenue per sale
36 new deals sold per year
3 deals sold per month
20% close rate from discovery through close
Need 6 qualified deals in the pipeline per month
Need 12 introduction calls/meetings per month (3 per week)
Need 50 outbound sales activities per day to set 3 meetings per week
Need to set aside 2.5 hours per day for prospecting to achieve 50 daily outbounds (calls, emails, webinars, LinkedIn chats, networking, partner meetings, etc.)
Another key metric to consider is your most profitable lead source. Opinions are valuable, but data is priceless. To determine which lead sources are most profitable, run historical analysis on all deals in your pipeline for the last 12 months.
Make a table, and indicate the lead source on the left side, then fill in the rest of the table with key metrics — including the deal size, the number of services/products quoted, the length of time to close — and indicate if the deal was closed-won or closed-lost.
From there, you can identify the lead sources which produced the highest close rate, the shortest time to close, and the highest revenue per sales, or product/service attachment. Identifying your most profitable lead source is an exercise you MUST do in order to know where you should be spending your time.
Fun story. For a year in my mid-market B2B sales career, I invested in creating a monthly HR expert networking group. I had noticed that telemarketing and email marketing were not producing the outreach-to-meeting-set ratio they once had, and I wanted to get creative.
I spent a year developing the group. Many key prospects of mine attended. I had the budget to pay for breakfast or lunch for everyone and brought in compelling speakers. I ran this group for a year and it felt successful because the attendance was consistent. However, I never won a deal. My opinion is that the group was valuable, and had I not run a historical analysis and reviewed the data, I may have continued it with a false perception that it was a good use of my time. Was it a powerful event? Yes. Was I in sales? Yes. But I had to spend my time on winning business, not as an event coordinator. Even though it was difficult to say goodbye to the group, I needed to refocus my time on winning deals.
Now that you have this information, go write your sales plan by the numbers. You have to know what you need to do on a daily basis in order to achieve your goals.
You can’t close what you don’t have in your pipeline. Period.
If you don’t plant enough seeds — meaning, if you don’t have enough qualified opportunities in your pipeline — you’re either going to have to dramatically increase your average revenue per sale or close rate. That’s the only way you can hit or exceed your number.
Learn how to predict your future success by analyzing your current numbers. These can be referred to as leading and lagging indicators. The leading is your activity and the lagging are your results.
To further guide you in this exercise, please watch our Sales BQ® Quota Crusher™ Course, How to Build a Sales Plan.