Do you remember the feature film Moneyball? (Spoiler alert.) It’s the true story of the successful attempt by the Oakland A's general manager, Billy Beane, to assemble a baseball team on a lean budget by employing computer-generated analysis to acquire new players. Just like this story proved, integrators don’t need a team of all-stars to win. Instead, you can assemble a winning team through implementing goals reinforced by accurate data and analysis.
Let’s play this out with an example exercise:
Your team consists of 2 sales people, 1 senior and 1 junior, with a combined goal of $2MM annually. At the beginning of the year, you huddled with each of your consultants and agreed the senior consultant would produce $1.5MM while the junior would produce $500K.
Most integrators determine their monthly or weekly sales goal by dividing their annual goal by 12 months or 52 weeks - that’s the first mistake. Instead, consider operating inside an 11-month year. This leaves room for employee time off, unexpected diversions, and unruly customer buying behaviors (these sometimes occur with seasonality and holidays). If you’re following along and doing the math, that means your senior consultant's weekly goal is ~$34K while your junior’s weekly goal is ~$11.5K.
Next, it’s time to understand their individual numbers, specifically close rate and revenue per transaction (RPT). Luckily, these are often quick and quite easy to calculate.
For close rate, identify a fixed period of time (the last 12 months is a great window) and divide the number of proposals created by the number of closed projects, then multiply the result by 100. For example, if your senior consultant produced 100 proposals over the last 12 months and won 90 projects, their close rate would be 90%. Repeat this step again for your junior consultant.
For RPT, use the same fixed period of time and divide the total project revenue sold by the number of closed projects. For example, if your senior consultant produced $900K over the last 12 months and won 90 projects, their RPT is $10K. Repeat this step again for your junior consultant.
So how do we create a winning formula using a sales goal, close rate, and RPT? I’m glad you asked. Focusing on the senior consultant example, we can take their weekly sales goal of $34K and divide that number by the close rate of 90%. Then, divide that result by their RPT of $10K. The result of 3.8 (or rounded up to 4) suggests how many proposals this consultant must present each week to achieve their goal. Inversely said, if they present 3.8 proposals with an RPT of $10K and close 90%, they’ll on average close $34K each week.
You may have heard that hard work beats talent in sales. This is why.
Yes, a sales consultant can and should work to improve their close rate and increase their RPT, but it’s much easier to simply meet with more customers and present more proposals. Over the next week, challenge each member of your sales team to identify their own close rate and RPT using these methods. Then, at your next weekly sales meeting, have a conversation about the meaning and impact behind these numbers. Each week, in addition to reporting on their financial results, each member of your sales team should be reporting on the number of consultations completed and proposals they delivered.
Remember, if you don’t measure it, you won’t improve it.
At OneVision, we coach our partners to track and measure their membership sales performance for this very reason.
Good luck and let us know how your first meeting goes!
P.S. If you find your team is conducting more consultations than proposals delivered, you may have a customer qualification issue. Drop us a line if you would like to learn more!