The Problem
Let me tell you a common story for business owners.
David had been doing very well in sales. But he knew he could do better. So, he called and asked for some help.
His business was surviving, but he felt that he couldn’t grow because there was too much uncertainty around sales in his business. He wasn’t spending his time, effort, and energy in the right places, and spent a lot of time on unimportant and non-urgent tasks.
He was burning the candle at both ends.
For years he’d resigned himself to this, as he felt he had to manage all aspects of the business. He believed that the only thing that could get more customers was discounts and that would ruin his bottom line.
The Questions
When we asked what his closing ratios were, David pondered the question for a few moments, and 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?
- Do you know your break even point?
- 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?
David thought about these questions for a few moments, and with a puzzled-look on his face, he said “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 right now, but I could probably write it down if you give me some time.”
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 your most profitable products are.
- The average value of your sales.
- Your conversion rates.
You should have the answers to these questions at your fingertips, for without them, you’re like a bus driver who doesn’t know his bus route and is just trying to pick up people at random. You’ve no idea what direction you’re going in. (Last week a client reported that he’d run out of petrol while driving to an appointment. He’d been looking at the speedometer. Unfortunately, he’d forgotten to look at his petrol gauge.)
Because David 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.
The Journey
Over the next few weeks David 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 25 percent of his sales on the first interview, 10 percent on the second interview, and 8 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 that did were his smallest, least profitable sales.
David had been trained in the “everybody’s a prospect” school of selling and had always followed the “I’m going to call on them till they buy or they die!” sales methodology.
He had the persistence of a bulldog. He refused to let go.
As David reviewed his records, he noted that he was closing 40 percent of his 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 rather 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 David,” How much time are you spending chasing these people?”
David 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.
The Solution
We then discussed the ‘novel’ notion of not calling on a prospect after the second contact. If they haven’t bought, move on, looking for a better prospect. A prospect who’s in the market to buy from you, now.
We spent the next few sessions working on David’s telephone techniques and helped him perfect his Elevator Speech.
And 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 opportunities, and close more sales.
Over the past few weeks, David’s results have been startling. Because he’s more focused on finding people who are in his target market today, he’s not pushing himself on those that aren’t interested.
By giving up on D grade customers David found that his sales and profits actually increased, towards closing for his A grade customers.
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. He’s not just working smarter, he’s working fewer hours.
Our Business Growth Expert could help you on your journey with a gifted coaching session or a book a spot on our next free seminar.
