A monthly sales call planner should have the following format:
Account. The name of the account you are seeing that month.
Opportunity Name. The name of the opportunity.
Contact. The name of the person you plan on seeing. List all the decision makers you think are in important in that account, regardless of whether you plan on seeing him. You can then reuse your monthly sales planner by saving it as the next month’s planner and updating it.
Position. The title of the contact.
Planned, In-Person Sales Calls/Month. Self-explanatory.
Actual. The number of sales calls you actually made.
Current Phase. In which Measurable Phase did you make the sales call?
Total Planned Calls. Self-explanatory.
Nonscheduled Reactive Calls. The number of sales calls you make on a reactive basis rather than on a planned one. Try to make sure your reactive calls (such as customer requests, unexpected bids or opportunities that surface, and customer problems that arise) are less than a third of your total sales calls. It’s difficult to react your way to sales superstar status.
Total Monthly Calls. Self-explanatory.
Note If you do not use customer relationship management (CRM) software to record your selling activities or a day timer, then use scheduling software programs such as Lotus Notes or Out-look to record in their calendars where you made in-person, sales calls. Compare the number from your calendar to your monthly sales call planner to evaluate your performance.
Set Limits on Sales Calls to Increase Productivity
Another way to improve productivity is to limit the number of sales calls in each of the MPs. In a given sales opportunity, decide how many calls you are willing to invest without obtaining an MPC in each selling phase. When you reach a certain limit, it is time to call it quits. Otherwise, hope springs eternal—along with wasted efforts.
Setting limits provides an objective and measurable mechanism to motivate you to identify and handle potential hinges or smokescreens. Limits also trigger create-and-wait (Chapter 4) responses sooner so you pursue more productive and high-return opportunities. As discussed, if you end the sales process at this time, let the customers know why. Also, if possible, explain to them that if certain goals or filters change you can provide them with more benefits and value than they currently receive. Q sheets chart the number of sales calls you make in each MP. (See Exhibit 9-10.)
Exhibit 9-10: Setting limits to improve productivity.
Use a Quote Inventory to Increase Productivity
A quote inventory is easy to create. The quote inventory encompasses the law of diminishing returns. Every MP 3: Cement Solution quote (proposal) you add over a certain number of outstanding ones, the harder it becomes for you to handle them proficiently. Therefore, set a maximum number on your MP 3: Cement Solution quotes. Typically, salespeople can effectively manage between eight and fifteen quotes. Do not count proposals made outside of the MeasureMax process (public bids) in your numbers, just the MP 3 ones that occur within it. You know public bid outcomes most often depend on low price to win the sale.
When you exceed this limit, take one quote out of inventory and insert it in an inactive file. Bring the oldest quote first back into inventory when you fall below your maximum level. Purchase orders and, regrettably, lost sales provide room to add quotes into your inventory.
Question why your MP 3: Cement Solution proposals are not sales yet. When the agreed-upon budget or start dates arrive without purchase orders, ask customers why. After all, the MPC 3: Solution Confirmed supposedly validated that your proposed solutions met their conditional commitments. Depending on their answers, review the “Handling Hinges” section in Chapter 8 to determine the best strategy to use. As a preventative measure, remember that the stronger the measurable benefits are in MP 3, the more likely MPC 4 will occur at the same time.
Set up a quote log to track your outstanding MP 3: Cement Solution proposals by budget and decision dates of the proposals, dollar amounts, and gross margins. Again, Q sheets record this information. (See Exhibit 9-11.)
Exhibit 9-11: Manageable quote limit.
Note When customers view your products as commodities, your input become less important after you provide them with quotes, which they often view as official price tags. With value-driven sales, your input is just important after the quote as before.
Compete Against Yourself and Productivity Explodes
As discussed, one of your greatest strengths is your ability to influence sales performance. Traditionally, you or your sales manager judged performance solely on dollars sold. The logic ran that volume is the only thing that matters. Yet, other things matter because they help you to reach dollars sold. The productivity equation is important because it quantifies and improves your sales skills and productivity on an annual basis.
Sales productivity is an equation. Total dollars sold is the part that comes after the equal sign. Yet, dollars sold tells you only past results, not current or future trends. Therefore, the key to influencing performance is to look at the five variables that come before the equal sign and the selling skills they reflect. As in any equation, the variables affect each other. The equation is shown in Exhibit 9-12 and Exhibit 9-13.
Exhibit 9-12: The productivity equation.
Exhibit 9-13: Using the productivity equation as your personal benchmark.
The Five Variables
Number of Sales Calls. The quantity of in-person sales calls you make to all customers. They are the power cells that fuel sales production. (Do not include telephone calls in this figure.) Reflects: Your planning and time management skills.
For example, four hundred in-person sales calls in a year might indicate good planning. However, whether they are productive calls still needs to be determined by the four other variables.
Quote Ratio. The number of sales calls it takes to generate one quote. Taking your total number of sales calls and dividing that sum by your total number of quotes calculates this ratio. Reflects: Your ability to identify market segments that have goals achievable by your products and services. It also reflects both your technical (products) and market segments—that is, filters or systems of evaluations—knowledge to recognize and seize opportunities. The lower the number, the greater your skills.
For example, you generate 114 proposals. Your quote ratio is 3.5 (400 calls ÷ 114 proposals). It took you 3.5 calls to generate a quote.
Closure Rate. This is the number of quotes it takes to obtain one purchase order. Calculate this percentage by taking the number of orders and dividing it by your total quantity of quotes. Reflects: Your ability to qualify customers and to obtain and build on the sequence of the MPCs. It also highlights whether you are in negotiated (higher rate) or bid markets (lower rate). Most important, it shows whether you made the order nothing more than the logical conclusion to a series of engineered agreements—the MPCs.
For example, you sold forty-six orders. Your closure rate is 40 percent (46 orders ÷ 114 proposals). You receive orders on four out of every ten sales opportunities you quoted.
Average Order Size. The total dollar value of your orders divided by the total number of purchase orders. Reflects: Your technical skills and industry knowledge in identifying customers’ goals, measurable benefits, and SOEs rather than just ability to respond to customers’ needs or pains. It also illustrates the ability to package products and services.
For example, your total sales are $1,150,000. Your average order size is $25,000 ($1,150,000 ÷ 46 orders).
Average Gross Margin Percentage. This is the profit level of a sale, which only includes its direct labor, material, and overhead costs. The sell price minus direct labor, material, and overhead costs equals gross margin dollars. Dividing the gross margin dollars by dollars sold gives you the percentage. Reflects: Whether your sales are price- or value-driven. Bid sales represent the former, negotiated sales the latter. Did customers seek low-cost products or did you build goal-oriented and high-value solutions? Did you make the dollar value of Column 2 larger than Column 1?
For example, if you generated $550,000 gross margin dollars, your average gross margin percentage is 47.8 ($550, 000 ÷ $1,150,000).
Total gross margin dollars sold, as opposed to just total dollars sold, more accurately reflects your ability to have customers compensate you for providing more value than competitors. Do not stop at dollars sold to make any judgments about performance without accounting for gross margins (value).
Managing the Productivity Equation
Set up your productivity equation for the year. Compare your results to each variable. MeasureMax’s focus is on the numbers that precede the equal’s sign and on improving each variable.
View the trends to determine how your sales, marketing skills, and the effects of any new strategies or training are working (including MeasureMax.) Regardless of whether you chart this information or not, it is beneficial to be aware of how the measurable variables can influence your sales productivity.
Productivity equations also let you review the results of trade-offs. If you make fewer proposals but qualify better, will your closure rate go up? If you make more calls, will your quote ratio become worse? If you work the bid market more, will your closure rate go down but your average order size increase? What happens to average gross margins? The list of questions is endless.