Sales Math - Quality vs. Quantity - Adaptive Business Services

I had an interesting discussion recently with my friend, Gary Kurtis, with Sales Tips 101. Gary and I have stunningly similar sales backgrounds as well as our belief in the importance of developing selling fundamentals.

Gary mentioned that he has always focused on making quality calls but has now modified that approach to include quantitative values as well. I too have always placed a focus on quality and the only numbers I have ever expressed an interest in, aside from hard results, have been ratios.

Calls to appointments. Appointments to presentations. Presentations to closed deals. Those kinds of ratios. However, you need to have adequate numbers (activity) in all of these areas in order for ratios to hold any value.

If I make one presentation and that results in a sale, my closing ratio is 100% but I doubt it will allow me to reach my monthly targets. Instead, I might need to make 20 presentations each month and close 60% of those presentations. It all depends on the numbers. The sales math.

What are some of the variables?

$ sales goal
Average $ sale
Closing ratio calls to appointments
Closing ratio appointments to opportunities
Closing ratio opportunities to sales

I find it best to start with the end result (desired sales $) and then work it backwards. The tricky part, getting started, will be the ratios and particularly for new hires. If you do not have historical data to compile ratios on yourself, you will need to start out with some average ratios, or reasonable goals, experienced by the company sales force.

A few things about ratios (and why they will change over time) …

Ratios are unique to each individual. The ratios for new hires will likely be much lower than for seasoned staff.
Ratios point directly to the quality of actions, skills, and target market.
As a salesperson’s skills and confidence increases, ratios will improve.
A decrease in ratios can be attributed to a number of factors with complacency being first among them.
When ratios remain static but results decrease … activity has likely decreased.
High ratios, yet low $ numbers, can generally be attributed to low activity levels. Cherry picking.
Once ratios and activity have stabilized, minute improvements in either can dramatically affect results!

Regardless, there are only three ways that I can think of to elevate results. You will need to …

Increase your activity and/or
Improve your ratios and/or
Raise your average sale value

However, let’s muddy up the waters. Your choice of activities can also affect your ratios. Individual types of activities will likely deliver varying results (ratios). For example, cold emails vs cold calls. Warm calls vs. cold calls. Email blast vs. personalized outreach.

There is also the quality of your target market to consider. There are two variables in this area: the companies and the people in those companies who will have the highest likelihood of doing business with you …

ICP (Ideal Client Profile) – Your ideal target client
TBP (Target Buyer Persona) – The individual within a company who you will have the highest level of success in dealing with.

Obviously, we can get pretty deep in the weeds here and the last thing that we wish to experience is paralysis by analysis. Therefore, just to keep this ball rolling, let’s assume averages irrespective of specific activity and profile/persona types. Let’s say that …

We need $100,000 in sales each month
Our average sale is $10,000
We close 50% of our valid deals
20% of our appointments turn into opportunities
We book appointments on 10% of our sales calls

Now, I pulled these numbers out of the hat, thin air so to speak. Presentation purposes only. Still, what can we derive from these?

If we need to sell $100,000 per month and our closing ratio is 50%, we are going to need $200,000 in good active deals that will close this month.
This means 20 deals at an average of $10,000 per deal.
If 20% of our appointments turn into valid opportunities (deals), we will need 100 appointments per month.
If 10% of our calls turn into appointments … 1,000 calls per month.

1,000 calls per month = approximately 46 contacts per day. Doable? Probably depending on how you do it. For what it’s worth, when I first became involved in B2B selling in 1977, we were expected to make 30 physical cold calls per day. Door to door door knocking.

Here’s the fun part. If I improve each of my ratios, and my average $ sale, by only 10% … my needed daily calls to reach my $100,000 goal drops from 46 to 32. I’ll let you work on the next math problem. What happens to my sales if I keep doing those 46 sales calls while increasing my ratios and my average $ sale. Lovely.

Now, I’ve kept this pretty simple. I like simple. I’m not what you would call a big data guy. I might suggest that you too start with … simple.

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Craig M. Jamieson

Managing Member at Adaptive Business Services

Craig M. Jamieson is a lifelong B2B salesperson, manager, owner, and a networking enthusiast. Adaptive Business Services provides solutions related to the sales professional. We are a Nimble CRM Solution Partner. Craig also conducts training and workshops primarily in social selling and communication skills. Craig is also the author of "The Small Business' Guide to Social CRM", now available on Amazon!