Some salespeople complain that they never know when it is OK to "shut it off" for the day. When is enough actually enough when it comes to prospecting and cold calling?
Imagine how much easier your life would be if you were able to identify the specific and measurable actions you need to take on a daily basis in order to reach your yearly income goal. Use the following template to create your success formula. You will then be able to determine how many cold calls to make and the number of appointments/presentations needed each month, even each day, to attain your goals, as well as the time commitment it will take to do so.
Let the numbers in your success formula determine the amount of activities you need to put into your daily routine to ensure selling success. It sure beats scratching your head at the end of every month, wondering why you didn't meet your sales quota. Now, you will have a defined formula to follow so that you can generate the results you want.
- How many calls do I need to make to generate one prospect?
- How many prospects does it take to generate one sale?
- How long will each prospecting or cold-calling effort take?
- How much time do I need to devote to new business development every day?
- How many sales do I need each month to attain my year-end financial goals?
If you don't know the answers to these essential questions, that's perfectly fine. Because by the end of this article you will.
As you go through this formula, you may come across some questions that you don't know the answer to. This is perfectly normal, especially if you are new to sales or have never been exposed to these questions. Realize that if you do not have the answer to some of these questions, it may require doing some conscious tracking of your cold-calling efforts before you are able to accurately answer them.
Before you attempt to complete this formula, you must have a specific prospecting activity in mind. Since each prospecting activity is going to generate a different number of prospects within a certain amount of time, you must therefore create a separate formula for each prospecting activity you take on.
For example, if you use direct mail as a way to generate new prospects, then step four in your formula may look like this:
"Marketing Efforts: I need to spend $______ per month to generate one new qualified prospect."
The following formula is for your cold-calling efforts only. Develop a separate formula for all additional prospecting activities (for example: PR/marketing, alliances, partnerships, published articles, networking, referrals, speaking engagements).
Finally, please note that this formula does not take into account residual income generated from each sale. To compensate for this, use the average lifetime value of one client (excluding any referral business they send you) as the factor for steps 1, 2, and 3 in the formula. For example, if you are a consultant that is paid on average $1,000 a month as a retainer and the average lifetime of each client is six months, then in number 1, the average sale would be $6,000. Once you have this number, you can complete the rest of the formula.
My Formula for Selling Success
1. Average sale in my business is $_____.
2. Percentage of commission/income I am paid per sale is _____%.
3. My average commission/ income per sale is $_____.
4. Prospecting Activity: Cold Calling
It takes _____ (number) cold calls to find one new qualified prospect.
5. I need to present to/meet with _____ (number) prospects to close one sale. In other words, I typically close/earn the business of _____ out of _____ prospects I am in front of. Therefore, my closing percentage is _____%. (Number of sales divided by number of prospects you presented to/met with.)
6. My annual income goal is $_____.
7. To attain my goal, I need to generate $_____ in average monthly income. (Yearly income goal [step six] divided by 12 months.)
8. I require _____ (number) monthly sales to produce $_____ [step seven] in average monthly income. (Average monthly income [step seven] divided by average commission/ income per sale [step three].)
9. To produce _____ (number) sales monthly [step eight], I must present to/meet with _____ (number) new qualified prospects per month. (Number of prospects needed to close one sale [step five] multiplied by the number of desired sales per month [step eight] = number of presentations/meetings with qualified prospects per month.)
10. To produce _____ (number) new qualified prospects per month [step nine], I must make _____ (number) cold calls per month. (Number of cold calls to find one new prospect [step four] multiplied by the number of new qualified prospects needed per month to produce desired number of monthly sales [step nine].)
11. I must make _____ (number) cold calls per week. (Number of calls needed to make per month [step ten] divided by 4.335 weeks.)
12. To make _____ (number) cold calls per week [step eleven], I need to devote _____ (number) hours per week tp cold calling. (Number of cold calls per week [step eleven] multiplied by the average amount of time per call [in minutes] divided by 60 = the number of hours needed to devote to cold calling per week.)
Tip from the Sales Coach: Make sure that you account for any additional preparation time prior to each cold call.
13. I need to devote _____ (hours) per day to cold calling. (Number of hours per week devoted to cold calling [step twelve] divided by number of workdays.)
14. I need to make _____ (number) cold calls per day that will take up _____ (number) hours per day [step thirteen]. (Number of cold calls per week [step eleven] divided by number of workdays.)
What Did You Expect to Happen?
After completing this exercise, you'll find that you may fit into one of the following scenarios in terms of how much prospecting (in this case, cold calling) you will have to do in order to reach your income goal:
- You are right on track to reach your sales and income goal.
- You're slightly off but can easily adjust your daily routine to compensate.
- You'll need to devote a considerable amount more time to prospecting. This may require some delegation of responsibilities or taking some other activities, tasks, or projects off your plate that may not serve you best or support your goals.
- You feel like you just got hit with a two-by-four because the amount of cold calling you need to do in order to reach your income goal is off the charts and unrealistic; even too high to count.
If you fall within the last category, do not despair! If you find that you need to spend more hours prospecting than there are in a day in order to reach your income goal, consider some other alternatives that will decrease your required prospecting time:
- Improve your closing percentages.
- Increase your profitability/commissions or income per sale.
- Increase the size of your average sale.
- Decrease the number of cold calls needed to identify one new prospect.
- Decrease the average time it takes for you to make one cold call (remove all distractions).
- Change your income/sales goal.
- Find a new career path. This alternative is only for those people who have thoroughly explored all options (including working with a sales coach) and, most important, have taken the time to develop their selling skills and implement a comprehensive prospecting system they have followed for a considerable length of time.
What gets measured gets managed. Fine-tuning the first six of the seven measurables I just mentioned will ensure that you are maximizing your time, your talents, and your potential, as well as each prospecting and selling opportunity.
About Keith Rosen, MCC — The Executive Sales Coach
Keith Rosen is the executive sales coach that top corporations, executives, and sales professionals call first. As an engaging speaker, Master Coach, and well-known author of many books and articles, Keith is one of the foremost authorities on coaching people to achieve positive change in their attitude, behavior, and results. For his work as a pioneer and leader in the coaching profession, Inc. magazine and Fast Company named Keith one of the five most respected and influential executive coaches in the country.
If you're ready for better results quickly, contact Keith about personal or team coaching and training at 1-888-262-2450 or e-mail [email protected]. Visit Keith Rosen online at Profit Builders and be sure to sign up for his free newsletter The Winners Path.