I have been in sales for as far back as I can remember. Of our little circle of friends, I was the only one who chose to sell to make a living. Everyone else who had a 9-5 job with a steady paycheck thought Iwas absolutely crazy to choose a career where your paycheck isn’t guaranteed every week.
I saw things a little differently. I thought it was absurd that people got paid the same amount of money regardless of how hard working, educated or talented they were.
I liked the idea that I could control my paycheck. If I needed some extra cash, I knew exactly how many more sales I would have to close.
Along with that, I knew exactly what I had to do to get that number of sales. I knew my “ratios”.
Any expert salesperson should be able to know their ratios right off the top of their head. If they can’t, they are surely an amateur salesperson.
I you are just starting out in sales, you should learn your ratios ASAP or else you are heading for failure.
In sales, the amount of money that you make depends on one thing; and that how many deals you close.
How many deals you close however, depends on a number of different things like the types of questions you ask, how well you listen to the answer, how you overcome objections and how persistent you are in asking for the sale.
But aside from all of that, you must know your ratios like the back of your hand and constantly strive to improve them.
The 3 types of ratios that I’m referring to include:
The Appointment Ratio – Of the people you speak to, how many of them make an appointment.
The Show Ratio – Of those who make the appointment, how many actually showed.
The Close Ratio – Of those who showed, how many made a purchase.
To truly enhance yourself as a salesperson, it is critical that you document this information, base your goals around these numbers and make improvement where necessary.
To get on the right rack you must first set some targets. For example, depending on what you are selling and how frequently people buy what you’re selling, set a target amount of people to speak to per day.
Then, set a target for the amount of people you want to make an appointment with and finally, a target amount of sales.
As you start your day, document exactly what happens. That will give you a rough idea of what your ratios look like.
For example, let’s say you are selling life insurance policies. Much of your work involves cold calling lists of people that have at one point or another said they might be interested in purchasing a policy.
From what you can see, the expert sales people in the office sell roughly 4-5 policy’s a day and the weaker one’s may sell 1-2.
If you are new to the game and haven’t really identified your strengths and weaknesses, set a conservative goal of 3 sales (right in between the weak and the strong).
If you have a good sales manager working with you, he or she should be able to tell you what the company averages are in terms of ratios. Then you can see exactly how the strong people are making more money. Are their ratios higher than everyone else’s or or they working harder and talking to more people?
If your sales manager isn’t sure of what the averages are, you can use the following ratios as a reference:
The Appointment Ratio – 30% (If you speak to 10 people, 3 will make an appointment)
The Show Ratio - 50% (If you make an appointment with 10 people, 5 will show)
The Close Ratio 50% - (If you present to 10 people 5 will buy).
Based on these ratios, to get 3 sales per day, you would need to contact 40 people per day. Of those 40, 12 would make a appointment, 6 would show and 3 would buy.
As you put this process in place, you will see what your true ratios are, but it’s a starting point at the very least.
As time goes on, you will also begin to figure out how many calls you need to make each day to reach 40 people. Perhaps for every 5 calls you make, you speak to one person. This would mean you need to make 200 calls per day. It sounds like a lot but for an 8 hour day, it’s only 25 calls per hour.
Now remember, once you improve your appointment ratio, you will need to speak to less people to make the same amount of money. Or you could speak to the same amount of people and make more money.
In either case, you will be in a better position to be successful in sales, once you start learning your ratios and managing your business based on them.