In our experience very few SME business owners have a realistic handle on what it takes to grow revenue.
Often arbitrary numbers are bandied about. “I want 20% or 30% growth”. But what does that mean in terms of sales? How many new clients would that take? And how would you go about it?
As our clients are in service based industries, I’m going to assume you sell professional services, not a commodity widget.
To keep the maths simple let’s say you earn $100,000 a year.
Your growth target is 30% which puts an additional $30,000 in your kitty.
How many people will you need to speak with to achieve this?
Assuming you work 11 months in the year, $30,000 / 11 = $2,727. i.e. You’ll need to sell $2,727 extra each month.
If each deal is worth $1,000, $2,727 / $1000 means you must make 2.7 sales each month.
Not every person you speak with will become a client.
Say you have a conversion rate of 20%. i.e. 1 in every 5 people you speak with is qualified and becomes a client.
So 2.7 clients / 0.2 (20%) = 13.5 conversations per month which assuming you work 20 days per month is 0.67 (say 1 actual sales conversation which converts) per day.
But to get hold of 13.5 people who are ready to buy right now, you may need four times as many leads.
13.5 conversations x 4 = 54 leads coming into your funnel. And that’s per month!
If you were going to prospect and actually get hold of these people to qualify them in or out, you need to speak with 54 / 20 = 2.7 people per day.
Sobering maths, isn’t it.
Now here’s the kicker.
People buy when they’re ready. You could have a great sales conversation. Your prospect agrees they have an issue they want to solve, but for myriad reasons, the time isn’t right.
Which means you must have a much bigger pool of prospects coming into your funnel than you might initially think.
When working with clients, we emphasise the importance of combining both marketing and prospecting.
Marketing is a one to many activity which puts your message in front of a broad audience, encouraging them to raise their hands and contact you.
Prospecting is a one to one activity where you directly reach out to a potential client. Could be using email, social media messaging, TXT or cold calls.
Regardless of where your leads come from, most sales are made after the 5th to 10th contact.
Remember the 90 day rule. If you’re not in front of someone at least once every 90 days, you risk being forgotten. Meaning that should they be contacted by another supplier “just at the right time”, your prospect will forget you and go with your competition.
Therefore your marketing material must be designed to keep prospects warm, continuously adding value so that when they’re ready to move forward, your name is top of mind.
It’s the combination of prospecting and marketing which provides leverage, and makes your sales process more efficient by increasing conversions with less effort.
Have deals stalled? Unsure of the next steps? Our Rapid Sales Intervention sessions will help you get unstuck. We guarantee it or your money back. Click here for more information.
Rashid & Barbara
P.S. Christmas is nearly upon us. Contrary to popular belief many of your prospects will make buying decisions in the next few weeks so that they’re set up for 2020. Take action now, call us and we’ll help you generate more business.