Mastering the Science of Selling – The Sales Success Formula
Video transcript included for your convenience.
Question: John, we all know there is an art to selling but you also talk about the science of selling – tell us more?
I hear sales people always talk about the ‘art of selling’ – the relationship building and building rapport and so forth. Those things are absolutely important but there is also a science to selling.
I like to talk about formulas and templates because it makes it easier for people to repeat. The (Sales Success) formula I use has six components to it:
1) What is your sales quota in a particular month
2) What is your average order size or the average revenue spend per month
3) What’s your close rate
4) How long is your sales cycle
5) How many qualified prospects must you have in your pipeline every month?
6) How many suspects do you need to talk to on a monthly basis to fill your qualified pipeline?
Let’s focus on the first 4.
Let’s say your sales quota for this month is $10,000, your average order size is $1000, your close rate is 20% and your sales cycle is 60 days. If you use that formula and understand what’s going on with a $10,000 quota and a $1,000 average order size, I have to sell 10 deals in a month.
Unfortunately my close rate is only 20% (only one out of five) so I have to multiply 10 times 5 (10×5) and to get 50. To compound things worse, my sales cycle 60 days which means I need to have 100 qualified prospects (10x5x2 months) in my pipeline at all times.
Next, how many suspects – how many folks do you have to talk to in order to get to 100 qualified prospects?
As you see, there’s a science and a math to this.
Now before everyone panics, please know that you can affect your sales cycle. If I sell a $2000 order instead of $1000 order, that changes my multiplier and the way I sell those bigger deals is to call on bigger customers and offer add-on services and products to be able to increase that average order size.
I can also improve my close rate. If I do a better job of asking for referrals or do a better job profiling my best customers looks like or do a better job of being able to use reference selling that 20% (close rate) now goes to 30% and now my multiplier is three versus five; if I get to 50% (close rate), my multiplier is 2 and frankly what we have found is that your sales cycle is affected by your close rate and your average order size.
So the larger the average order size and the better your close rate is, the shorter your sales cycle.
Also what I’ve found is the next best thing to a quick YES is an equally quick NO – it’s the maybe that kills you because you have to keep following up.
If you can continue to build the skill of building relationship and building rapport and add the science or the metrics to you, you can be much more successful in sales and it’s sustainable. That’s the key!