Often when talking with business owners, a question I ask is how they measure salesperson effectiveness. Perhaps the most common answer is that they know who is bringing in the most sales, both in number of closings as well as total dollar sales.
Focus on this thought: Highest closer is best salesperson. Are you sure?
Let's make a real example. (Math always was a favorite class of mine, so I'm going to create some simple math and let you in on the fun.) Look at our highest closer, Tom, versus our lower closer, Sam.
Follow along!
Tom got 100 leads. Those leads cost $500 apiece. He closes at 50%. Average sale is $5,000.
Math = 50% of 100 = 50 sales x $5,000 = $250,000 total sales. Total lead cost is $50,000. (This means it takes $50,000 in marketing to get $250,000 in sales.)
$50,000 divided by $250,000 = 20%. That's our marketing percentage for each one of Tom's sales. 20% right off the top of each sale of Tom's goes directly to cover marketing.
Now Sam. Sam also got 100 leads, but closes at 25%. (That is half as many as Tom.) His average lead cost is $100. His average sale is $5000, same as Tom's average contract size.
Math = 25% of 100 = 25 sales x $5,000 = $125,000 total sales.
Total lead cost is $10,000. (This means it takes $10,000 in marketing for Sam to make $125,000 in sales.)
$10,000 divided by $125,000 = 8%. 8% of every one of Sam's contracts go directly toward marketing.
Who is your more effective closer? In this case it is Sam, even though he selling less in total sales. Why make a sale if you can't make money off it?
This is only one small part of tracking. Winners know their numbers!
That's your winning tip for today!
Stay tuned for more.
To your success,
Susan
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