Manage Sales Activities and Two Important Ratios
When the sales cycle is greater than ninety (90) days and begins to move toward six (6) months or greater, the closing rate is an unimportant way to manage sales performance. In these longer sales cycles, it is more important to manage the funnel size and to focus on strategies not activities (please reference Neil Rackman’s research in his book “Managing Major Account Sales”). ??For shorter sales cycles, ninety (90) days or less, activity ratios become very important and should be focused on for sales goal achievement. And, in these high activity sales teams, the following ratios are: ??
1st Appointments to Quotes (or presentations) ?- This is the Opportunity Ratio and tells a person how qualified are their prospects. A higher rate means a pool of more highly qualified prospects who have needs and problems that the salesperson can help with their service or product. This measures the effectiveness of a salesperson converting 1st appointments into presentations (quotes), and is generally affected by the quality of the prospect and a salesperson’s ability to get the prospect to agree to a presentation based on existing needs and problems. ??
Quotes (or presentations) to Sales ?- This is the traditional Closing Ratio, and measures the effectiveness of a salesperson’s face-to-face skills at the end of the sales cycle. In Major Account selling, the sales manager is not effective being thrown in toward the end of the sales cycle. In High Activity selling, i.e. short sales cycles, the sales manager is effective at the end of the cycle. He can help the salesperson with closing sales. (Note: If the sales cycle averages several days and can be as long as ninety (90) days, then one must look at these ratios over a year’s period of time to truly understand what they are.)
How do you track these? Better still ... how to your salespeople track these? And, remember, in Major Account Sales, manage the funnel size and the sales strategies for movement in the funnel. Celebrate the advances. Now, go and make things better. You can. Lance.