Selling is a Numbers Game – Or is it?
The numbers don’t lie, but are they hiding the real truth? “If I can just get more leads, I can close more deals.” If I had a dollar for every time I heard these words come out of a salesperson’s mouth, I could start planning my retirement right now. Selling is a numbers game. I get it. The more leads that come in the door the more we are going to close. I agree completely. But, what salesperson can’t close more deals when they have more leads? Ouch!
So, let’s break this down. If you are a numbers person with an analytical mind, you will love this. For all others, I will keep it as simple as possible. The bottom line is that if you don’t see and understand what I am about to show you, you are losing a ton of money for yourself and your organization.
For the sake of arguing, let’s say you have 20 new leads a month for a particular community. These leads consist of Internet leads, walk-ins and call-ins. As a result of these leads, you have four new residents move into your community. That is a closing ratio (inquiry to move in) of 20%. The average cost of each of those leads is about $200 (that’s on the low end). So, the company invested $4,000 on those 20 leads. That’s not a bad return on the investment when you consider the amount of revenue those four new residents will bring to the company. The majority of the time, this revenue consumes our full attention.
Everybody is happy, but the salesperson is not satisfied. You have to love that hunger! The salesperson tells their manager that if they could get 40 new leads instead of 20, they could get 8 new residents instead of the 4. It does not take a rocket scientist to do the calculations. Based on doubling the leads, we can double the move-ins. So, we invest more money into the leads. Now we spend $8,000 for 40 new leads. Maybe the salesperson gets 8 move-ins from those leads, and maybe not. So, what’s the point, right?
The point is that the salesperson’s closing ratios have not moved. Based on these numbers, the closing ratio is still at 20%, regardless of the number of leads you bring them. In this scenario, the number of closed deals is directly related to the number of incoming leads. I don’t know about you, but as far as I am concerned, that is completely unacceptable. As managers, we are letting salespeople off the hook. We invest in the leads, yet we are not investing in the person. We can all go to bed and sleep at night because we are bringing in new residents and the company as a whole is doing pretty well from a revenue perspective. The owners and senior executive team sees the bottom number and are content. The glass is half full right? Here lies the problem.
It is our human nature to want to experience pleasure over pain. However, every sales trainer in the world will tell you to uncover the prospects pain, and sell to that emotion. Yet, as business leaders, we tend to hide the painful stuff and focus on the “feel good” stuff. We focus on the glass being half full as opposed to it actually being more than half empty. As an organization, we may be bringing in enough revenue to stabilize our communities, and that is where we tend to focus. However, if we shifted our focus to the lost revenue and educated ourselves on how to overcome that “lost resident” ratio, we would very quickly discover the distance from being content to unthinkable success is not such a huge gap after all.
As a manager or leader, you have to reach that point where enough is enough. If every prospect that walks through your doors is treated exactly the same (90% of the time, this is the case), then you are relying on the numbers game to close the deal. Quite frankly, you don’t have salespeople, but order takers. Nothing will change until you shift the focus from the quantity to the quality. This requires an investment in your staff. You need to uncover their weaknesses and train to them. You need to discover their strengths and continue to refine them.
The Bottom Line
For those Bottom Line Up Front people, shift your focus more towards what is being lost as opposed to what is being gained. Alluding to a common quote – don’t just give your salesperson a fish, but teach them how to fish. More leads are great, but focus more on quality instead of quantity. Don’t lose focus of the numbers, but make sure the spotlight is not so bright that the other “real truth” numbers fall in the shadows. Train and develop your sales team and uncover the true value and worth that they have to offer. It main be painful in the beginning, as change normally is. However, just like we have all told out children, one day they will thank us.
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