Start of the year. New term, new budget for all sales people. No one can avoid it. And we shouldn’t..
Companies rely on sales people to grow, sometimes even to survive. Cash flow is important and forecasting is equally necessary so that the company builds its cash flow expectation to be able to organise its future spending and investing.
Normally the budget question is a matter that is discussed in a very high level and normally a conversation takes place with sales to seek whether such targets are feasible and attainable.
Once the budget is decided and agreed in high level with sales, quota is given to individual sales people. The budget or alternatively the sales target, either in an individual or in company’s level, is the desired outcome of a certain period.
How can one decide the path to this number? How can you make sure you follow certain activities to achieve that?
To do so, one can work on their commercial budget. Commercial budget is a paper exercise that can show you even how many leads to have, how many calls to make or emails to send to achieve the anticipated target. It is an easy excel exercise that everybody can do.
Work out as a first step how many opportunities you need to have to achieve the deals you want. Work carefully the conversion on that. Are you going to close one out of four opportunities? Then work out how many prospects you need that will lead to qualified opportunities. Is it again one to four ratio? Finally, you need to think how many leads you need to work with and approach to make your prospect list and consequently your opportunities. And here you go. You know exactly how many leads you should have.
Important note here is that one should be very careful in the conversion ratio they use. 1to3 to 1to4 will have a big impact in the exercise. In regards to the levels I presented above, these are used for demonstration purpose, one can use as many and different levels as they like.
The above exercise saves you from risking miss the targets. It shows you the path to achieve it. Don’t expect that targets are achieved like magic, consistent and planned work is the answer.
Send me a note if you want to discuss this topic more.
Happy selling.