Quality over quantity is one of the most well-known pieces of business wisdom, however how many salespeople ever stop and think about what it really means? DAVID BROCK explores the simple math behind an important business philosophy.
I’ve long discussed the importance of win/loss analysis in improving business performance, and to this day, I continue to be amazed at how little we understand about what causes us to win and lose in the world of business.
It’s important to understand why we win, why we lose, and how we maximise our performance and productivity.
Let’s explore a straightforward example. Assume three members of staff have the same quota of $500,000 in annual sales and each has the same average deal/sale size of $10,000.
Let’s also assume that they require the same number of opportunities to find a qualified sale. Let’s assume 10 prospecting efforts produce one qualified sale.
With a 20 per cent win rate, it takes Salesperson A 2,500 prospective opportunities to fulfill the quota.
Salesperson B, with a win rate of 30 per cent, can achieve that task in 1,670 prospective opportunities. Our strongest performing hypothetical staff member, Salesperson C, can achieve the quota with 1,000 prospective opportunities with a win rate of 50 per cent.
This is the kind of maths all retailers should be performing, however in reality, I find very few sales teams, or managers, who have spent time thinking about what this means.
Ask the big questions
Sadly, the rare few managers and sales staff who do track this kind of data tend to view it as a kind of ‘law of nature’ and not something that can be improved.
Across the many businesses I’ve encountered, too few managers and sales staff are willing to challenge themselves and ask the important questions about their practice.
How do we increase our win rates? How do we increase our average deal/sale sizes? How do we compress the sales cycle? How do we create greater yield from our prospecting efforts? How do we effectively improve the performance of each person on the team?
When these kinds of questions are proposed, the answer is always the same: “Just do more!”
You may read this and find yourself thinking, “Well Dave, you are just showing that maths works, what’s your point?”
Once we start looking at these big questions with the above example in mind, we must then ask what it is that causes such a difference in the performance of one salesperson to another.
What are the salespeople with 50 per cent win rates doing differently than those with few wins? How can we get others to emulate the achievements of our elite performers? These are the right questions.
Quality over quantity
Our simple example above treats everything other than win rates as being relatively equal, and we know that reality is never that straightforward.
Sales staff with higher win rates tend to have higher average deal/sales values.
The elite performers also tend to have higher yields with their prospecting efforts. It’s natural that more successful salespeople are more focused on the right prospects and will rarely be caught wasting time on low-quality opportunities.
Because sales staff with higher win rates need to chase fewer opportunities, they can invest more time in the opportunities they select. This practice dramatically improves customer experience and by extension, the propensity to purchase.
Comparatively, those with poorer win rates fall into the trap of chasing so many potential sales they fail to invest the time needed to win at the macro level.
This is what I like to call a ‘performance death spiral’ because by reducing the time and energy spent on each individual prospective customer, failing salespeople chase much-needed wins by contacting or dealing with more and more prospects, falling into a vicious cycle of failure.
Over time, I’ve analysed businesses and seen these kinds of trends repeating themselves. Today, it’s all too common to see salespeople settling for single-digit sales performances.
The far too common focus on volume of contacts with prospective clients has had a horrible impact on performance on average. Many promote reducing the amount of time spent on each call and increasing the number of calls made or increasing the number of emails sent out. This is rarely the right message!
Focus on what works
The key to driving performance for salespeople is rarely increasing overall activity. Improvement comes from producing more and more from each individual sales opportunity.
Instead of doing more of what doesn’t work, faster, we must focus on what works. Discovering what it is that produces success within these interactions and learning to execute more effectively.