Even if figures aren’t your thing, knowing what the sales numbers are in your business is crucial if you want to be successful. Let me explain…
Do you know how many leads your marketing generates? Knowing how many leads you generate is a great starting point to finding out how effective your marketing is. By marketing, this includes everything you do to market your business, from networking to blogging and all points in between.
Once you know how many leads you generate, you also need to know how many of these leads you convert into sales. The reason these numbers are important is because you can judge if you need more leads or if you need to improve your ability to convert into sales.
The next step in knowing your numbers is then analysing how much your average sale is worth to you, and how much profit you make from that sale.
Now you know how much your average sale is worth to you, you can then analyse how often your customers repeat buy from you, and how often they refer your services to other potential customers.
These are typical of the sales numbers you really could do with knowing about your business, because not knowing anything about these is a bit like trying to navigate your business down a mountain at midnight with no lights on!
A good place to start with this exercise is with the end results – for instance, how much do you want your business to turn-over in a year?
For a simple example, if you want a t/o of £50,000 per year, research what the average sale is worth to you – let’s say its £1k for this exercise. Therefore, you need to make 50 sales per year. Then look at how many leads you need to see to convert into a sale – this might be 5 leads on average you need to see. So, you now know you need to approximately generate 250 leads per year, which works out at about 5 every week, to make a sale. If you’re not seeing 5 potential customers a week, 1 per day, then the chances of you turning over £50,000 per years are small!
Obviously, into these numbers you would also need to plug in repeat sales from existing customers, but you can see how this exercise can quickly and clearly highlight what activity you need to be successful and where you need to improve. For instance, if your marketing isn’t generating the required number of leads, then what needs to change there?
Also, if your lead/sale conversion rate is 5:1, then what can you do to improve your sales skills to reduce that to, say 3:1. If you could do that, then you would either require fewer leads or would make more sales from the same number of leads – either way you are being more successful.
Knowing your sales numbers is crucial if you want to build a sustainable and successful business – even if figures aren’t your thing!