All of us are in sales from the moment we are born. It's pretty hard to ignore a baby's cry or a two yearolds persistence. Some of us actually receive income from our sales efforts in our professional lives.
We recently hired on a new salesperson who has no prospecting experience. So he is learning from scratch.
This week I discovered an excellent article on this from SalesConcepts.com:
| Is it worth your time? You have a prospect that has indicated that they may consider buying from you if you do x, y, and z. Well x, y, and z take a lot of time on your part. Do you do it as an investment for future business, or do you write it off as not worth it? The difference between good and great sales people is that great sales people know when and how to say no to a prospect without wasting their time chasing orders that provide little return on their time. Decide by using a proven method called CPOD or cost per order dollar. |  |
| Here’s how it works. Take the number of hours you have to work for an entire year. There are 8,760 hours per year. Let’s say you spend roughly a third of those hours working. (Insert laughs and jokes here.) That would be 2,920 hours you have to work per year. Now let’s say you spend about a third of your time working with actual customers. (Yes, insert more jokes and louder laughter here.) That would be just over 973 hours you have to be with customers each year. Now, you are in sales so you have a quota, right? Let’s say your quota is a cool million dollars. That is how you justify your existence to your employer. You have to come up with that million by year end or else. How much do you need from each of those hours to get a million? Well, one million dollars divided by 973 hours is approximately $1,028 per hour. To fulfill a quota of $1,000,000 you need to sell $1,028 per hour. Now how do you feel about that coffee break? Once you know what your time is worth it becomes much less difficult to allocate it. How much time should you spend to win a $30,000 order? Using our formula for a 1 million dollar quota: $30,000 ÷ $1,028 per hour = 29 hours 20 minutes. Wow! You need to be pulling in $30K every three business days! You could invest about 3 business days to get that order, anything more and its not worth it. Let’s try a different number. How much time should you invest to win an order for $350K? Same math applies: $350,000 ÷ $1,028 per hour = 340 hours 30 minutes. 340 hours = approximately 38 business days, give or take, but you get the idea. One thing we have not addressed is the element of risk. You may not want to risk 340 hours if you feel you have no chance in winning the business. What CPOD tells you is you would not want to risk any more than 340 hours in the preceding example. We’ll save the topic of risk for a later issue. So, what’s your time worth? If you don’t know, you owe it to yourself and your company to find out. We all have 24 hours a day. Your competition has the same amount of time you do. Use it wisely.
| |
Posts
No comments:
Post a Comment