One of the greatest things invented by the financial service industry was “Compound Interest". Save for the fact that no one is paying much interest on money these days, the reality of Compound Interest still holds and delivers added gain regardless of how low of high rates are. I was watching a teacher explain the concept to a grade 5 class, and he brought it down to "a little to start, a little from here, a little from there, and over time you end up with more than straight interest".
As you assess your plan for sales success in 2013, you can take advantage of "Compounding" to achieve greater success. Rather than resolving to do new things in new ways in 2013, why not resolve to improve a little here and a little there with things you already do or need to do; but do it in a way that ends up being greater than the individual gains on your efforts.
Let’s use fictitious Rep Willy as an example; here are Willy’s current ratios:
http://www.sellbetter.ca/
As you assess your plan for sales success in 2013, you can take advantage of "Compounding" to achieve greater success. Rather than resolving to do new things in new ways in 2013, why not resolve to improve a little here and a little there with things you already do or need to do; but do it in a way that ends up being greater than the individual gains on your efforts.
Let’s use fictitious Rep Willy as an example; here are Willy’s current ratios:
- Sets 6 new opportunity appointments each week > 24 appointments a month
- 1 of three 3 of the above will go to proposal > 8 proposals per month
- Willy closes 2 of every 4 proposals > 4 closes a month
- Average deal size is $17,000 > $68,000 in revenue
Some will tell Willy to focus on one thing and set a goal to specifically and dramatically improve that one aspect of his selling. For example, increase the number of new opportunity appointments by a third, or increase the number of proposals from 1 to 1 ½ of 3, doesn’t sound like much but that is asking for a 50% increase. Good ideas and we all know the old saying about “big audacious goals”, but we also know the pressure of big expectations, and the setback of failure.
Instead, let the power of compounding deliver real, sustainable and measurable improvements and results. Look at improving key aspects of your sale by a smaller and more doable percentage, and you will achieve bigger results than having symbolic “big audacious goals”, that are usually more motivating than attainable or ever delivered.
Here is the power of Compounding, let’s ask Willy to move the dial by only 10% in all but the close ratio, where we will give him a bit of a stretch, and ask him to go for a 12.5% improvement. This may not be such a stretch given the momentum he will build working on the other ratios, 12.5% is not an extreme ask. Let’s take a look:
Instead, let the power of compounding deliver real, sustainable and measurable improvements and results. Look at improving key aspects of your sale by a smaller and more doable percentage, and you will achieve bigger results than having symbolic “big audacious goals”, that are usually more motivating than attainable or ever delivered.
Here is the power of Compounding, let’s ask Willy to move the dial by only 10% in all but the close ratio, where we will give him a bit of a stretch, and ask him to go for a 12.5% improvement. This may not be such a stretch given the momentum he will build working on the other ratios, 12.5% is not an extreme ask. Let’s take a look:
- A 10% improvement in setting new opportunity appointments per week > 26.4 appointments a month
- A 10% improvement in proposals > 8.8 or 9 proposals per month
- Here is the stretch, 12.5% increase will lead to a close ratio of 56% > 5 closes a month
- Average deal size is $17,000 > $88,358 in revenue per month
- A 77% increase over his previous performance!
Further, if Wilily was a selling a product where he had a bit of pricing discretion, and he normally exercised it to the fullest, and he cut that by a couple of percentage points the delta would be much greater.
The above demonstrates how Sales Compounding works by addressing a little improvement across various activities in sales at a time; it also works for you in another way. Much like reinvesting interest earned, and then earning returns on your returns, you can do the same for your selling. As Willy moves from 24 appointments to 26.4 appointments, say in a period of three months, he develops the habit of improvement, and he continues to apply himself, there is no reason he cannot progress another 10% on top of his first improvement over the next few months, and reach 29 appointments. As that trickles through the cycle, and he makes gains in his other ratios, he will realize better and better results.
The reality is that there is a limit to these gains, and I hope you all max out, but even when you do you will have options. You could achieve success with less time and resources, and more significantly less stress. So stop riding the roller coaster of hope and disappointment of unachievable “big audacious goals”, and get on the Compounding track. Imagine what you can do with your recaptured time and energy, certainly more that when there less predictable opportunities in the pipeline.
By Tibor ShantoThe above demonstrates how Sales Compounding works by addressing a little improvement across various activities in sales at a time; it also works for you in another way. Much like reinvesting interest earned, and then earning returns on your returns, you can do the same for your selling. As Willy moves from 24 appointments to 26.4 appointments, say in a period of three months, he develops the habit of improvement, and he continues to apply himself, there is no reason he cannot progress another 10% on top of his first improvement over the next few months, and reach 29 appointments. As that trickles through the cycle, and he makes gains in his other ratios, he will realize better and better results.
The reality is that there is a limit to these gains, and I hope you all max out, but even when you do you will have options. You could achieve success with less time and resources, and more significantly less stress. So stop riding the roller coaster of hope and disappointment of unachievable “big audacious goals”, and get on the Compounding track. Imagine what you can do with your recaptured time and energy, certainly more that when there less predictable opportunities in the pipeline.
http://www.sellbetter.ca/
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