Not so many years ago the major emphasis in sales was on keeping track of the number of phone calls, the number of appointments made from the phone calls, the number of proposals generated from the appointments, and the number of sales that resulted from the proposals. Today many companies and sales departments have stopped keeping track of this kind of information.

I think that the numbers aspect should be brought back into selling. How else can you truly measure and evaluate sales performance and take corrective action? Even slight increases in mathematical improvement can greatly increase your sales figures, which will increase your profits and the incomes of your salespeople. That, in the modern language of sales, is a “win-win” situation.

Our first math formulas are Closing Ratios: (1) The number of actual sales divided by the number of sales attempted (#S/#A), and (2) The dollar value of actual sales divided by the dollar value of all sales attempted ($S/$A).

Example:

Linda presents proposals to 20 prospects during a month. Five of the prospects buy from her, the remaining 15 do not. Her number closing ratio is 25 percent (5/20 = 25%).

The total dollar value of the 20 proposals Linda presents is $30,000. The dollar value of the five sales she does make is $9,000. Her dollar closing ratio is 30 percent ($9,000/$30,000 = 30%).

Linda can realize a significant increase in sales without any additional prospects just by increasing her closing ratios. A 30 percent numbers closing ratio would result in six sales. Assuming an average size sale of $1,800, Linda would have $10,800 in sales volume. This represents a 20 percent increase in sales for the month.

A low numbers closing ratio is usually the result of trying to sell to unqualified prospects or not selling properly. A low dollars closing ratio is usually the result of spending too much time on low value sales. Any closing ratio below 20 percent for either measurement should be cause for concern.

Our second pair of math formula are Average Size Sales: (1) The average dollar size of all sales attempted and (2) The average dollar size of actual sales.

Example:

1. The 20 proposals Linda presented totaled $30,000. $30,000 divided by 20 = $1,500 average size sale attempted.

2. She sold five of her proposals for a total of $9,000 in sales. $9,000 divided by 5 = $1,800 average size sale.

If the average actual sales amount is significantly lower than the average for all sales attempted, the salesperson may be spending too much time on the easier sales.

In Linda’s case, her average size sale is higher than her average size proposal. She is closing a good number of high dollar volume sales.

This math is very significant for monthly and quarterly sales forecasting. You can easily determine your own sales picture by making your personal sales report.

We will look at Linda’s sales figures again and use them in the report. We are going to assume that her sales were made in the month of January 1993.

During the month, Linda presented 15 proposals for a total volume of $30,000. Each category in the report (A through G) contains important information.

A. These numbers, and those in B, are an arbitrary split of the 15 prospects that Linda did not sell. Linda has “lost” five of her prospects for a volume of $5,000. These are prospects that bought from a competitor, etc.

B. That leaves ten prospects for a volume of $6,000 still pending. These prospects have not bought from anyone yet.

C. We are assuming here that Linda has five pending proposals for a volume of $15,000 still active from previous months. These are prospects who also have not yet purchased from someone else.

D. This is the total number and volume of pending proposals Linda is still trying to sell.

E. We are going to assume that during the past six months Linda’s closing ratios were the same as for her current month’s sales.

F. Based on her closing ratios of the past six months, Linda can expect to close four of her pending bids for a total of $6,300. If we assume that her current month’s sales are the same as her monthly average over the past six months, Linda has less than one month of business as active prospects. In order to keep her averages at the current level, she will need to generate additional proposals and sales during the upcoming month.

G. Linda’s sales for this month are equal to her monthly averages in numbers, volume and average size sale. The average size of her forecasted sales is $225 lower than her average over the past six months. This indicates that Linda needs to find some higher volume prospects during the upcoming month to keep her average up.

Use this simple “sales math” to keep good salespeople on track, uncover potential problem areas on a monthly basis, and determine goals and objectives.