Sales and Sales Management Blog

June 23, 2014

You Need to Know Your Sales History if You Want to Grow Your Sales Business–and Income

Filed under: Uncategorized — Paul McCord @ 12:37 pm
Tags: , , , ,

OK, so metrics are boring—but knowing your numbers is critical to your success.  Go ahead, read the article and then apply the math to your sales business.

Do you know what you have to do if you want to increase your income by 25%?  How about if you want to increase it 70%?

The obvious answer is to increase your production by 25 or 70%.

But is that the right answer?

Maybe–probably–not.

Rather than thinking in terms of increasing your production by 25 or 70%, ask yourself these questions:

What is your average annual commission per client?

Since most of us have different products and/or types of clients, break it down even further:

What is your average annual commission per client type A (say retail client)?
What is your average annual commission per client type B (wholesale)?

Or

What is your average annual commission per individual client?
What is your average annual commission per corporate client?

Or

What is your average annual commission per client buying service A?
What is your average annual commission per client buying service B?
What is your average annual commission per client buying service C?

Here’s a hypothetical example:

Mary sells widgets to both individuals and companies.  Over the past 3 years she has sold widgets to 300 individuals and 114 companies.

Her average commission for selling to an individual is $375.
Her average commission from a sale to a company is $1,050.

Last year her income was $107,050.

She wants to increase her income by 22% or $23,500 this year for a gross income of about $130,000.

Since she knows her production/commission numbers she knows exactly what she must do:

She needs to sell to an additional 28 individuals and 12 companies to reach her goal.

However, she could refocus her business by concentrating on business sales as each additional business sale would reduce the required additional individual sales by 2.8.

She could also take her numbers one step further and calculate what her averages have been over a shorter period of time such as 6 or 12 months.  When she does that she discovers that:

Over the past 12 months she has sold to 105 individuals with an average commission of $450 and 45 businesses with an average commission of $1300.

With these more accurate current numbers she knows in order to reach her goal she must sell to an additional 23 individuals and 10 new businesses.

So, that’s all she needs to do in order to reach the $130,000 income she wants for this year—simply make an additional 2 ¾ sales per month.

Again, she could refocus her business and concentrate more on corporate sales as each additional corporate sale would decrease the number of individual sales needed by almost 3 sales.

All the sudden that 20% increase doesn’t seem so difficult to accomplish because she knows exactly what it will take to get there.  The hocus pocus of pulling numbers out of thin air, the wondering of how in the world she can make an additional $30,000 is gone and replaced with knowledge—knowledge of what she has done in the past, what she is doing at the moment, and what it will really take to reach her goal.

Reaching your income and sales goals can be just as concrete and just as realistic as Mary’s goals were for her if you’ll take the time to do a little research and math.  These are crucial metrics of your business that you must know.

Don’t play a guessing game.  You can’t afford to operate in a vacuum.  Knowing your sales history is key to reaching your goals for our future business tends to replicate out past business unless we consciously break out of that pattern.  You need to know where you’ve been in order to get where you want to go.

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2 Comments »

  1. […] OK, so metrics are boring—but knowing your numbers is critical to your success. Go ahead, read the article and then apply the math to your sales business. Do you know what you have to do if you want to increase your income by 25%?  […]

    Pingback by You Need to Know Your Sales History if You Want... — June 26, 2014 @ 9:32 am | Reply

  2. yes sales history can help us to know our loss or profit and we can make goal for the next time.. 🙂 I agree that it is important to know for getting succes

    Comment by harrisondear — July 9, 2014 @ 6:11 am | Reply


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