Read the first article in this series on developing a competitive advantage: Focus on the 180: Front-End Sales Cycle Management.
What is your competitive advantage? No, really! What is your competitive edge? Sounds like a simple question, and when asked, most distributors, reps and manufacturers answer pretty quickly and predictably. If your goal is to excel in a competitive market, continuous attention to systems, methods, and processes that offer a competitive edge is essential. This series of articles focuses on areas proven to give companies a real competitive edge, yielding measurable results. These methods and processes must be things you and your team can focus on – and control – internally. Excuses related to external factors such as the economy and industry softness need not apply.
The topic in this article is managing your Load Input Goal. Having been in and around industrial sales for the past 30 years, I can count on one hand the companies that did not establish some sort of sales goal at the start of a year. But sales goals are typically backward-looking and expressed as some percentage increase over the previous year. They generally start at the top with a total company sales goal and filter down to territory, product, or service, and then ultimately to the salesperson.
Does this sound familiar?
If it does, you’re part of the majority and, and this is the normal, but not necessarily the best, way of doing things. Let’s talk briefly about how they are typically managed. The focus is on the back end looking at how the sales stack up to the previously established goal. Monthly sales reports are generated and with some quick math the numbers are compared and result in either a pat on the back or a figurative kick in the rear.
If goals are missed, the standard retort is “I’ll make it up next month.” This is a reactive rather than proactive way of looking at things.
To gain a competitive edge, you must shift to a proactive way of thinking and focus on Load Input Goals. What is your Load Input Goal number? No, it is not the pipeline, which is the answer I typically get when I ask this question during my seminars.
Load input goal management is a different way to think about and run your business. This concept is about understanding what you need to reach your sales goals in the form of Load Input, Opportunities, and/or Quotes. It is forward-thinking and proactive rather than based on the historic results. It is, in fact a leading indicator for future business.
The Secret Sales Formula I use is:
Sales Goal = Base Business + (New Load Input X Hit Rate)
Let’s break this down:
- Sales Goal = the annual sales goal for your company, a subdivision of your business, salesperson, territory, product, etc.
- Base Business = the recurring base business built over time for that subdivision, typically MRO business and not including one-time large projects.
- New Load Input = the new opportunities your sales team has identified and is currently working on.
- Hit Rate = the close-rate percentage your company has experienced for opportunities and quotes converting to orders.
The key here is determining the New Load Input requirement which will become your Load Input Goal in the above formula. With this simple formula you can determine what the Load Input Goal requirement is to meet your sales goals, proactively … in other words, your leading indicator for future sales.
You are now looking at the front end of the sales cycle and taking a proactive approach to delivering the ability to contemporaneously monitor whether the pipeline is adequately filled to reach your desired sales goals. This gives you the opportunity to take action as necessary before it’s too late: a true competitive edge.
The takeaway: Establish this Load Input Goal for the areas of your business that you want to manage proactively: company, territory, products, salesperson, etc. The key now is to track the actual NEW input (opportunities and quotes) against Load Input Goal.
Trend this on a monthly basis, and you will see clearly whether you are heading in the right direction. If your input trend is constantly below your Load Input Goal you most likely will not reach your sales goal. If the input trend is constantly above your Load Input Goal, you probably will be heading to the bank to deposit that commission check.
Take control of your sales process and put focus on this simple, yet typically overlooked, philosophy. This approach will give your team a Competitive Edge.