Sales: Measuring for Success
Winning contractors are sales driven.
Having a team of salespeople out on the road selling each day is how we grow and scale our business. That means we:
1) Need a plan to build and train a team of salespeople that deliver consistent results and 2) Need a means of measuring the success of that team.
We’re going to talk more about building and training a great sales team down the road but, before we do, let’s start with that second item: How are we going to measure the success of our salespeople?
Total sales in dollars? That’s problematic because salespeople don’t work from the same number of leads, so you’re not getting a fair picture of how effective each one is.
What about closing ratio? That doesn’t take into account the size of the jobs. Maybe Skip closes fewer jobs than John but when he closes he brings in more money on average.
Well, then what about average sale? If John and Skip both had 50 leads and John’s average sale was $5000 and Skip’s was $4200, is John better? Measuring Average Sale size would say 'yes'. But what if we also took into account that Skip’s closing ratio was 42% and Johns was 29%? Skip sold $88,200 (50 X .42 X $4200) and John sold $72,500 (50 X .29 X $5000). Measuring average sale isn’t going to give us the clear picture we need.
Well, it would seem we have a measurement dilemma.
What’s the answer? Average Dollar per Lead or ADL.
How does it work? Well first off, we count every lead. This is the only way you can get accurate numbers to compare salespeople, compare your overall company progress, and understand your marketing costs correctly (remember every lead cost you marketing dollars). Let’s look at some numbers:
Anything stand out to you? The numbers tell some interesting stories but I’ll just point out a couple things here: Andrew brought in the most money, but he went through the most leads to make that happen. Sam didn’t get that many leads but when he got one, he did well with it.
What else can we say about this sales team? What about taking a closer look at the marketing cost for each salesman (divide cost per appointment by ADL):
To set things right, you have to see things right. Having an effective means to measure the success of your salespeople is a critical piece for any home improvement, home repair contractor looking to take their business to even greater heights.
Try using ADL to measure your team’s effectiveness and see what results you get. Maybe you’ll be surprised.
See you soon.