Do You Know What Your Lost Sales Are Costing You?

Have you ever computed the cost of your lost sales revenue in a week or year?

My 35+ year research of the ratio of clients sales efforts to sales income, regardless of industry, organization size, individual sales experience and market conditions shows that the average salesperson has a 1 to 5 closing ratio on new prospects. If you or your salespeople are doing better than that congratulations if not please read on.

Tens of thousands of ineffective sales calls are made every day by well meaning but poorly trained salespeople. The extrapolated cost of lost revenue in a year of these lost sales is staggering to say the least. I have developed a simple formula that helps you determine how much actual revenue you are losing or how much your sales group is losing in a year. I recommend you compute this number only if you are a hardy soul and on some kind of high blood pressure medicine.

1. Subtract the number of closed sales from the total number of presentations given to good prospects in a week by you or one of your average salespeople.

2. Now multiply the remaining number (lost sales) by your average sales income per closed customer. Granted this number will vary but it will give you a good indicator. If you dont know the average income per customer determine that first. This will give you the lost total revenue for yourself or an average sales rep in a week.

3. If you are a sales manager or executive: now multiply that number times the total number of sales reps in your sales force. This will give you the total of lost revenue for the week by your combined sales group.

4. Now multiply this number times 52 and bingo youve got the magic number of your lost revenue or the lost revenue of your sales team in a year.

Here is an example for a typical rep:

-15 appointments per week, 3 sales, 9 no sales.
-Average income per sale - $1000.
-Lost revenue by this rep in one week - $9,000.
-As a manager, if you have 10 reps thats $90,000 in lost revenue in one week.
-Times 52 weeks thats $4,680,000 in lost revenue in one year

We only used $1000. for an average sale. You can imagine what the number would be if your average sale was much higher!

I understand that:

-every product/service has a different sales cycle
-every product/service has more or less competition
-every organization has more or less corporate resources required for support and sales costs
-that every sales rep has a unique territory
-that every sales rep has different levels of competence

But, the point remains, even if you used better than average numbers and favorable sales conditions, I guarantee your revenues per week and year or the revenues of your salespeople could be much - much higher.

Tim Connor, CSP is an internationally renowned sales, management and leadership speaker, trainer and best selling author. Since 1981 he has given over 3500 presentations in 21 countries on a variety of sales, management, leadership and relationship topics. He is the best selling author of over 60 books including; Soft Sell, Thats Life, Peace Of Mind, 81 Challenges Managers Face and Your First Year In Sales. He is also the CEO of Sales Clubs Of America. He can be reached at tim@timconnor.com, 704-895-1230 or visit his websites at http://www.timconnor.com or http://www.SalesClubsOfAmerica.com

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