What’s Improving – Your Sales OR Orders?2

By Tibor Shantotibor.shanto@sellbetter.ca

Bubbling up

As the economy continues to show hints of progress, and business picks up, it is important to understand the nature of the improvements in sales you and your company experience. Taking into account the old adage “all boats rise with the tide”, you need to be able to discern where your growth is coming from.  Is it from increased sales, or just an increase in orders due to an improving economic environment; and yes Sunshine, there is a difference, much like the difference between sales professionals and order takers.

More than ever, having a defined sales process, with supporting metrics is a must. Without that, you may easily mistake increased revenues with improved sales or selling, when in reality the improvement may be organic.  Increased demand, leading to an uptick in orders or improved selling, the two are very different, but often mistaken.

In fact, this is one of the risks of relying strictly on a single lagging indicator – Revenues, rather than a mix of leading and lagging indicators.  In many ways you can look at it the way investors look at interest rates paid on fixed income instruments, where they back out the rate of inflation from the total rate they receive from an instrument to arrive at the real rate.  Think of the organic increase in orders as inflation, and the real rate as YOUR ability to sell more or better in a given market.  All sellers benefit from a rise in demand, only those who focus on selling will grow sales beyond the herd, and get more than their share of growth.  Increased market share is always a good thing.

To avoid being caught, you need understand your intra-sale conversion rates, understanding if in fact you are doing a better job of converting leads to prospects, prospects to proposals and proposals to wins.  By measuring these and other critical points you will know if you are just benefiting from an increase in demand – more leads, or ability to convert those leads.  If you have a 4:1 lead to prospect rate, then it goes without saying that you’ll have more sales from six leads than 4, 1.5 sales vs. 1.  But if your sales and selling skills improve, and you can move to a 3:1 ratio, you’ll sell proportionally more.  This is important in down markets too, but people get fooled in up markets when the wind is in their sails.

Once you understand these measures, you can set goals for theses (or other) conversions from stage to stage, and benefit from the compounding effect, and increase both real and organic sales.  With goals and metrics in place, it is much easier to develop and Execute a tactical plan, you will be in a position to adjust or change your model to ensure continuous growth and skills improvements.

Not knowing can create more than false comfort, it could lead you to make wrong decisions, and by the time you realize, you may be left too far behind the competition.

What’s In Your Pipeline?
Tibor Shanto

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2 Comments

  1. Hugh Sutherland

    Hi Tibor,
    Another great post. Getting orders remind me of the chicken and egg situation when it comes to working out whether the chicken or the egg came first but in sales one thing is certain, prospecting definitely comes before orders!
    There can be no doubt that business only starts when there is an order-everything else comes next, yet a lot of companies believe in developing every thing else and can take sales for granted,
    Orders are not sales until the money is in the bank but one can find there are a lot of orders but they don’t achieve revenue targets. It’s getting the team to trawl for dollars not dimes. In my experience, big revenue orders are the ones that take months, if not years, to close and herein lies the challenge. Most, if not all sales representatives are tightly controlled to make “target” in terms of units or orders and shy away from account development which may affect short-term target performance.
    I once worked for a major German truck maker and my job was to take business away from other European competitors. I was not paid a commission but a straight salary to use whatever it took to convert motor carriers to the brand. All I had to do to keep my job was to show results and then introduce a regular commission-paid sales representative and help him/her to sustain the business and build customer loyalty to the brand. Some accounts took up to two years to win over but it was worth it for my employer and beating the challenge made it the most exciting job I have ever had.

  2. Tibor Shanto

    Great perspective Hugh.

    Thanks,
    Tibor

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