How to calculate your sales conversion ratio.
How to calculate your sales conversion so you can focus on the most important to increase your sales and achieve your sales goals.
If you were to aim for a target, would you just point in the general direction and hope you hit it?
Of course, not! You would take careful aim, in fact you would make sure that you could clearly see the bullseye to do your best to hit it the first time.
That same approach works with your sales when aiming for a sales target.
Let me share with you how to find the bullseye on your sales target so you can take careful aim and nail it.
- Do you know how many calls you need to make daily or weekly to achieve your sales goals?
- Do you know what your close ratio is?
- Do you know how many prospects or opportunities you need to touch to reach your sales goals?
The answer to these questions will allow you to clearly focus and aim at your sales target.
When setting your sales goals, it’s important to have crystal clear numbers on what the goal is, what your conversion ratio is, and how many deals it requires you to close, for you to achieve your sales goals.
In my opinion, it’s not an option, it’s a necessity because ambiguity creates sales reluctance which is the enemy for a sales person. If you’re not absolutely crystal-clear on what you need to achieve to hit your target, then you’re just shooting in the general direction hoping to hit your sales target.
Successful sales is about hitting your sales goals and knowing exactly how much effort is required to achieve your sales goals. If the sales targets are not hit at the weekly, monthly, and quarterly then it most likely is not going to happen by yearend.
So, let’s bring it into focus and calculate your sales numbers so you can back into how many calls and opportunities you need touch to achieve your sales goals and take the mystery out of it.
No need to write down the formulas because I’ve included a link in the description below to my sales calculator worksheet that you can download and easily calculate your sales numbers.
Let’s first calculate your close ratio.
The sales close ratio is your sales effectiveness indicator. It’s how well you do at closing based upon the number of opportunities you touched. Similar to a batting average for major league baseball player.
To calculate, Take the # of closed deals or sales you had in the past 12 months and divide that by the # of leads or prospects you worked in the same given time frame.
For example, let’s say you had 20 closed deals / by 100 sales leads that you touched that would give you a 20% close ratio.
Calculate how many leads or opportunities you need to touch to reach your sales quota
Now, let’s calculate how many opportunities you need to touch to reach your sales goal.
Let’s say you have a sales quota of $1 million
And let’s use our 20% conversion ratio.
The next number we’ll need is the average deal size. To calculate that take your sales by $dollars divided by the number of deals you had in the same given time frame. Lets’ say the average deal size is $10,000.
Now we can calculate how many deals you need to close to hit your $1,000,000 sales quota.
Simply take $1,000,000 sales quota and divide it by your average deal size which is $10,000 and you’ll come up with 100 closed deals that are needed to reach you sales quota.
Now let’s take it a step further, to calculate how many opportunities you need to touch in order to reach your sales quota; take the # of closed deals needed which in this case is 100, divided by your close ratio of 20%, and viola’ you come up with 500 opportunities you need to touch in a 12 month period. This means you would need to target $5,000,000 of opportunities to achieve your sales goal of $1,000,000 and 100 closed deals.
Now you can take careful aim and hit the bulls eye.
If you really want to be a sharp shooter let’s break it down even further so you have absolute clarity on what you need to hit by the week, month and quarter to keep you focused on the most important.
Here’s what the sales goals look like when you break it down by time period.
By the Year: 500 leads valued at $5,000,000 to generate 100 deals with an average of $10,000 per deal based on a 20% close ratio
By the Quarter: 125 opportunities valued at $1,250,000 to close 25 deals which is $250K per quarter
By the month: 42 opportunities valued at $420K, to generate 8 deals valued at $80K per month
By the week: 10 opportunities valued at $100K to generate 2 deals valued at $20K per week
To be successful in sales requires focus on the goals, and the right habits executed consistently over time.
And there you go. You now know how to calculate your close ratio and how many deals you need to aim for to achieve your sales goal.
Don’t forget to download my sales calculator by visiting https://thefocusguy.com/download-sales-calculator/
Have an awesome day!
Mike Brenhaug – The Focus Guy