The Importance of Setting Goals in Sales

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“A goal is not always meant to be reached, it often serves simply as something to aim at.” – Bruce Lee

Today is the first day of 2014.

 

Here are some of the things that I need money to buy for me in 2014:

-A trip somewhere not in North America ($5,000)

-An Extra $2,000 in commissions a month to a nicer apartment downtown so I can enjoy the nightlife and not have to travel so far to get home at night.

Since my commission rate is 8%, I need to sell $62,500 to earn my trip someone not in North America.   And I need to sell an extra $25,000 to raise my income by $2000/month.

This isn’t some stupid sales target someone else is imposing on me (like a sales manager.)  These goals are self generated because I need the money to do something for me that I want.  And by practicing goal setting, tracking and measuring my sales activity I know I have a reasonable chance of hitting my goals.

 

3 Simple Steps to selling.

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Going through pg. 10 of Lifestyle Selling made perfect sense.  Selling is really simple:

1.  Fine Tune your Niche Market

2.  Identify Your Client’s Level of Interest

3.  Use the Nine Methods of Inspiration

However it’s one of those things in life, that for some is simple but not easy.
And for many-to master the mundane, it’s very boring to do day in and day out.

In my telemarketer days,  I was just stuck on step 2 and step 3.  My boss or marketing manager was the one deciding who to call or who was the ideal prospect in step 1.  They were the ones that picked who to sell to.  Sometimes it was “everyone’s your niche.   Call from this phone book or knock on all these doors in this neighborhood.”  Or joining some network marketing companies the niche would be “who are the closest 5 people you know?”

But that never worked for me.  Here I had some generic product, and I was asking people to stop buying whatever they usually used to buy from me, a product that was supposed to do more, better, faster, and sometimes for less/same price but many times for more money.

And I always found, that even though I was using pre-made scripts from a company, with pre-made rebuttals to objections from whomever I was paid (or not paid if I was working on commission) to call, they were usually useless because I was selling to people that had no interest in buying my type of product or service.

Basically, I was always selling to the wrong crowd of people!

I was using every rebuttal and every persuasion technique until I was blue in the face to try and sell something to someone that didn’t want to buy from me.   All this frustration because I was paid to sell to the wrong niche.  But hey, I was getting paid to test this niche by marketing manager or boss.

When you get control of who you can to sell to, the types of clients you want, the people you want to serve and whom also have a need for your service, things become much more easier and stress free.

How I plan to make an extra $1,000 per month through sales

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I spoke about my mentor’s book, Lifestyle Selling for Women by Pauline O’Malley. For those that have not read it yet, it’s an instant sales plan for instant income and here is my plan to use this in a new market to sell my services as a commercial insurance broker and look for a cross sell of home insurance afterwards.

First, some business plan math.

The average commission I make is about 8% on commercial insurance. (It’s low, I know!) However, I do get a chance to make that again next year and the average client stays with me for about 3-7 years before they move on. Here are some assumptions.

Average Sale = $1,000.
Average commission = 8% or $80.00
Average closing ratio = 10% (Remember, we are assuming that we are going in cold, and I’ve heard this 10% cold ratio has become a worse lately. My warm closing ratio is around 65-75% and as high as 96% from a referral. But if you’re cold calling, it can actually be as low as 1%, which is considered good for a direct mail or Adsense campaign!)

How many clients do I need to make $1000/month? About 12.5, so 13 new clients a month. ($1000/$80)= 12.5.

So working backwards, how many calls do I need to make to get those 13? 13/0.10 = 130. I need to be able to literally talk to 130 people a month for a few minutes and pitch them.

But wait, let’s go a little further than than. Let’s say we only get to pitch 10% of the people we actually call. Now how many calls do I have to make?

130 people willing to talk to me about insurance/10% = 1300 attempted calls.

So, to summarize. I need to make 1300 calls to talk to 130 people to get 13 new clients willing to purchase on average $1000 worth of insurance, of which I will make about $80 in commission per sale earning me a gross of $1040.00 extra per month.

I know it takes me from past experience about 5 minutes to make a call on average between all the hang ups, the introductions and having people hang up on you or tell you they are not interested.

So 1300 x 5 minutes = 6500 minutes / 60 minutes per hour = 108.33 hours.

$1040/108.33= $9.61 per hour. But wait, there’s more-and it gets worse!

It will take me about 30 minutes to talk to those willing to talk to me and then collect the requisite information for their insurance application and probably about another 30 of back and forth with the underwriter and then another hour of presenting, rebuttal and overcoming any questions and objections the prospect may have.

So out of 1300 calls, I’m going to spent about 120 minutes on those 130 tire kickers. 130*120= 15,600 minutes.

15,600 of “presentation time” + 6500 minutes of “cold calling time” = 22,100 minutes/60 minutes per hour = 368.33 hours.

$1,000/368.33 hours = $2.82/hour.

But wait! It gets even worse (before it gets better.)

I’ll have 13 clients, and I’ll spend about an hour probably doing after sales support and preparing nice presentation letters of their policy.

So, lets tack on 13 hours extra to the equation. 13 hours x 60 minutes = 780 minutes

6,500 minutes of “cold calling time”+15,600 minutes of “presentation time”+780 minutes of “after sales support time” = 22,800 minutes/381.33 hours total from nothing to enough clients to earn approximately $1040.

$1040/381.33 = $2.73/hour.

Yup, you read that right. My initial clients are going to earn me $2.73/hour.

Why would I do something for so little money?

Because next year, it only takes about 60 minutes to make the sale again.

I’ll have 13 clients, which take me 60 minutes, so 13 hours. But I will earn $1040/13hours = $80/hour.

And if I keep these clients on average 3 years, that means I’m going to make $2.73/hour my first year, $80/hour in year 2 and another $80/hour in year 3. So it will be on average $54.24/hour that I make per client. Now that is not a bad hourly wage! And if I give good service and they last 7 years? It works out to $2.73+$80+$80+$80+$80+$80+$80/7=$68.96/hour.

But wait, it gets even better than that (sort of.)

Say I do get 13 new clients. What if 10% of them allow me to sell them Condo insurance for a $20 commission?

It only takes about twenty minutes to do a condo application. So that’s $60/hour right there.

Year 1 means I need to take 5 minutes to ask if I can do their condo insurance. So 13 x 5minutes = 65minutes/60 = 1.08hours.

1.08 hours to ask for their condo insurance. + 1 hour to process.

=$60/2.08= $28.85/hour on the Condo Insurance part but really this is an exaggeration.

Let’s re-do some math.

I’m going to earn $1040 on my initial 13 clients. Plus I’m going to earn $60 extra in terms of Condo insurance commission.

That’s $1100 extra.

It’s going to take me 381.33 hours to get my initial clients. Plus it will take me about 2.08 hours for the condo insurance.

That’s $1100/383.41hours= $2.87 per hour in my first year. (So it’s a little better than first calculated)

In Year 2. Assuming no clients leave (This is a big if, but on average, with attrition taken in, my clients from past experience will stay about 3-7 years.)

13 clients, 60 minutes each and $80 in commissions per client = $1040/13=$80/hour.
add:
3 clients, 20 minutes each, and $20 in commissions per client = $60/1hr =$60/hour.

Or $1100/14hours= $78.57.

Yup, you read that right. Going for the up-sell actually lowered my per hour rate in year 2 onwards. But doing the up-sell doesn’t take that long and it does allow me to be the one stop go-to guy for home and commercial insurance. The only way I would lose the client is if their car insurance guy asked for a shot at their home and business insurance or if another cold caller beat me some how or if I drop the ball on service or the client’s friend or family member decides to get into the insurance business.

So how long does it actually take to spend 383.41 hours per month?

Well, if you work a 40 hour work week it would take 9.59 weeks. That doesn’t really work if you plan to make the extra $1040 in one month. You would literally have to be calling 16 hours a day which isn’t possible given that most businesses don’t answer their phone 16 hours a day.

In this case, it’s a matter of lowering expectations as it is physically impossible to do this task given the time frame, average sale size and margins.

Most people, myself included work a 30-40 hour work week already. So if you’re looking at making extra money on the side, in this case, only doing 25% of this goal would make more sense given the constraints of the average sale size and commission percentage. The only way to get ahead is to sell more, earn more of it, and do it in less time. Or pay someone else to do it for you while still making a profit off of your employee/contractor. But the above math has to make sense.

No one would willingly work for the initial $2.76/hour if they didn’t understand the back end of the deal. And never let yourself be fooled that you can get paid more upfront if you plan to stay in the same job/business for a few years. You can make $54/hour over 3 years per client or a lot less (sometimes even minimum wage) if you just plan to stay in the job for less than a year. That’s why they say true wealth is made over time. That average $54.24/hour goes up even more if the client stays a full 7 years to $68.96/hour. The trick then, at least in my situation is to get enough clients over time and service them well enough to overcome any attrition (hey, it happens.)

Lifestyle Selling for Women

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Ok, I’m not a woman.  However, this book was written by my mentor Pauline O’malley and many of the theories found in this book are found in her sales seminars and sales training course online. I remember being a young college graduate and taking her Revenue Builder Course for corporate clients (now updated and rebranded to Rev Turbo) years ago. Back then, as now, I was and today still am very impressed with the number of successful people that attend her courses to get better at what they do in their profession. Which is selling!

Check it out below or see the link to my right to get the book or visit www.paulineomalley.com for more information about her sales courses.

Lifestyle Selling for Women Lifestyle Selling for Women

 

I’m going to touch upon some of the timeless sales principals found throughout this book in my blog as Pauline has distilled all the principals down into a very concise volume.

All you have to do add the effort!

My first B2B sales presentation afterwards…

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It’s been awhile since I’ve wrote here.  But I wanted to share the story of my first sales presentation after the presentation seminar.  (Yes, I know it’s been a few months.)

My first presentation was for a plastics manufacturing company.

I went, and came with an application form for business insurance and sat inside a cafe a block away from the prospect and thought about what to say.  The problem with selling property and casualty insurance is that I don’t have any set scripts for any particular business segment.  It’s a very simple product.  We read the contracts and pick out the features and benefits and present them to the client.  However in this instance, the client ended up calling me.   They were a referral from a life insurance person that cold called and basically knocked on the prospects door and provided a presentation.

So this was a little different.

The prospect knew why I was there.  We had spoken on the phone.  They needed a commercial general liability policy to satisfy their lease.  I went in early and spoke with one of the partners.  I was waiting for a man named Mark.

After spending some time asking about the business Mark showed up.  I introduced myself and my firm and said to him, it takes an application to get you a quote.  (That’s actually when I do make a presentation.)

We spent about 40 minutes talking to him and asking about the business.

After that I shook hands with them all and left.

I remember getting back to the office and sending the quote out to a few underwriting companies.  The prospect mentioned that there was another insurance agent that had arrived in the morning so locking in a quote right away was imperative.  In the insurance industry with business insurance the first broker that gets the application to the underwriter is usually the only one to be able to quote that company.  After three days, only one would respond with a quote as foreign sales are usually a problem for insurance companies.  When you get to that, you end up dealing with different laws in different countries.  One company wanted over $20,000 in insurance premiums.

I remembered that prospect only needed something to cover the lease and equipment in the event of a fire.

So I suggested that to the underwriter and they came back with a premises liability policy only.  It was a lot less at  around $4,000.

I spoke with the prospect on the phone and e-mailed the quote to him.

The presentation was in offering the quote.  This was the realization.  When I get a referral, my presentation is actually not in the first meeting, but the second meeting.  Yes, there is a mini presentation of who I am, but the prospect knows why I’m there.  They called me.  My presentation is afterwards, when I have a quote in hand from the underwriters.

Their quote was exactly what they needed.  Premises liability only.  And coverage for their equipment in the event of a problem.  The problem was that the price was still out of their budget.

I followed up on calls for the next three weeks, but would not get a hold of Mark.  It seemed that he would see my number and just not answer.  I left a few messages.

My last resort usually is to send an e-mail.

We’ll see what happens, but using Pauline’s Rev Turbo score card, if they don’t have the budget it never looks good.  The best you can do is stay in touch until they do have the budget to buy from you.

In the meantime, let me tell you about my second sales presentation, third and fourth ones after that…

My First Online Sales Training Review

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I’m so excited today.  This is my first review of an online sales training seminar.

Pauline O’malley’s Rev Turbo is a Citrix based gotomeeting.com on becoming a better sales person.

Today’s online seminar is:  Popping Proposals: Giving What Buyers Want.

Before the meeting I was e-mailed some “homework” to get my thoughts going about my business.  The handout talked about scheduling and implementing your plan.  It described how to figure out your lead time and your return on investment.   Working through it, I became more and more excited about the online seminar itself.

My Online Sales Training Review of Popping Proposals:

Although I had some trouble with gotomeeting.com’s software loading in the beginning, after I got it to work it worked fine.  I dialed into the telephone audio portion and then unmuted the audio portion with my phone afterwards.  (I would recommend listening through headphones.)

The presentation itself was great.   Pauline gave me exactly the number of slides to use in a presentation and explained the psychology of a person’s attention span and to present accordingly.  She clearly explained how cognitive dissonance affects the buying process and buyer’s remorse and how to overcome it in your proposal.

She related how Popping Proposals fit into the 6 Stages of Acceptance (Buying) and gave a lot of tips on making your proposals effective in a selling environment.

I loved the motto:  “Proposals don’t sell people.  People sell people.

You can enroll in Pauline O’malley’s online workshop here:  http://www.paulineomalley.com/how-we-help/online-workshops/

Birth of a Salesman: Journal of my Online Sales Training from RevTurbo

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So I’ll admit it.  I suck at sales.  Rather, I suck at lead generation, but when the client is in front of me, I usually can close them no problem.  And in this economy, you’ve got to find enough people to get in front of.

I’ve been in the property and casualty business for a few years now because in my head I figured it would be a good business.  Everyone needs insurance right?  The mortgage companies won’t lend unless you have insurance and if you drive in my province, the government forces you to buy insurance or they issue you a $600+ ticket.    So, it’s an easy sell!  Well…the reality was sort of.  It seems everyone in my industry thought the same thing and the margins just get crushed.  Isn’t that the same thing everywhere else.  You can sell something hard, and make fewer sales as long  and make a good living doing it because the sales commissions are bigger.  Or you can sell something easy, but barely scratch out a living because the margins are small and you’ve got to sell a lot of it.

So here’s the dilemna.  I want to quit my job (don’t we all.)  And I want to do something better with my life.  (Again, don’t we all.)  But no matter what job I do, I still have to make a sale.  Either to my boss, or to a customer, or to someone I’m trying to recruit to make a sale for me.   So I’m always running into the problem of making a sale.  Although you don’t like doing it, it has to be done.

When  I was in college, I was paired up with a mentor, Pauline O’malley of Rev Turbo.  Back in the day, her training company was called the Revenue Builder.  It was a very effective sales seminar and the sales course work broke the sales process into very simple steps.  But I hated the work.  But the work was what made it worked.

I bounced around a few careers and was always looking for a way around cold calling.  Joining networking groups like BNI, advertising through direct mail and flyers, building online websites that would page rank in google and asking for referrals.  Many ways of generating leads, but eventually I hit a wall.  Today I’m doing something about it.   I’m going back to the basics and cold calling and generating new clients out of no where again.

9 years later, I looked up my old mentor, and found out that she’s remodelled her training program.  Here is my story of my online sales seminar training with Pauline O’malley’s  Rev Turbo.