Get off the Feast or Famine Rollercoaster
By Mark Wardell @MarkWardell | March 31, 2009
It's one of the biggest frustrations in business. One month you're busier than you've ever been, and the next month you're wondering how you'll make payroll. Why is it that so many businesses ride the "feast or famine" rollercoaster?
Most often, sales fluctuations are a result of unbalanced management. They inhibit growth because when a company is constantly being thrown from bare survival mode into utter chaos and back again there is never an opportunity to step back and consider any strategic improvements.
So while it may seem counterintuitive, most companies don't have trouble with sales due to their lack of sales skills. Most companies have trouble with sales due to their lack of managerial skills. The key to sales success is consistency. It's simply not possible to accurately measure and improve something that changes from week to week.
So how can you achieve a Zen-like sales state in your business?
At Wardell, we solve this problem using a simple, yet powerful, forward-looking sales tool. Here's how it works.
- Begin by documenting your sales system in detail. Then follow this system to the letter.
- Using a spreadsheet (or your favorite sales-tracking software), track the number and dollar value of all your warm leads or sales quotes, including those from the customers you expect to continuously do business with.
- Next, estimate a closing date for each potential sale, for new and existing accounts.
- And finally, compare those numbers to your actual results.
Before long, you'll begin to notice patterns emerging. A tracking tool like this will show you how many of your prospects are likely to turn into clients, and when. For example, you might discover that you convert an average of 50 percent of your leads into sales and that an average sale takes 45 days to close. It will also give you a fairly accurate estimate of the potential dollar value of those sales.
Armed with an accurate estimate of the business coming your way, you can then adjust your sales efforts to help maintain a consistent sales pace.
A steady and purposeful sales pace translates into a steady production or "order fulfillment" pace which is ultimately more profitable for any company. Resources are used more efficiently (i.e. errors are reduced, overtime is reduced, and so forth). The overall capacity of the organization is increased because downtime is eliminated. And customers receive their goods or services on time and as promised, leading to greater customer satisfaction and ultimately more business, which can now be handled because of increased efficiencies.
Creating a sales tracking system will ensure you are better prepared all around. For example, if you are a manufacturer, you'll be able to more accurately estimate your production needs, thereby reducing inventory and improving cash flow. Or if you are a wholesaler, you'll be better equipped to manage your buying volumes throughout the year, and so forth.
By developing a forward-looking perspective on your sales cycles, you will be equipped to take charge of the sales rollercoaster and build a much more sustainable business.