MH Marketing Sales Management

by Tim Connor, CSP

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

My 30 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 4 or 5 - closing ratio on new prospects. There are variables , of course, depending on the average dollar volume of the sale, the strength and presence of the competition, the qualification of the prospect and the tenure of the salesperson. If you are doing better than that – congratulations! – if not please read on.

Tens of thousands of ineffective sales encounters and prospecting calls are made every day by well meaning but poorly trained or motivated salespeople.  One of the common reasons why salespeople do not close more sales is the inability to effectively disarm sales resistance in advance or overcome sales objections during the sales process. In other words, they are ultimately selling and trying to close to a poor prospect.

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 revenue per closed customer. Granted this number may vary, but it will give you a good indicator.  If you don’t 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 you’ve got the magic number of your lost revenue or the lost revenue of your sales team in a year.

Let’s use as an example a retail sales location in a manufactured housing community. Here is an example for a typical salesperson, using a very modest net housing profit, as an example:

• 15 appointments per week, 2 sales, 13 ‘no sales.’
• Average net income per sale - $5000.
• Lost revenue by this rep in one week - $65,000.
• As a manager, if you have 10 reps on your team that’s $650,000 in lost revenue in one week.
• Times 52 weeks – that’s $33,800.00 in lost revenue in one year

We only used $5000. for an average net sale.  A retailer, developer and some community operators will be looking for considerably more. 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 assigned location or 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.

Learning to effectively handle sales resistance is one of the best ways to improve your sales results.  Naturally, it is important to be trying to close a good prospect rather than a poor one, but we can cover the prospecting and qualification issue in another article.

Keep in mind that the frequency, number and type of sales objections is an excellent clue that will help you determine whether you have a good prospect or a bad one.##

Tim Connor, CSP is an internationally renowned sales, management and leadership speaker, trainer and best selling author. Since 1981 he has given over 4000 presentations in 21 countries on a variety of sales, management, leadership and personal and business relationship topics. Tim has been a member of the National Speakers Assn for over 30 years. He is the best selling author of over 75 books including the international best sellers; Soft Sell, Corporate Disconnect, 81 Challenges Managers Face and Your First Year In Sales and Life Is Short. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , 704-895-1230 or visit his websites at http://www.timconnor.com AND www.CorporateDisconnect.com