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How To Set Sales Targets

how to set sales targetsHow to set sales targets was a recent question from a new business owner. I appreciate that no one wants to pull a number out of the air. But how do you develop a revenue target that makes sense? Is achievable? Will get you the money you desire?

So to begin with, what resources do you have? Other people, time, money? These play a role in your choices and the reach you can achieve. If no one knows you exist, you won't get any customers, will you?

Critical Factors of How To Set Sales Targets

It all comes down to the daily behaviors you (and your staff and your other resources, if you have any) actually DO.

Suspects >> Prospects >> Customers

That's a generally accepted flow. Suspects are breathing human beings who MIGHT have a need for what you offer. Prospects have stuck up their hands and said, "Yes! I *am* in that situation which your solution can get me out of!" And customers have paid you for that solution.

An effective sales process is all about filtering. You filter suspects into prospects, and prospects into customers. So returning to daily behaviors, how many suspects a day can you encounter? And on average how many will filter into prospects? Of the prospects, how many can you filter into customers?

The more you can automate this process, the better. Especially the Suspect >> Prospect section. You do not want to be wasting your time on people who are unlikely to buy.

At first you won't know the exact ratios. How could you? Industry trends may be available to help your guess, but it will still be a guess. That's fine. Begin with a conservative ratio, and then improve as you get real feedback.

You have at least two approaches to reaching your X number for revenue. Either you can set the revenue target at the number you want to earn and work backwards to develop the behaviors and resources you require to reach it...or you can figure out the behaviors you can accomplish per day and work forwards to a possible total.

Example #1 of How To Set Sales Targets, Working Backwards:

You want to make $500,000 in the next 12 months.

Your revenue per sale is $1,000.

Simple division: you need 500 customers.

Let's say you're new and not very good at selling, so a reasonable ratio would be 15 prospects who have to be spoken to for one sale. That's 7,500 prospects you need to get into your funnel this year.

Building back from that, let's say conservatively you will require 20 suspects to learn about your existence to get one prospect to stick up their hand and say, "Yes, I might need that!" So now you know you need at least 15,000 suspects.

Daunting?

Now compare to your resources. How will you get in front of those 15,000 suspects? Who and where are they? How much does it cost to reach them? What process will you use to convert the 1 in 20 you expect to become a prospect? How long does this part of the process take?

And for the sales...out of the 15 prospects you must meet to get an order, do you have the time to personally do this? Or must you hire salespeople? Can you automate? How much does this cost? How long does it take to convert?

For simplicity's sake, assume it takes less than 30 days for the whole funnel to work and a suspect to go in and a customer to pop out. This means you must meet 625 prospects every month, or an average of more than 31 EVERY DAY!

This is useful information, isn't it? Because it tells you what you need for resources: it's unlikely you alone will be able to meet with 32 people in one day, every day, 20 days out of the month, isn't it. 5 or 6 is more likely for a moderate-ticket sale like this, right? Now you know you need a half-dozen more sales staff or you won't meet your target no matter how hard you work.

Example #2 of How To Set Sales Targets, Working Forwards:

You have 20 working days in the month. Each day you can meet with 6 prospects. That's 120 prospects a month to get your revenue from. At a 1 in 15 closing ratio, you can expect 8 sales in a month or $8,000 in revenue...

**and there you will be capped until you can apply more resources.**

This is critical to understand, as a single operator. There comes a point where you just can't do any better alone.

And continuing, you need 20 suspects to generate one prospect...that's 2,400 suspects you need to engage. Where are they? How will you reach them? Do you have the time--with blog entries, emails, what have you--to do this?

It should be obvious how you build in affiliates now. They have their own funnels with their own ratios, but you can forecast their conservative results on an individual basis.

Remember, your ratios will improve over time. You will learn the market's pain points, get used to the sales process, and be more comfortable closing.

Make sure your costs of customer acquisition--marketing, your time, sales staff and more--don't eat up your profit. Consider your pricing carefully. I teach people to begin with Price because it keeps them out of trouble, and focuses them on who they should be going after as their target market.

>> Jason Kanigan is a business development expert. Was this information helpful to you? Please Like or Share to let others know! Questions? Comment below. More expertise in this area? <<

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Information Interviews [How To]

Information InterviewsInformation interviews are the key when you're confused about...

...what job to pursue, at what companies...

...when you want to know what your target market is interested in concerning your offer...

...when you want to make sales but don't know your new niche.
 
If you can't say out loud and clearly:

> Why you want a specific job at a specific company

or

> Why decision makers in the niche you're entering want to buy from you

then you badly need to do some information interviews.

Why?

The fact is, this is your target market. And hearing what they want and value in their own words is critical. Nothing else is more important. Not what you believe their desires and values are. Not what you hope or think they will be.

When we talk about pain points, this is what we mean. These words. These phrases. This jargon. This terminology. When you repeat these pain points to members of your target market, they will listen. These terms will resonate with them and that will give you instant credibility.

When we talk about finding the work role you truly enjoy, you need to know several things. What people who do that job actually do all day. What they like. What they don't like. How different the same job is at different companies with different cultures. How those companies hire.

These critical knowledge points and more are readily available in information interviews.

People are cooperative and like to show off what they know (I'm doing it right now!). So let them.

This isn't hard. Nearly everyone you call will be open to at least talking with you on the phone for a few minutes. You may have to schedule a time to call back or meet in person later, and that's fine.

Information Interviews for Job Hunt Satisfaction

So say there's a job you want to do, you think, and you'd like to find out more about it. The funny thing is, the same job done at different companies can be totally different experiences because of cultures. So it's best to talk to three or four people doing that job at separate firms to get perspective.

To find these people is not difficult. You can use LinkedIn. Or you can use a simple method called the Little Unsure technique, where you ask the receptionist, "Hi, I'm not sure who I should speak with...I'm looking for the person who does [whatever role it is]. But again, I'm not sure who that would be there..." and trail off.

This method is very effective.

You may get voicemail. 3/4 times the person you're calling won't be available to take your call. Don't take it personally. Leave a quick message or call back later now that you have the name.

For messages or live answers, say you are doing some research, are interested in the role they have and are wondering if it's right for you. If they could speak with you for about 15 minutes, it would be very helpful. If now's not a good time, when would work?

Have your questions ready. They may want to go ahead right now.

I have had employees get time for such interviews in person approved by their boss...again, people want to be cooperative. Once in awhile you may find someone who is "too busy". Simply move on. No big deal. That person is probably not a fit anyway.

The higher you go in larger organizations, the nicer the people you'll find. How did the leaders in most organizations get there? The Sales career path. They know all about cold calling. They appreciate it.

Nearly all of the success factors here are getting past your fears. These fears are simply not valid. They don't hold true in the real world. Nearly everyone is flattered someone would ask their opinion. Go find out whether this job is really something you want. And you'll also find out what kind of different corporate cultures exist...which will play a big part in your job selection, if you're smart.

Don't be in "I'll Take Anything" mode. Start sorting.

Have an interview plan. What is the purpose of the interview? Don't be wishy-washy. Your two questions today could have used a lot more detail.

Here's an example of several information interviews with fellow sales professionals.

Write out your questions beforehand. Of course one or two new questions will occur to you while conducting the interview; ask them, too. But have your base set up.

Think about your request from their perspective: WHY would they want to participate? Yes, people want to be cooperative and helpful. But No, they do not want to create content for you (for example, I am asked to be interviewed all the time by people who are compiling such expert interviews to then SELL them...why on earth should I give them content so they can make money with it?!).

So be clear about your purpose.

You really must be looking for expertise, not digging for a job. Fake purpose will be seen through immediately and it will hurt your reputation.

Collecting a series of these interviews online around a specific topic is a great differentiating factor for job hunting, however. This is positioning.

Information Interviews for Pain Points

Information interviews to uncover pain points are very similar. Use the Little Unsure technique to reach the decision maker. Tell them you're doing some research. Then have a straightforward conversation about your topic.

Have they considered buying or have they bought what you offer?

How did they go about that?

On what criteria did they choose their provider? Why did that matter? (Hint: Price is not the real reason...and if it is, you don't want that buyer as a customer.)

For both job hunting and finding pain points, realize you must do several of these to get correlation. One or two is not enough. However, the activity level and payoff for booking and completing say a half-dozen information interviews is very powerful. You will feel incredibly confident because you finally understand your market.

>> Jason Kanigan is a business development expert who has had companies create custom roles for him on four occasions. Was this information helpful to you? Please Like or Share to let others know. And if you have a question about information interviews, Comment below! <<

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How To Value An Online Business: Interview with Jock Purtle

how to value an online businessHow to value an online business is a question I have asked over the last several years of running my own web-based company.

Without much in the way of physical goods, how does one calculate the assets of the operation? Fortunately, an expert who values, buys and sells online firms is here to help us out. His name is Jock Purtle and while he's a young guy, in two minutes flat he'll gobsmack you with the obvious fact that he knows how to value an online business backwards and forwards.

Jock Purtle On How To Value An Online Business

When we booked this interview, I wondered how serious Jock would be since I hadn't met or spoken with him before. I was also curious how 'out there' his business valuation methodology would be. As part of my operations management and business administration training, I had the fun of three years of accounting courses...all the way through finance and cost accounting. So I had expectations on the terminology to be used.

The first key factor Jock lets us know about as the key difference between valuing brick and mortar and web-based businesses is Goodwill. In place of physical assets, Goodwill appears as the major line item on the balance sheet. We continued the discussion through the critical factors in valuing a business. Jock surprised me with his obvious command of accounting methodology, and the fact that his process is completely grounded in the Generally Accepted Accounting Principles.

Maximizing the Value of Your Web-Based Business

If you are starting an online business and want to ensure it becomes as valuable as possible in a three-to-five year timeframe, Jock directs you to build in three factors: rising market, defensibility, and scalability. He reminds us the potential buyer of your business is really buying future profits--not you, your process, or your customer list.

For a guide on how to set up your online business for maximum value, Jock recommends The Star Principle by Richard Koch.

Concluding, Jock shares the two sides you must split your business into, and empower others to handle, to stop it from being dependent on its creator.

How To Value An Online Business: When You Should Call the Expert

A typical accountant is not the person you want valuing your online business--even if they are your CFO! In the interview, you'll hear why you would need three experts or one Jock Purtle to arrive at the right figure of how to value an online business.

When should you get in touch with Jock Purtle? He recommends six to twelve months out from when you'll be truly ready to sell your business. Why? Because in that time, he could increase the value of your business 20-100%! Visit Jock's site for free business valuation guides and more at DigitalExits.com.

Listen to the interview with Jock Purtle on How To Value An Online Business right here:

Click here to listen

 
>> Jason Kanigan is a business development expert. Did this content help you? Please Like or Share to let others know! Do you have a question about valuing an online business? Comment below to let us know! <<