Engineering is a complex topic but have no fear, this exercise in reverse engineering your way to success is simple and effective.
As a sales professional or executive, you likely have a revenue quota. Nothing is more important than hitting that number. But obsessing on your total quota is no way to hit the number, so break it down into actionable levels.
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Let’s look at an example… and we’ll use round numbers just to simplify the math. Sales professional Pam has a $1.2M annual quota, which equates to about $100K per month in revenue.
Pam’s average size deal is $25K, so in order to hit the monthly quota (and subsequent yearly quota), Pam needs to close an average of four deals per month.
On average, Pam closes about 50% of her opportunities, so in order to close four deals a month, Pam needs to be working on eight opportunities at any one given time.
On average, Pam requires about 3 new customer meetings to create each new opportunity, as roughly two-thirds of her initial meetings result in the opportunity being unqualified. So in order to acquire eight new opportunities per month, Pam needs to conduct an average of 24 meetings per month, or six meetings per week (a little more than one per day)… although most experienced reps would conduct meetings on two specific days each week, freeing herself up for three days of calls, planning and follow-up.
In order to achieve six new meetings per week, Pam needs to make the phone calls. On average, Pam requires about 5 calls per meeting. So, in order to book six new meetings a week, Pam need to make about 30 phone calls… each and every week, or five calls a day – which is in addition to her six meetings a week.
In the preceding paragraphs, we went through the process of reverse engineering Pam’s success model. She wants $1.2M per year in revenue. By walking through her average metrics, we’ve determined that she needs to be making five calls a day in addition to one meeting a day (four days a week) and two meetings a day (one day a week).
So there you have it, Pam will likely hit her annual sales number if she can average five calls and a little more than one meeting per day.
Don’t fret over your annual number… it’s simply too big to focus on daily. Try to reverse engineer your quota so that you can be successful on a daily, or even hourly basis.
Here’s the breakdown you should consider to reverse engineer your success:
1) Annual quota divided by twelve months to get monthly quota (or subset the months if your business is seasonal).
2) Monthly quota divided by average deal size determines the number of deals you need to close each month.
3) Your close rate (how many deals do you close on average per ten opportunities) determines how many opportunities you need to be working in order to close your desired number of deals.
4) How many meetings does it take for you to create an opportunity?
5) How many calls does it take for you to book a meeting will determine how many calls you need to average per day?
Of course, anytime that you can improve your effectiveness (quality) you’ll be able to lower the required quantity.
Reverse engineer your way to sales success!
