Michael Lewis’s 2003 bestselling book Moneyball: The Art of Winning an Unfair Game, which inspired the 2011 film Moneyball, examined the Oakland A’s baseball team and their general manager’s approach to assembling a team that could compete, despite its comparatively low payroll. A’s manager Billy Beane introduced baseball to sabermetrics—“the application of statistical analysis to baseball records, especially in order to evaluate and compare the performance of individual players.”
The result was that the A’s were competitive and made the playoffs a couple of times with one of baseball’s lowest payrolls. Now all baseball teams have sabermetric departments, and sabermetrics plays a major role in the way a manager manages. In fact, some ball clubs are going with younger managers who are not afraid to embrace sabermetrics and use them religiously.
In the 2001 film A Beautiful Mind, a biographical drama based on the life of John Nash, a Nobel Laureate in Economics, Nash (played by Russell Crowe) says that 80 percent of all problems on Earth can be solved by math, hence the birth of sabermetrics.
- Monthly revenue numbers—are your numbers on par to meet and exceed your annual quota?
- Margin goals—are you closing the right deals to generate the right kind of profit? If not, are you discounting too much or do you need help in negotiations?
- Closing ratio—what percentage of all proposals do you close?
- Most people have low percentages because they do not adequately qualify the deal and accounts. A satisfactory closing ratio for all proposals is well over 50 percent. You should be getting over 70 percent if you are qualifying correctly.
- How many calls, emails, social media posts, and so forth does it take to get a qualified opportunity? This number will tell you what your activity level is; if it is way too high, you will know you need to work on your skill sets to reduce it.
- Retention—what percentage of your customers come back for repeat business? It is normal to factor in an annual attrition rate of 10 percent for reasons beyond your control, such as acquisitions, down markets, and so forth. If it is higher, then you need to figure out why your customers are dissatisfied and leaving.
- Market percentage—what does your customer annually spend on your type of products/services and how much of that do you currently enjoy? What is your goal for an increase, and what will it take to achieve that?
- The sales funnel—break up the sales funnel into three sections:
- Closing opps—deals in which the confidence factor is over 75 percent, proposals are given, and there is high interest. Now you just need to win the deal and negotiate terms.
- Qualified—deals that you properly qualified and have a confidence level of over 50 percent.
- Opportunities—customers that can use your type of service or product but have not been qualified.
Note: The sales funnel is critical and requires appropriate revenue goals in each area. But you cannot have those goals if you do not know your numbers for each. What percentage of opportunities make it to qualified and what percentage of qualified make it to closing status? The numbers are your guide.
The secret to growing your sales lies in your numbers. Don’t fear them: use your numbers to your advantage. Continually investigate and update them—your success depends on it.