Do I review my numbers as often as I should? Ummm . . . So perhaps I shouldn’t be surprised at how many businesses I’ve worked with that *think* they know their numbers, but when the data is really scrutinized, we discover some interesting things. Because most businesses don’t focus on the numbers the way they should.
So even if you don’t have monthly quotas to meet, and you think you’re turning over a healthy profit, here are 5 reasons why you’ll want to review your numbers. At least quarterly, and preferably monthly.
1. Your best customers aren’t who you think they are.
This is one I’ve seen more often than not. Many of my clients are putting all their energy into attracting a certain group of prospects that they think are their ideal clients. But when we look at their numbers it turns out that the acquisition cost is much too high AND they are yielding less revenue than another group the business has been ignoring.
2. Your projected conversion rates are nothing like your actual conversion rates.
Again, one I run into all the time. We’re all guilty of overestimating how well we’re going to do (and apparently we’re pretty poor at estimating how long things will take us to complete too). Can you track your actual conversion rates? If not, you need to find a way to do this (some advice in this post) because it’s the only way you’ll know how many sales calls you’ll need to make to win the business you need to win. For a free sales forecasting tool that will tell you how many sales conversations you’ll need to have, email me at firstname.lastname@example.org
3. Your most profitable revenue stream isn’t what you think it is.
This one is similar to the first point, above, with a twist. Say you have three revenue streams and you have based all your projections on a ratio distribution of 15%, 45% and 40%. How do your actual sales compare? And which revenue stream is the most profitable? If you changed your ratios to 25%, 35% and 40%, how does that change your monthly or quarterly profit? Sometimes we just need to play with spreadsheets. If that’s really not in your skill set, find someone who can help you.
4. You’re so focused on new clients you forget about the ones you’ve already sold.
This one is unforgiveable. Unless you are selling a product or service that is really a one-shot deal. Why, oh why, would you continue to chase after the shiny new thing when you have people who already know, like and trust you, and would happily purchase from you again? And how much revenue are you leaving on the table as a result? Lisa Shaughnessy has some good suggestions on how to avoid this in this post.
5. Your sales targets are unrealistic.
If you’re consistently under or overachieving your sales targets, you need to review them. If you’re missing your sales goals more often than not, have you really found the right market for your product or service? Is there one that could be more profitable? Perhaps you’ve anticipated more rapid growth than the market can bear, or you really don’t have the right team in place. This is one that must be investigated and addressed before it becomes a business failure problem.
And if you’re consistently exceeding your targets, congratulations! It seems like you could probably make them a little more challenging. Who knows how much potential growth you’re missing because you’re being cautious.
Sales are the lifeblood of any business. But when you’re a smaller business without a sales manager constantly reviewing the numbers (most likely with the assistance of some expensive software) it’s easy to get it wrong. So schedule some time every month to review your numbers with your team. And make the changes necessary for you to win more business!