Successful selling is a three-part process that consists of locating and calling on prospects, getting them interested enough to accept a quotation, and then closing the order.
This logic made so much sense to us that we refined it into a formula consisting of three ratios: P/C x Q/P x O/Q = E where “P” stands for Prospects; “C” for Calls; “Q” for Quotations; “O” for Orders; and “E” for the Efficiency of the selling system.
Now, if you’re a mathematician, you’ve already figured out that you can cancel the “P’s” and the “Q’s” in the formula, and the efficiency of the selling system boils down to the ratio of Orders to Calls.
However, if you go back to the individual ratios and look at the factors that influence them, you can draw some interesting conclusions about your specific selling system and what is needed to improve its efficiency.
The first ratio – Prospects to Calls – is influenced by two major factors: market identification and prospect identification.
The second ratio – Quotations to Prospects – is influenced by a number of factors including the validity of the sales proposition, the clarity of the sales presentation, and the closing techniques used by the salespeople.
The third ratio – Orders to Quotes – is influenced by several factors including price; delivery; quality; and, last but not least, by the prospect’s perception of the vendor. Referred to by people in advertising as “image”, it is the degree of recognition and preference that the product or the manufacturer enjoys in the marketplace.
Now that we’ve dissected the formula, what do you do with it? Well, we suggest that you make your own best guess as to the ratios in your company. We suspect that your efficiency will not be very high. For most companies, industrial selling intrinsically is not a very efficient process. In fact, the average efficiency of most industrial companies works out to about 7.5%. So, don’t be concerned about your total efficiency score. Instead, look at the individual ratios and try to determine where actions can be taken to improve the overall efficiency of your selling system.
And take comfort from the realization that an improvement of as little as one percentage point in your total selling system can mean a dramatic increase in your sales volume and your profits.
Norris & Company specializes in evaluating industrial selling systems and helping to improve their efficiency.
If you would like more information on this subject, or a reprint of this and other ads in the series, please contact us: (508) 510-5626 • info@norrisco.com
