The Lost Sales Paradox
Do you know what your lost sales are costing you every month? Every year? Let me give you two quick examples. It’s what refer to as – The Lost Sales Paradox.
Example one - Your average sales are $1000 per order. You have five salespeople on your team and their average close percentage is one out of three sales presentations. They see approximately thirty potential prospects every month. So – the results; your average salesperson closes ten sales a month for 10,000 in total revenue every month. So, your organization is closing 50 sales a month for $50,000 in revenue. But you are also losing one hundred sales per month (the 2 out of three they don’t close) for a total of $100,000 – or around a million bucks a year in total lost sales.
Example two – Your average sales are $5,000 per order. You have twenty salespeople and their average closing percentage is one out of three prospect presentations. They each see forty potential prospects each month. So – the results – your average salesperson is closing 13 sales per month for $65,000 in revenue times twenty salespeople so the total organization monthly revenue is a little under one and a half million or around $60,000,000 per year but – you are also losing almost three million in monthly revenue or $36,000,000 per year.
Example one – Yearly sales revenue $600,000 – Lost sales revenue for the year - $1,000,000.
Example two – Yearly sales revenue - $18,000,000 – Lost sales revenue for the year - $30,000,000.
Regardless of your organization’s products or services, the number of sales employees, your sales-generating model, your competition or your market share the above paradox generally apply and why?
First – very few salespeople or organizations have a one hundred percent new customer closing ratio.
Second – Every organization sooner or later loses customers or clients for any number of reasons.
Third – Every day the world is getting more competitive.
And Fourth – If you are not reinventing, staying ahead of the trends, and staying in touch with reality it’s only a matter of time before you will be a statistic.
So, let me ask you - if I asked you the following question what would your answer be. “If you could invest, let’s say $25,000 in either situation above to cut your ‘lost revenue’ losses, let‘s say by twenty-five percent or even in half – would you do it?”
Well, teaching proven and contemporary sales techniques to hundreds of organizations around the world for over thirty-five years guess what the most frequent answer I have received to this question is when I have asked it?
No. So, you would be willing to let go of more than +/- 50% of your potential revenue by not investing a few thousand dollars in teaching your sales team, customer service employees, or other employees who interact with your customers the essential and/or creative communication, sales, and negotiation skills to ensure you don’t lose this revenue year after year because they lack the necessary these skills or attitudes to perform with consistent, effective and creative excellence?
I get it – unless I can guarantee you won’t stop losing this revenue why risk it. There are other important things you can invest or spend your money on like – more technology, nicer offices, or employee compensation. Yes, but if you add up the losses over the years imagine what you could have done with that extra month after month revenue!
Yes, the sales process has evolved over the years due to technology. Yes, the world is becoming a global village. And yes, with social media, internet buying patterns and economic uncertainty things are changing. But there are three things that are not changing. One – people buy from organizations and people they trust. Two – technology will never completely replace the human touch when it comes to major, critical, or significant purchases. Three - success will always involve a “Blending” process – mixing the best strategies, approaches, and techniques from, the past, present, and future.
If your organization is losing more sales revenue than you are achieving (and you might be amazed at how many organizations don’t know these statistics when it comes to lost sales percentages or reasons) and you are ready to get ahead of the curve when it comes to sales and marketing philosophy and performance-based approaches – let’s chat. Timspeaks4u@gmail.com.