The Lost Sales Paradox
Tim Connor
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.
To
summarize:
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.
