The sales meeting often starts like this, “We aren’t going to make our sales goal because we lost this big job. How are we going to make up the shortfall?”
My question is “What changed? You did not have this revenue; you still don’t have this revenue. Isn’t there other revenue out there? Were you going to stop selling because you won this project?”
What will make you feel better?
Nothing changes when you don’t win. You just keep doing the right things to help you win next time. Let’s do some math:
Let’s assume you want to win ten projects a year. How many do you need to quote on?
If your close rate is 20%, you need to write 50 quotes. You will lose 40. Feel better yet?
If you want to write 50 quotes, how many opportunities do you need to process?
If your conversion rate from opportunity to quote is 20%, then you need 250 opportunities. Happy now?
If you need 250 opportunities, how many prospects do you need?
If 20% of the prospects you pursue eventually become an opportunity, then you need 1,250 prospects on the books. It gets better, I promise.
If you have 1,250 prospects and keep in touch, promote your brand, offer value, and generally don’t stink at marketing, then you will retain many of them.
Let’s say you are good at keeping prospects and 80% stay engaged, then you only need to replace 250. That’s great news!
If you need 250 new prospects a year, how many leads do you need?
Let’s say your lead to prospect conversion rate is 10%. You will now need to generate 2500 new leads per year to maintain your prospect list and eventually win ten projects.
I Don’t Like Those Odds
Agreed. You need to improve your odds.
My point is that when I hear someone staking their future on one job – I know this is a company with no effective marketing, little if any conversion skills, and probably no insight at all into their pipeline.
Let’s assume you improve your close rate by being more selective and putting more focused effort into each proposal. Now, you are at a respectable 50% close rate. What happens to your sales funnel?
You only need 125 opportunities, 625 active prospects, 125 new prospects per year, and 1,250 leads per year. That’s half of what you needed before!
How can you earn that many leads? What if you improved your conversion rate? What if you improved your retention rate? Good questions! Now, you do the math.