In this post I’m going to share with you exactly how to forecast and how to predict the success of a sales or marketing strategy in your business.
WHY IS FORECASTING SO IMPORTANT
I was working with an entrepreneur who had paid a lot of money to have a company help them sell more units of a product that they were trying to sell. I asked them, "Well, what do you want to get out of this consulting offering?", which they had paid a lot of money for. And they told me how many units they wanted to sell. Then I asked, "What sort of budget do you have and what sort of strategy are you using?". Then I put together this model and showed them why, unfortunately, it was not going to work for them. They looked at me, and we looked at the model, and it was just awkward. Because I could have saved them a lot of money by showing them that what they were about to try was simply not going to work. It wasn't going to get them the results that they wanted.
Having this ability to model and predict your sales strategy can help you magnify the good ideas and double down on the things that will work. It can also help you identify what isn't going to work and what you shouldn't even try. By being able to predict the success of your sales efforts, you have more power to hit your dreams and goals in sales or as a sales leader.
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HOW TO BUILD YOUR FORECAST
STEP 1 – OUTREACH ATTEMPTS
To get started, you’re going to want to pull up a Google Sheet or an Excel Sheet. The very first thing you want to start looking at is outreach attempts. This could be LinkedIn connection requests, emails, messages on Instagram, cold calls, etc. So, in cell A1 you’re going to input “Outreach attempts” and in cell B1 you’re going to enter the number of outreach attempts you’re going to try, lets say “1000”.
STEP 2 – INTERESTED PROSPECTS
Now that you know how many outreach attempts you’re going to try, you’re going to figure out how many of those outreaches are going to turn into interested prospects. You’re going to enter “Conversion rate into interest” in A2, and out of 1000 outreaches, let’s say you predict that 6% of those people will be interested. So, input “6%” into B2.
Next, in A3 you’re going to put “Total interested prospects” and in B3 you’re to enter the formula “=B1*B2”. This will multiple the number of outreach attempts by the conversion rate. And you're going to see, out of 1000 activities, you've got 60 interested prospects.
STEP 3 – PROSPECTS SHOWING UP
Out of these 60 interested prospects, how many people are going to show up? Let's say you're expecting 40% of those people will show up. So, in A4 you’re going to enter “Show up?” and in B4 “40%”. Then, in A5 enter “Total amount of prospects showing” and in B5 enter the formula “=B3*B4”, which multiples the number of total interested prospects by the show up rate. So, out of those 60 interested prospects you're going to see you've got 24 people showing up to a sales meeting.
STEP 4 – SALES
The next question is, what is your sales conversion rate? This can be anywhere between 8% and 23% in competitive industries, and as high as 40% to 80% in non-competitive industries. Let's just say your conversion rate is at 10%.
So, in A6 you’re going to put “Sales conversion rate” and in B6 “10%”. Then in A7 your going to enter “Sales generated” and in B7 the formula “=B5*B6”, which multiples the number of prospects showing up by the sales conversion rate. So, you get 24 times 10% and you've generated 2.4 sales.
STEP 5 – EARNINGS
Now let’s figure out how much money you're going to make. Let's put “Earnings per sale” in A8 and call it $2,000 per sale, so put “$2,000” in B8. Next, you’re going to put “Total earnings” in A9 and the formula “=B7*B8” in B9. This is going to multiply $2,000 times 2.4, and we see that you've made $4,800 from those 1000 outreach attempts.
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EXPERIMENTING WITH YOUR IDEA
Now, if it takes you all month to make those 1000 outreaches and you're making $4,800 that may be great for you, or that may not be enough. Let's say your goal is $10,000, what do you need to do to get to that $10,000 income level? Well, you can change the number of outreach attempts, and it looks like you'll need 2200 or so outreaches in order to get to $10,000 in income.
So, this is the way to predict the success of a sales strategy. And you can do this for each different type of outreach. What you're going to find, of course, is you've got different conversion rates for each one of those strategies.
As you continue to go through and execute the strategy, you'll want to see, did your conversion rate in the interest go up or was it less than you forecasted? Maybe your conversion rate in the interest was only 4% and you can see how that impacts your income. You just went from $10,000 to $7,000. You might find that your conversion rate is much higher and that your message was great. So, maybe you've got 15% of people interested and that takes your income to $26,000.
TROUBLESHOOTING SALES PROBLEM AREAS
If you're not getting people converting at an acceptable rate, it could be a couple of things. It could be that the traffic is bad, meaning you're reaching out to the wrong people, or it could mean that your message isn't that great. So those are the two things you need to troubleshoot at that point.
As you go through each one of these conversion rates, you can find and troubleshoot what could be the problem. If you only have 40% of the people showing up, what can you do to increase the show up rate? Well, ClientPoint can help with that, we help make sure that your show up rates increase. And you can make sure that you're calling and texting people, reminding them to show up.
Maybe it’s your sales conversion rate, that's where traditional sales training comes in. If your conversion rate's only at 10% maybe there's something wrong with the product market fit, or somethings wrong with the pricing. It's important to diagnose what could possibly be causing friction at each point in this sales conversion process.
So that is the best way for you to troubleshoot your sales and marketing strategy to understand what is going to work and what might fail. That way you can make sure that you're doubling down on the things that can create real traction in the marketplace and get the best results possible for you, your business, and your family.
If you'd like to see how ClientPoint can help you optimize each one of those conversion percentages, we can show you exactly how, Schedule a Demo Now.