The Sales Process: In Sales, You Get What You Measure

By Laura Compton
Business Support Manager, RightNow

Ask 10 salespeople in our industry what their commission goal is this year, and only 1 or 2 will be able to answer with a solid number. Most will say something like, “Well, I don’t know where the industry is headed, so I hope to earn at least what I did last year.” We also commonly hear “I work as hard as I can every month, bringing in as many orders as I can, and that’s the commission that I will make.” The reality is that only 1-2% of all title industry sales and marketing representatives will tell you exactly how much they want to make, and exactly how they are going to do it. With great precision, they will also tell you the number of “no’s” they need to hear every day in order to achieve their goal.

There is no doubt about it. Many salespeople in our industry have done very well for themselves “working hard.” Just take one look at your parking lot on the day of your staff meeting and you’ll see. But as Bob Dylan said a long time ago, “The times, they are a changin’.” In this case, if you keep doing what you’ve always done, you won’t necessarily get the same result you’ve always achieved in the past.

So let’s play the numbers game.

We suggest that you work these numbers with each person on your team individually, since they won’t be the same for everyone. One performer may be better at converting cold calls to appointment than another. Start with the commission they want to earn in any given “commission period,” usually one month’s time.

Commission Goal for Bob = $5,000 per month (This allows Bob to make his annual goal of $100,000 total gross income, because Bob’s base + car allowance is $40K.)

• Bob’s commission breakdown is the following:
• 3% of the premium dollars that he brings in, and
• 0.5% of the "house" or branch revenue (Accounts Bob did not bring in , but helps maintain)

On average, the monthly amount Bob earns from the ‘house account’ at 0.5% is $1,000. Therefore, he needs to earn $4,000 on his own. In order to earn $4,000 with a 3.0% commission rate, Bob needs to generate $134,000 in revenue. Are you with me so far? ($134,000 x 3% = $4,000). The average fee per file (FPF) in Bob’s office is $1,950. Therefore, $134,000 divided by $1,950 would be equal to 69 closed orders. (We could get really complicated here and separate resale and refi and any other streams of business Bob can generate, but we’ll just use an average FPF to simplify things.)

So, Bob needs to bring in 69 closed orders on his own, given his commission structure, in order to meet his financial goals. But wait, we’re not done yet. We need to make sure that Bob’s goal of 69 closed orders, combined with the revenue from house accounts is (a) enough to make the branch profitable, and (b) enough to also meet the branch goals. (For simplicity, let’s assume that if Bob brings in 69 closed orders, the branch achieves its goal of 21% profit retention.)

Now we get down to the fun stuff
Quite simply, we all know that sales is about activity. But in concert with the activity, it is also about time. It takes a certain number of calls over a certain amount of time to get an appointment. It takes a certain amount of appointments to get a commitment for an order. It then takes a certain number of “commitments” to actually convert to an order. Know on average the numbers associated with each of these activities for each of your team members, as it may vary, and select a span of time in which to conduct the activity. Bob may need to ratchet up activity in order to get the results he needs and wants. If 10 office visits a day “talking to as many people as he can” doesn’t get him there, help him to set specific goals around calls, contacts and interviews.

As you meet with your team members regularly, help them to set goals and track their progress on an ongoing basis. You will start to identify best practices that help elevate everyone on the team. You win, and so do they!

RightNow suggests, at a minimum, that salespeople should have monthly results goals for the following categories: revenue, new clients and orders. They should also have monthly activity goals for both (a) outbound contacts made and (b) interviews with prospects and clients.

So, if you don’t set goals with your sales team now, make it YOUR goal to do so by the end of the month for the final quarter of the year. Then, do the same for the entire year of 2008. Our research consistently shows that the mere act of setting goals, and writing them down, helps individuals and operations attain greater numbers for financial success. 2008 will be upon us soon, and we want you to be prepared to take your team to the next level of success.