Your Cookbook
Do you know what it costs you to get out of bed every day? Here are three steps to creating a "cookbook" knowing what that number is and for managing your behavior to be sure you reach your goals.
STEP ONE: KNOW YOUR DAILY "NUT"
Add your needs (rent, food, clothing, college fund, taxes, etc.) plus your wants (vacation, down payment on the new car, Christmas savings, etc.).
Divide that by 12 to get a monthly figure. Divide that by 4.33 to get the weekly. Divide that by 5 to get your daily. That's what it costs you to get out of bed each day!
Here's an example:
Mary sells a professional service. Most of her prospecting is done by telephone. Mary calculated her annual income goal, including taxes, as $60,000.
$60,000 divided by 12 months = $5,000 per month
$5,000 divided by 4.33 weeks = $1,154 per week
$1,154 divided by 5 days = $230 per day
Mary now knows it costs her $230 to get out of bed every morning!
STEP TWO: KNOW YOUR RATIOS
Get the following information from your sales and activity records. If you don't have these, make your best guess. (And start keeping these records - what you measure you tend to improve!)
- What is the average sale in your business?
- What is your average commission or profit margin per sale or opened account? What do you expect to earn on an average account in a year? (If you are on full or partial salary, make adjustments for that.) Calculate your closing ratio. How many face to face meetings (or letters sent, or whatever is appropriate for your business) it
- takes in order to make one sale.
- Determine how many decision makers you must contact in order to get that face to face, presentation, closing call, etc.
- Calculate the number of "attempts" (cold calls, walk-ins, phone calls, etc.) required to get you to one face to face or closing situation.
(Back to Mary)
Mary's sales records tell her the following:
She made 12 sales in the last 3 months. Her average sale earned her $1,500. In order to close one sale she had to go on 4 face-to-face meetings (4 different prospects) In order to get in front of 1 prospect she had to talk to 10 people who could make a decision. In order to talk to one person who could make a decision she had to dial the phone 10 times.
So now she knows that one new sale equals
4 face to face meetings
X 10 conversations with decision makers
x 10 dials
---------------------------------
or 400 dialings
Mary has to make 400 attempts (dialings) to make $1,500 and earns about $3.75 for every attempt made (regardless of what happened on the call!)
So, if Mary needs $230 a day to make her "nut” then she needs to make 61 "attempts" per day [ $230 divided by $3.75 per attempt = 61 attempts].
Mary is no longer living by chance. She has a basis for her daily behavior. And this assumes she doesn't get any better! (Which, of course, we know YOU WILL!)
STEP THREE: FOLLOW YOUR COOKBOOK!
You have the ingredients. Now Start Cookin'!
JUMProductions
po box 522
arlington, tx 76004
vox 817.261.2108 fax 801.881.2717
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