Issue Date: Sales Success June 1, 2010, Posted On: 6/14/2010
Road to the Sale Goal setting: It pays to work backwards Whenever Sales Success speaks with automotive salespeople, the conversation inevitably turns to what their numbers are. People usually tell us their goals, where they stand compared to the goals, maybe how many units they have out that month, but not much more.
Dealership sales professionals need to track much more if they want to consistently outperform. How many appointments did you have this year, and how is that versus last year? Is that number of appointments adequate to get you to your goal? How many phone calls did you make to generate those appointments?
To properly answer that, it is necessary to break down your goals to understand the level of activity needed to achieve them. To accomplish this you need to track a number of things, and then work backwards to get to your goal.
Three things are a must:
The average length of the vehicle sales cycle
The average gross profit on a sale
The number of phone calls, appointments, and presentations during the sales cycle to reach the target.
Very few people can tell you what the average sales cycle is for a car shoppers, key here being average. When we ask about the length of the sales cycle for a car buyer we often get a wide range of answers. Recently we had a used car manager tell us that the normal cycle was between 10 to 12 weeks. When we put the question to his team, the shortest was four days the longest was a year, quite a range.
Review the last 100 sales
Now it goes without saying that if you looked at your last 100 sales, a pattern will emerge. After you take skills and other factors into account, you will see a discernable curve. Leave out the odd balls and you'll find that some 80% will fall in to a tight range. That is your sales cycle. Doing this takes a little effort, but it is a worthwhile exercise that helps set benchmarks. This same process will give you the average gross profit on each sale.
This done you can then focus on the average number of calls, appointments, and presentations needed to close a sale. This is an individual exercise, but there is benefit in knowing the dealership's average. But unless you know how many presentations you will need to close a deal, how will you manage your time?
Now you can easily know how many sales you'll need to make your year, or better yet, how many you'll need to beat your goal, how many appointments you'll need to schedule and properly manage your day.
You will need to know how many "new prospects" you need to engage to reach your goal. Allowing for the fact that a potion of your sales will come from existing customers, it is also important to know how many new prospects you need to identify, find, engage and close to make your numbers.
For example, if the first exercise showed that your cycle is a month, you need 144 sales a year (or 12 per month), and it takes on average four presentations to close each sale. You know that you will have to make a minimum of 48 vehicle presentations per month. This assumes that you will close 25% of the prospects that your meet, but if you close only one out of every five new prospects you meet, then you can add 12 more meetings.
Work backwards to get ahead
What does it take to set the 48 initial appointments it takes to sell 12 cars a month? How many people will you need to speak to, how many will you need to reach out to, how much time will this take every day?
Take the time at the start of the year to work backwards from your goals, using your specific stats. You need to repeat this at least quarterly based on year to date results. In a slow year you need to increase activity and productivity according to results and in good years you plan to outperform the forecast.
Without working backwards from your goal, you have little chance to get ahead.