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Salespeople Can Produce 4X

6 Nov


I’ve seen many examples of salespeople and even teams that have achieved an ROI of 4X (gross margin / cost). In some industries, it is easier, but I’m a strong believer that most salespeople can reach that production level by year 2. I’m assuming that your B2B product(s) or service(s) cost more than $1,000 – and that your GM is more than 20%. If you fit that criteria, it’s time to focus on ROI and 4X.

Calculating Return on Investment (ROI) for Salespeople: 
Total Margin (Not Sales!) / Salary + Commission + Benefits

Julie sells $1 Million in 2018.
Her Gross Margin is 34% = $340K

Julie’s salary is $60K and her commission is $34K.
The company’s benefits cost approximately 20%.
$94K * 1.2 = $112,800 is the expense of this employee

$340K / $112,800 = 3.01 is her ROI

When you simplify it, salespeople only do three positive and/or negative things for your company:

  1. Make you money or cost you money.
  1. Boost or hurt the company and team morale.
  1. Externally, they positively or negatively affect your company’s reputation.

They’re Just a Number? 

I hate to turn salespeople into numbers and that isn’t where I start; especially in the interview and training process. Your sales force is much more than salesperson #12 that sits in the 34th cubicle on the 5th floor producing 3X.

If you’ve read any of my previous material in my newsletter, blogs or book, Sales Neutrinos, you realize that I put a lot of emphasis on the qualitative side of appropriately selecting, managing and motivating employees. Every salesperson is a unique human being and typically you should be helping them versus berating them over their ROI. If you hired well, assume they are another important future 4X producer on your team – and do everything in your power to get them there (or fall short at 3X).

Managing salespeople is actually a lot easier than we make it. They are working for you to help sell more goods or services. Long term, it’s about measuring their production. If they aren’t delivering a strong return, then they aren’t making a lot in commissions… and they probably aren’t happy either.

Hire, train and manage them well. In terms of numbers, first and foremost, concentrate on ROI; the rest of the metrics are secondary.

It’s time to grow faster~ 

Better Sales Series

4 Oct

I’ve started doing a video series on YouTube titled “Better Sales”. Please check out my latest two videos below!

It’s time to grow faster~

Drew Schmitz

Time to Purchase a Sales CRM?

23 Aug

Customer Relationship Management

The short answer is, YES.

Last year, Salesforce, the largest sales CRM provider, grew their revenue by 26%. Companies are getting on board with CRM’s earlier than ever. If you are a small company in a growth stage, I would strongly recommend that you implement a basic program like Salesforce immediately. I honestly don’t have a strong opinion about the best CRM – there strengths to all of them and I’ve consulted within many business using different programs. 

Here are 3 resources for investigating the software that works best for your business:

We can’t afford it right now. They aren’t that expensive relative to other software purchases and there are many options at a reasonable price. A business with 2-3 users can find a basic SaaS CRM for less than $100 a month.

Our business is too small. I’m amazed at how many companies are still using Excel or another type of spreadsheet! If you only have two people selling inside your business there is a daily need to share information on prospects and customers. Simply put, you are never too small for a sales CRM.

My salespeople don’t like using it. Too bad – it’s a part of the job in 2018. It won’t slow them down and, in fact, should help them with pipeline management and efficiently sharing information with colleagues and management.

If your sales team is battling you on using a sales CRM, then you have some training ahead of you. Technology isn’t a burden, it’s a necessity… and this expands way beyond the use of a CRM. More selling than ever is happening via email, social media and eCommerce and not on the telephone or in person.

As a manager, the sales CRM will provide you with better visibility to customer/prospect analytics, pipeline revenue, real-time insights and long-term forecasts. With the ability to automatically convert your current information, it’s a much easier implementation than you realize.

If you are putting this off, bite the bullet and get this in place before the end of the year. Or how about tomorrow? Let me know if you have any specific questions that I can answer regarding purchasing and implementing a sales CRM. 

Forward, never straight~ Drew

It’s time to grow faster.


The Dog Days of August

31 Jul


How was your summer? Nope, it’s not over, but it is getting closer to Labor Day…

When it comes to my business cycle, August is always similar to the January turn at the beginning of the year. It’s still a bit slow – but we all know a busy season is approaching us. Given the Blue Octopus’ pipeline, it may be the busiest fall/winter yet! So… I can stall a few more weeks – or get “back on the horse” and prepare as if I’ll have no time September through December.

An August To-Do List:

  1. Email, Paperwork, etc. Are your files in order? If you don’t clean out that inbox this month, you are going to find July emails at the bottom of your inbox in January! Delete ’em, refer them onto someone else, file them away or take action.
  2. Finances. Personally and professionally, where is the cash flow going to fall for the rest of 2018? Match this up with the planning that I suggest below in #8.
  3. Networking. I vacationed twice in June and July and my networking plummeted. I have a lunch, three meetings and a networking event set for the first half of August. I’m shooting for at least 12 of these in August before I start getting comfortable.
  4. Marketing. I have a nearly finished second sales management book that I’ve been sitting on since April. It’s time to finish proofing and editing so I have a prayer of getting it out this fall. Partnering with Elite Holding Co., I also released a YouTube video last month (… and we need to get two more done this month.
  5. Sales. Not everyone is working hard this month, but those that are in the office aren’t getting as many emails and phone calls. This is a great month to keep the sales push going. Catch them now and you probably double your chance at a meeting with them in September.
  6. Old Connections. A different bent on sales & marketing is simply dropping an email to those that you haven’t talked to in the last few months. My best clients and referrers are practically friends. Don’t forget to proactively reach out to them regularly (and ask in return if there is anything you can do for them).
  7. Management. My personal responsibilities are to my recruiting team. I’m the salesman and they do the bulk of the recruiting and screening work. It’s time for a simple 2-way review. I certainly evaluate their performance but a one-on-one with each of them is important to make sure (a) Are we on the same page? (b) How is your boss doing? (c) What do you need in order to hit our numbers the rest of the year? This one hour interaction goes a long way towards better retention of your employees.
  8. Planning (and Thinking). It might sound stupid, but this could be your last chance to really think before the boss, clients, spouse and kids start dictating most of your schedule. Lay out your year and 4Q goals. Are they still achievable? What actions need to take place?

People are generally happier in the summertime (particularly here in Minnesota), so it’s a better time to catch them on a good day and bend their ear.

Don’t let your August blow away without some serious planning as well as taking action on that plan. What are you going to accomplish before Labor Day??

It’s time to grow faster.

Drew Schmitz


Sales Neutrinos

5 Feb

Cover Neutrinos

To those of you who have consistently read my blog –  or “stumbled” into it recently, I have finished an eBook called Sales Neutrinos. If you are interested in a free copy, please reach out. I’ve told everyone that it will cost you in 2016 but I’m giving it out complimentary in 2015!

Essentially, the book is an organized version of my blog – laid out in a linear manner with some new content. I would love to have you take a look. The forward is below…

What is smaller than an atom?

Recently, scientists have identified subatomic particles called neutrinos – they are so miniscule and weigh so little that no one has been able to measure their mass yet. Yet neutrinos are among the most abundant particles in the universe and by finding them, we are able to learn a great deal about the structure and the history of the universe.

I’m a bit obsessive about the root of a word, cause, movement or ideology. I want to understand the reason behind why certain salespeople overachieve while others flounder. Hence, my sales book gets the title Sales Neutrinos. We’re here to uncover the sales truths at the core!

It’s time to grow faster.

~Drew Schmitz

Blue Octopus LLC

Sales Persistence

18 Mar
Now that we've eliminated all the possibilities... Let's get started!

Now that we’ve eliminated all the possibilities… Let’s get started!

I don’t want salespeople to be pests, but if prospects don’t remember or know who you are – they will not/can not buy from you. So give yourself a real shot and believe in the math. If someone is a target, then knock on their door many times until qualified. If things would happen by themselves, there would be no need for sales people.  The art of making thing happen and being persistent (in a non-intrusive manner) makes the difference.

If you “knock once” – you’ll succeed, on average, 1% of the time.

Knock thrice – you’ll close about 6% of those prospects.

Knock six times – you’ll dramatically increase your odds.


The National Sales Executive Association has conducted a survey on how many sales you can get depending on how many times you contact your prospects. Their statistics show that most sales are made from the 5th contact through the 12th contact.

Here is the data they compiled:

2% of sales are made on the 1st contact
3% of sales are made on the 2nd contact
5% of sales are made on the 3rd contact
10% of sales are made on the 4th contact
80% of sales are made on the 5th – 12th contact

With these statistics in mind, structure the mix of your calls to maximize success. The first calls require 50 attempts to succeed while fourth contact calls require only 10 attempts to succeed. This is why you need to make your 10-20 sales calls every morning. This is why you need to follow-up your calls with emails. Your consistent follow-through will drive results.


How many times must a prospect see a marketing message to take them from a state of total apathy to purchase readiness? Following a year-long study, the researchers concluded that a marketing message must penetrate the mind of a prospect a total of 9 times before that prospect becomes a customer.

That’s the good news.  The bad news is that for every three times you expose your prospect to your marketing message­ via ad, sign, monthly direct mail advertising, whatever  it gets missed or ignored two of those times. Hence, the marketing world came up with the “Rule of 27”. After all, people have more important things to do than pay attention to your marketing. So you’ve got to put out the good word about your company a total of 27 times in order to make at least nine impressions.

The first personality trait of the successful sales & marketing pro is patience. The second is persistence!

Make every day count!

~Drew Schmitz


Twitter: @drew_schmitz

8 Paths to Better Team Selling

31 Dec


Organizations simply aren’t team selling often enough. Here’s what I mean by team selling…

  1. Include Everyone Involved on the Prospect Side: This includes the buyer whom you start with and initially pitch, the people whose problem you are fixing with your product or service, the influencers and the people who control the budget. If anyone on their end says “no”, “maybe” or “I’m not sure”, you will likely lose the sale.
  2. Also, Include Everyone that can Aid the Sale from Your Organization: In bigger deals, always include a manager or higher exec (the owner if privately held), the technical experts and those involved in servicing future customers. They are included in all stages of the sale.
  3. Introduce Yourself to the CEO Early: You need to respect their buying process and avoid “stepping on toes” in selling to the C-Suite, but MOST OF THE TIME you don’t lose a sale because you call the CEO once and introduce yourself. If actually lose it, you’d hate that client anyway! Let the initial buyer lead the sales process, but never give your final presentation if he/she doesn’t own the budget. One way to stay above board, is emailing your contact that you will be calling the CEO (or Exec) in the same hour that you are making the phone call.
  4. Keep Your Team Informed: As you include everyone from your organization on the big deals, over-communicate with everyone via meetings, strategy discussions, CRM documentation and via email. If you have a strong project management software, this is a great communique for keeping all informed.
  5. Ask your Executive to be Involved in the Final Pitch: Major presentations should always include management, a technical expert (regardless of your product or service) and someone from the servicing team. A team approach of four or more presenters also achieves several benefits: (a) the prospect is impressed that you are taking them seriously (2) all of their questions can be answered (3) if you are smaller organization, a quality presentation with multiple people involved makes you look robust and qualified to handle their needs (d) multiple presenters makes it a lot easier to focus on everyone you are selling to in the room.
  6. Emails: I have a very particular way of selling in a team environment – over-communicate until you are told otherwise by the prospect (again, you rarely lose a sales when keeping the top brass informed). Once it is determined that the prospect is interested and they are a fairly large target, you need to determine all the individuals involved in the sale. Yes, sometimes it may only be two people, but you need to understand their buying process. After a one-on-one introduction to each of these people, keep them CC’d on the major steps moving forward (demos, target dates, information and movement towards a final presentation date). Also, CC everyone on your team that is involved. It’s not ridiculous to send an email to one person and CC seven or more people when you are making a $50,000 sale!
  7. Daily or Weekly Action: How can you not have a next step every week if you have four people selling to four or more decision makers? Action steps create movement. Sales is all about staying in front of them until they say yes or no. You are the ring-leader in the sale, so lead and don’t let it slow down!
  8. Focus on the Ultimate Decision Maker: If he or she doesn’t feel confident in you and your company, they ain’t buying. At the final presentation, focus the presentation on getting all of his/her questions answered first. You have others in the room with you, so your job is to focus your efforts on that one person (and make sure your executive has a similar focus). Understand the budget earlier (I’ll be blogging about this in an upcoming January post), and make sure the money isn’t the reason if the sale doesn’t close.

This isn’t that complicated. Hopefully, you are already doing most of the above – if not, rethink your team sales process. Have a safe, healthy, blessed, lucky and successful 2014!

Happy New Year!



26 Nov

sales growth

How is your year going? If you are ahead of your sales goals, I’m guessing you are smiling – and if not, biting your nails throughout the 4th Quarter!

If you have read my previous posts, you’ll recall my strong belief in metrics. Sales management and salespeople need to be fully aware of the bigger picture and trends. Sales metrics are the “buttons” we all can press to repeat successes and dramatically improve your sales odds. You don’t have to over analyze, but you should automate via your CRM the numbers which can be easily tracked below. If you are a Salesforce user, check out for a little more gusto to your forecasting and sales pipeline. We’ll discuss sales CRM’s in depth another day, but make certain you are able to track all of the metrics below in your system. Manage every rep to enter their activities like their job depends on it (if it isn’t recorded, it didn’t happen!). Every goal listed should be examined by the individuals and the team as a whole.

The only 8 sales metrics that you need to pay attention to: 

1. Total Conversations, Meetings or Demos, Proposals & Closes:

The math between these steps is critical to everything that follows on this list and will help you understand gaps and strengths in which to improve or capitalize.  Here is an example: In a month, Beatrice makes 160 calls speaking with a decision maker; she also goes out on 20 face to face meetings, delivers 8 proposals and closes 2 deals. Her ratio is 160/20/8/2. It takes 8 “spoke-to’s” (not calls) to achieve 1 meeting, 80 conversations to close one deal, and 20 meetings lead her to 8 proposals… Understand these ratios for every salesperson. Understand these ratios for the entire team (the larger the sample set, the better – so be willing to look at annual numbers). Overall, understand what it takes to close business (and the average margin attached to those closes). If you can track these ratios, then you can set fair expectations for the salespeople – and even better, become somewhat of a fortune-teller for sales results in your company!

Note that I want you to chart sales conversations, not the number of attempts it takes to reach decision makers. I would count emails returned as spoke-to’s but don’t give your sales reps credit for left messages and outbound emails. It’s a great way for a salesperson to hide from management if all your tracking is their attempts. Find a way to track real conversations as these are what lead to appointments, proposals and closed deals. Chart these numbers weekly and share them with everyone in the sales team.

2. The Effectiveness of Every Sales Activity:

Start with the team averages. How many conversations does it take to set to meetings and demos? How many meetings and demos result in proposals? How many proposals to prospects convert to closes? If you have a baseline high/low expectation pulled from your top producers’ results, you will start to see the gaps in individuals.

In 2011, Blue Octopus closed 24 deals. We wanted to close 30 but we only delivered 40 proposals/presentations. Yes, our close percentage was great, but the following year, we delivered over 100 proposals and doubled the number of deals. Everyone on your team should have a goal to improve a certain category based on their shortcomings. Ideally, focus on a salesperson’s closed deals, but if they aren’t meeting goal, analyze the activity at the top of the funnel to understand the cause and effect down the pipeline.

3. The Percentage of the Deals Won/Lost:

In 2011, Blue Octopus’ close ratio was 65%. In 2012, it fell to 48% but I was happy with that. Four years into running this business, I’m not sure what the right number is, but I know it’s lower than 65% based on the sales structure of my business. This year our run rate is 45% so I suspect the right answer is actually even lower (somewhere between 30-45%). Examine your win ratio by each sales rep and then the entire team. Does the number need to go up or down? What will cause it to change? What will it take from the salesperson – from you – and from the team?

4. The Profiles of Clients Closed:

This isn’t exactly numbers data (unless you are focusing on SIC codes), but it is data nonetheless. If you win 50 deals this year, examine the basic profiles.

  • What industry?
  • Location?
  • Size of business (employee count and total sales)?
  • Titles you are selling to?
  • Department?
  • Any commonality in personality types?
  • Which profiles result in better gross margins?

The more specific you can get, the better. In retail, you want to break this down even further into age range, income, ethnicity, marital status, occupation – the list could go on and on (there is a $ reason Amazon, Wal-Mart, Clear Channel, Facebook and Google are tracking our buying behaviors!).

There’s tremendous power in understanding who your customers are and why they buy from you. It is also powerful in the closing stages to provide your prospects with references of similar businesses that have purchased your product or service.

5. The Length of the Sales Cycle:

I’m sure you have an idea of the length of your sales cycle, but it is often broad and based more on feelings and history than actual data. Examine the closes made this year. When did they start in your sales cycle? How did they start? How long does it take to go from prospecting to conversation to meeting to proposal to close? In many businesses, all four of these steps should be measured in average days. If you examine the profiles of your best clients – they likely made a faster buying decision. 

A salesperson’s number one job is to speed up the sales cycle but they need help from you in understanding how to improve it. That starts with precisely tracking the length of their sales cycle.

6. Closing Performance against Monthly, Quarterly & Annual Goals:

These numbers shouldn’t be very difficult to measure. There’s only two questions that will arise if you aren’t on track to hit your annual numbers: (1) Does our sales force have the ability to close deals? (2) Are we making enough calls, setting enough meetings, and pitching enough deals this year? #1 is complex, but #2 is fairly simple to drill down. I would much rather be working on coaching good salespeople to become better closers as opposed to micromanaging them to make more calls and set more meetings!

7. The Number of Real Opportunities in the Pipeline:

There is a lot of qualitative measurement under this category. The length of your sales cycle, the profile of the prospect and the success of the individual sales rep should all factor into the likelihood of closing a single deal. Let’s go back to Blue Octopus’ 2012 numbers: we made 104 proposals and closed exactly 50 deals. If we deliver 30 proposals this quarter, next quarter I should be able to predict 15 closed deals. Throw in a little chaos, and I would predict the actual number to be 12-13 (ask me in 4 months!). Real close opportunities means applying a little bit of a fudge factor. Do I want to close 20 deals? Yes! Do I want to provide my investors with a safe number for our budgeting? Yes, please.

8. The Number of Deals Forecasted to Close:

Remember the comments above about being a better fortune teller? You are now equipped with a lot of data and should be able to break it down by quarter in your forecasts.

I’m not sure I really believe in an annual forecast (I prefer 6 month forecasts). Predicting numbers 12 months from now is like throwing darts. Annual forecasts usually do not take sales turnover, economy and chaos into account (and every business has swings in all three categories).

If you want to throw a dart at doubling your sales in 2014, you obviously need to improve the causes that will give you a shot at making that leap. Are you doubling the size of your sales team? Are you plugging in a huge, new marketing effort? Are second and third year sales reps expected to make big leaps in performance? All of these come into play and your darts are more accurate as you tie them into your historical and ongoing sales metrics.

If you’d like a broader perspective (beyond the numbers) on sales forecasting, check out a great Forbes article by Scott Edinger: He not only looks at the metrics, but also presses that customer behavior, sales strategy and continual improvement are key to hitting your marks.

If you’ve done a great job of measuring all of the data in #1 through #7 above, then you should be able to make three forecasts: (1) minimum expected sales (2) goal (3) and a stretch goal – ideally you can convince your management to do these in 6 month increments and twice a year. I believe in setting all three of these and rewarding the team as they climb the ladder of success. Good luck as you fine tune those sales forecasts!

Make every day count!


Twitter: @drew_schmitz

A Cold Day in Heck

21 Jan

coldThey don’t want what you are selling, they don’t need it or could never “perceive” that they will need it. You call two other people within the organization and realize you probably don’t fit what they need. What do you do? Argh… You call them back in 3 months because you have them on your list and you waste another 12 calls every year of your life on them (and 100 others like them).

Do yourself a favor: give up on a few more. It’s a rare salesperson who can put away bad prospects and focus on other opportunities. A great salesperson can efficiently snuff out the good prospects from the bad, based on a prospect’s budget, level of interest, overall fit and their timing. Be persistent, but when you get to “HECK NO, we don’t need your stuff…”, give it a rest.

QUALIFY BETTER and LISTEN – build up that sales pipeline with another, better prospect that will potentially buy from you in 2014. Are you armed with the best questions for qualification? Are you encouraging them to say YES or NO? The more NO’s you receive, the better your sales pipeline or funnel. The faster you get to NO, the more efficient you can be with your time going forward.

It’s -19 degrees Fahrenheit in Minneapolis this morning and we are suffering and smiling through the day. Here’s to the new, hot prospects that are a phone call away today!

Make it a great day~ Drew Schmitz