Note: This is the first post in a 3 post series on increasing sales

Not another sales motivational blog post

By now everybody’s heard the term “coffee is for closers,” made famous by Alec Baldwin’s “in-your-face” speech in the movie Glengarry Glenn Ross. Baldwin’s scientific method for motivating the sales guys at this hard-sell investment real estate company? He used pure macho bravado to appeal to their competitive instincts and desire to avoid the humiliation of being fired, or even winning a set of steak knives as the “second prize” in sales.

In real life there are obviously more effective, positive and proven methods to teach sales people to increase sales.

But most companies completely ignore another method for increasing sales: analyzing their own data stored in their accounting, CRM or other operational systems.

What follows are three ways you, as a business owner or sales manager, can use analytical tools to analyze your company’s data to increase sales without having to pay for an expensive sales trainer to come in for a 3 day “rev ‘em up” sales training.

Three Steps to Increase Sales Now

Your transactional systems, whether it’s an accounting system like QuickBooks, MS Dynamics or SAP Business One, or a CRM such as BatchBlue, Salesforce.com, or NetSuite, contains lots of data that can help you increase sales revenues. But first you have to get that data into a reporting and dashboard tool, also known as a Business Intelligence tool.

Once you do that you can then analyze the data in many different ways. Three of the most important ways have a direct impact on how you can immediately increase sales revenues:

1. The number of customers you currently have
2. Their purchasing frequency, and
3. Average sale per customer

Your Number of Current Customers

Most companies analyze sales based on revenues, but ignore their customer count.

• Do you know your total number of customers?
• The customers that have generated sales?
• Customers that haven’t bought from you lately?
• Lost customers?
• New customers?

If you don’t know these counts, you should. But why is this important? I’ll get into that in a minute.

The total number of customers are your active customers. Depending on the period of time you’re analyzing, your active customers are those that have bought from you within that time period.

So for example, if you analyze sales on a monthly basis, if a customer bought from you that month, they’re an active customer.

Lost customers are customers that haven’t bought anything from you in X period. X period is what your company uses for bookkeeping purposes.

New customers are those we have invoiced for the first time during the period we are evaluating.

Two Different but Similar Examples

For example, a services company we worked with was almost entirely focused on acquiring new customers. When we presented them with the data on the previous year’s sales using our dashboards, they were shocked to learn that 78% of their sales came from new customer acquisitions, and only 22% from current customers.  In other words, 86% of their customers never made a repeat purchase.

By continuing to follow these indicators closely, the company was able to double their sales quickly, making decisions on how to keep selling to their current customer base.

One of our wholesale distribution customers suffered from the exact opposite effect. They were not acquiring any new customers, and they had a customer attrition rate of 2% per month.

Since sales per customer were going up, the CEO was satisfied with sales growth.

Little did he know that for the medium term, his customer attrition would reach a point where sales would actually decrease, and profitability would also decline.

Of course this CEO immediately started focusing on acquiring new customers.

These examples show that it’s not healthy to keep the same number of customers month over month, or to only increase the number of customers without selling more to your current customer base. To maintain a healthy growth in sales you must increase your sales per customer, and increase your number of customers.

In the next post in this series, we’ll examine the role of purchasing frequency, and finally in our last post we’ll examine the role of average sale per customer.

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