It's A Numbers Game

Three years ago, Paul left his corporate job to launch his
freelance writing career, and he’s done relatively well. He has
a group of regular clients that keep him going, and they are
happy with his work.

When he first called me, he expressed concern over the
sustainability of his business. “Even though I’ve got great
relationships with my clients, and they send me enough
assignments to keep my business going, I have this nagging
fear of losing them.

If I lost one or two at the same time, I would really be in
trouble. I really don’t like feeling this vulnerable. I don’t
feel like I’m in control of my own business.”

“Okay, let’s say that happened,” I prompted him. “How
long would it take you to get each new client to take their
place?” “I’m not sure,” he stammered. “I don’t really
keep track of those things. I’m scared to even think
about it.”

“But that’s why we’re working together. So you can look
at these aspects of your business. So you’ll be prepared
for the unexpected. I know it can be scary, so let’s look
at it together.”

Paul and I continued to discuss this topic during our next
four coaching calls. During that time, he plotted out his
prospecting process, developed a system for tracking
leads and prospects as they traveled through the system,
and created a spreadsheet that showed him the status
of each prospect at any given time.

With these figures, he was able to calculate how many leads
he needed to generate in order to meet his sales goals.
As a result, he now feels much more in control of his business
and knows exactly what he must do in order to ensure his
business’ survival.

None of us can predict when a client will move, lose money
they budgeted for our services, take our function in-house or
choose another vendor, but we can prepare ourselves to
respond to these types of things so they have the least amount
of impact on the viability of our business.

Do you know how many leads you have to generate in order to get
a new client? 5? 10? 25? 50? Although industry guidelines may be
available, what you really need to know is how many prospects YOU
have to approach in order to get one new client.

Knowing this number tells you what results you need to be getting
from your marketing efforts and knowing that tells you whether or
not your marketing efforts are sufficient to reach your annual
sales goals.

Let’s say you want to increase your sales by $18,000 over the
next 12 months, and you know that, on average, each client
spends $1200/year with you. That means you have to bring on
15 new clients in the next 12 months ($18,000 divided by $1,200).

Note that you’ll need to go into more detail in order to calculate
your own numbers since in this scenario the average client spends
$1,200/year with you, but if you don’t bring him/her on until 6
months from now, you’ll only be making $600 in the 12 month
period we’re looking at. But let’s run with what we’ve got for
the purposes of this example.

So you have to bring on 15 additional clients. If you also know
that you have to generate 10 qualified prospects for every person
that becomes a client, then you’ll have to generate 150
additional prospects this year (15 clients * 10 qualified prospects).

Therefore, in order to generate $18,000 more in sales you need
to come up with some marketing methods that will generate
150 additional prospects above and beyond those you are
currently generating.

Although this is not an exact science, it does give you some
numbers on which to focus in order to make your progress toward
your goal more measurable. This measurability allows you to chart
your progress throughout the year which, in turn, increases the
likelihood that you’ll reach your goals as you are able to make
mid-course corrections.

It worked for Paul, and it can work for you!

So, now's the time to ask yourself -- are you filling your
prospecting funnel?

For the first three years of my web design business, I just took
what came my way. I did what I thought would bring in
business and waited for the results. I did very little analysis of
the process, so I was never able to predict what activities
I needed to do in order to get my desired results.

A few years ago, a management consultant introduced me
to the idea of the prospecting funnel. It’s a way to track your
prospecting process so you know how many prospects are in
each stage at any given time.

Over time, you are able to predict how many prospects you
need to generate in order to produce one new client. This
helps you set realistic sales goals, plan effective marketing
efforts and budget sufficient marketing dollars.

On a blank piece of paper, draw a large funnel taking up
the whole page. To the right of the funnel, starting at the
top, write the first step of your prospecting process (for
example, first contact with prospect at networking meeting,
cold call, web site query, etc.).

Below that, leaving a little space between the two, write
the second step of your prospecting process (for example,
scheduling a meeting). Continue writing the subsequent
steps of your prospecting process, one below the other,
until you reach the bottom of the funnel. The last step
should be the one where the prospect becomes a client
(for example, you receive the signed contract back with
a deposit check).

Now, go back to the top of the funnel and for each stage
that you identified, write how many prospects you have
who are currently at that stage. Write these figures inside
the funnel. If you have room, you can write the names of
the prospects that are at each stage.

Now, you may want to create a spreadsheet that helps
you track when the prospect entered your system, when
they hit each stage and when they became a client. You
can use the first column to write prospect names and
other columns to write each prospecting step. Then, each
row, reading from left to right, can show what date the
prospect entered each stage of your prospecting process.

Over time, you’ll be able to come back to your spreadsheet
to calculate the number of prospects it takes to generate
one new client and the amount of time it takes, on average,
to convert a new prospect into a customer.

Once you’ve refined your prospecting system and funnel,
you may want to create a giant version of the funnel on
a flipchart where you can write each prospect’s name on
a sticky note and move them from one stage to the next.

It can give you a great visual of your current prospecting
status and show you what areas need your attention.

Happy Prospecting!