What do you really know about your sales operation? Do you know
your revenue by product line and by payer source? Which salesperson
sells the most of what products?
Whether you win or lose a bid or just want to survive the
pressures of a turbulent industry, one key is to control your
business expense variables while understanding where your sales
revenues are coming from. Once you have a handle on the entire
sales operation, you can better understand how to expand your
business.
Start by looking at these basics:
Sales per Salesperson: The age-old question
about how much a salesperson should sell has much to do with
referral sources and facilities in a sales territory, product lines
and payer sources. I have seen salespeople generate four times
their salaries, while others in large metropolitan areas generate
up to 10 times or more of their salaries.
Begin your analysis by tracking and documenting the business
each salesperson brings in. Include all of the expenses you incur
by their employment, making sure the investment (in your terms)
makes good business sense. You don't want a salesperson who costs
more money than he or she contributes. You should also determine
whether the salesperson is bringing in business that could not be
acquired without their hard work.
Revenue by Product/Product Line: What's
selling? Sales reps often sell products they know best, but more
extensive training about certain products could increase your
sales. Don't expect salespeople to sell products that they do not
fully understand or see as an important part of your product mix
and profits.
You also need to know what isn't selling. If a certain group of
products is not moving off the shelves, you need to increase their
sales with a new marketing plan or consider eliminating them from
your inventory.
Figure out if expanding the products in a product line that is
selling well will generate more revenue. If bath benches are
selling well, for example, should other bathroom safety aids be
added to your inventory?
Once you know revenue by product, you can develop a marketing
plan to ensure your salespeople know about the products you sell
and which products generate the most revenue. You cannot expect
salespeople to help build a business when they are not aware of
where the profits come from.
Revenue by Payer: We all know while various
payers may pay close to the same price for a product, the time you
wait for your money can be very different. Give each salesperson a
breakdown of revenues received by payment source. If 65 percent of
the money they generate comes from Medicare and less than 10
percent from private insurance, is this due to the kinds of
products being sold or the types of referral sources and accounts
being called on? Changing the salesperson's focus could change
these percentages and make your HME company more profitable.
Number of Calls per Week: This could be the
simplest form of research you do. The more accounts a salesperson
calls on, the more opportunities he or she has to sell more
products. Not a very analytical study, but it will give you some
indication of the volume of calls being made. The law of averages
tells us that if you tell your story over and over to more and more
people, someone might actually remember it and call you when they
need medical equipment.
While this simplistic study does not address the size of the
accounts nor their potential for business, it does let you know
when someone is trying. I admit trying does not pay the bills, but
increasing the number of sales contacts is a good predictor of
revenue potential. You quickly learn in sales school that no one
buys from people they don't know. So I do give some credit (at
least for a short time) to those who are hitting the pavement and
making the calls. Just make sure the large volume of calls, in a
short time, will generate revenue.
If you are not tracking your sales work, get moving. You are
running out of time. A piece of paper and a pencil is a start,
although there are more sophisticated software programs to help
readily available.
Track your business before your competition begins to track your
"old" customers for you. Remember that without sales you have no
business, and if you have business you must know why.
Read more Sales Notebook
columns.
Louis Feuer is president of Dynamic Seminars
& Consulting Inc. and the founder and director of the
target="_blank">DSC Teleconference Series, a teleconference
training program. You can reach him through
href="http://www.DynamicSeminars.com">www.DynamicSeminars.com
or at 954/435-8182.
