Time for the Big Picture

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 DSC Teleconference Series, a teleconference training program. You can reach him through www.DynamicSeminars.com or at 954/435-8182.