The Rhythm Will Eventually Get You
As someone who’s always been fascinated by numbers, one of my chosen specialism subjects after secondary education was Maths. I spent two years studying maths in depth and I loved it. I have a deep appreciation for maths. It provides me with a sense of calm in an otherwise chaotic life. Everything in the world as I see it can be broken down into its mathematical equivalent on some level. With maths, you always know where you are – it either is, or it isn’t. There’s no maybes. You’re either right or wrong, black or white. Numbers give us a sense of clarity and correctness.
Maths speaks to the bit of our brains which crave certainty and need safety. On a daily basis, we see numbers being used to reassure or alarm us about the world we live in. Nowhere do we see the power of maths more than in the space of statistical analysis. When I completed all my stats modules, the overriding learning I extracted had nothing to do with means, modes and medians. It was to do with what statistics meant to us as humans – the way I saw it, statistics are beautiful, simple tools which we use to understand the past and predict the future. We can and do use stats to give us comfort, predictability, and also to understand the dangers we face in the world. The hedge fund managers of the world use statistics to dig deep in the past and forecast the next big shifts, allowing billions to be created or lost in seconds. Surgeons lean on numbers to prepare themselves emotionally to accept that, under their hand, they will inevitably lose lives. But it’s ok because it’s expected. Insurance companies use maths to tell you how likely it is you’ll get burgled. Each time we board an aircraft, we’re soothed by the statistical certainties which have demonstrated safety in the past.
The fact is that in this world, in our lives – there is very little which is actually new. If something has happened before, it will happen again, and the stats prove it. Many things in life can be predicted with startling accuracy, all we need to do is let the numbers do the talking.
So I couldn’t help but wonder: why, when we know the power of numbers, why don’t I see entrepreneurs using statistics more to predict and success and defend against failure?
One of the things I hear from entrepreneurs is the concept that ‘sales are uncertain’. Given that sales is the backbone of any business, I’m often bemused by the number of business owners who wheel out ambitious targets for the upcoming year but cannot justify these expectations with proven statistics, a historical story of what’s happened in the past, in numbers. How’s it possible to arbitrarily imagine what you’re going to sell if you haven’t figures out what you’ve sold before? Without sales, you have no business. So doesn’t it make sense to throw as much as possible into the effort of getting them?
A simple way to look at your chances of sales success is to consider that just like music, sales has a beat, a pattern, rhythm. If you look hard enough, far enough back, you’ll identify this. It’s possible to statistically predict your own sales successes by looking at your history, and it doesn’t take any kind of a fancy CRM system to do this.
Let me give you an example from one of my own businesses, back in the day.
Starting out, one of our gateway products was bookeeping for the SME market. It was a straightforward product with simple pricing, easy to understand and popular with our market. At the time, we had three main ways of generating leads: referrals, online ads, and print marketing. For the purposes of this article I went back in time to look at the statistical success rates in granular detail.
Here’s how it breaks down.
Firstly I counted up the leads. I would determine a lead as being either an online enquiry, a referral or a phone enquiry: we used to get about 15 of these per month.
Of this figure, we’d respond to all of them however only an average of about 7 would follow up looking for an actual quote – it was a crowded marketplace and this was reflected by people shopping around – for about half the leads, they’d already found a provider by the time we had responded.
Of this (average) 7 second responders, we’d only quote 5 or 6 or them – there was always one who dropped off and didn’t allow us to pitch.
Of this final 5 quoted, we’d land on average two sales.
Based on this, I know that 15 leads could reliably result in two sales, per month.
This means that our sales beat was: 15 (leads) 7(responses) 5 (quotes) 2 (sales). So: 15/7/5/2.
Spin the beat back
You can do this for any business, and once you know your beat you can reverse engineer it to build your pitch strategy.
Using the example above, that’s 2 sales per 15 leads. This means that 10 sales would require 75 leads, because I’d need to quote a minimum of 25 people to guarantee the sales.
Furthermore, if I knew it cost me €100 to generate 15 leads, I would then need to be prepared to spend at least €500 to get 75 leads.
You can take this a step further and apply it to your pitches too. If you pitch five times a week and you get one sale, then logically, 5:1 is your ratio. So if you accelerated this and pitched 5 times a day instead of 5 times a week – you’d have a sale a day!
Success in selling is a lot about psychology and one of the most important things is momentum. What if you batch all your pitches into one or two days bursts? Your success ratio would shoot up, you’d sell daily and you’d be motivated to keep going.
For us, our beat was 15, 7, 5, 2.
15, 7, 5, 2.
You our business beat could could be different. Identify your rhythm, your beat, your pattern and use the numbers to spell success. Both on paper and psychologically there’s nothing better than winning at selling – since you know your beat, make the music, make the sale. Let the rhythm get you, in the end.