Thoughtful Thursdays - Increasing Sales Part 2

Last week we talked about coming up with a dollar value for incremental growth for the next twelve months. This number might be generated from from an across the board percentage growth over last year or perhaps a formula like the one listed below:

LY-CC+G1+G2+G3= Next Year's Forecast

• LY = Sales for the past 12 months
• CC = Core churn - business that will be lost for various reasons during the next 12 months
• G1 = Increases sales of existing products/services to existing customers for the next 12 months
• G2 = Sales of new products/services to existing customers for the next 12 months
• G3 = Sales to new customers for the next 12 months

I have used the above formula on a quarterly basis and incorporated +/- for Seasonality.

Whatever method or tools you use to come up with, your forecast for the next month can be expressed as a percentage of the previous years performance.

You have the number - what's next? Also mentioned last week, as food for thought for this week, sales growth comes from three areas:

1. Increased sales to existing customers
2. Sales to new customers
3. Price increases

If you analyze where your sales are coming from, it is likely that the majority of revenue is generated from a minority of customers. I am speaking of the 80/20 rule or Pareto Principal.

Take the customers that represent the bulk of your business and analyze each one's potential for growth next year:

• Will sales be flat?
• Are they going to buy more? - How much more?
• Are they going to buy less? - How much less?
• Can prices be increased or will they fall? - What will the dollar impact be?

For each customer have a detailed sales forecast by product or service purchased. If you have difficulty coming up with these details, get yourself to your customer and go over future sales expectations with them. Once that is done, add up the numbers and see where you stand. How close are you getting to the result you are looking for? What is the dollar gap you need to bridge?

Congratulations if your sales forecast can be satisfied with your existing customer base. In many situations however this will not be the case.

Take this week to review your forecast and go over the sales history for your existing customer base and get a good feel for what they will be purchasing over the next year.

Next week we will discuss ways to close the gap between what you expect to sell to your existing customers and your sales forecast.

Good Selling,

Richard