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How To Calculate Your Monthly Sales Projection

How do you calculate your monthly sales projection?

 

On the first of every month, sales managers gather all the salespeople into a room to get their sales projections. What number will you hit this month? Traditionally, salespeople have no real idea, and most are not taught how to calculate their monthly sales numbers before the month begins.

How do most salespeople calculate a sales projection?

I find that most salespeople take a look at their funnel and then make up a number out of thin air.

Example: They look at the funnel and see a total number at the bottom of $100,000. The thinking goes that the salesperson will add a few more into that number during the month, so they project $125,000. Thin air!

Real-life shows us that the above projection is a fantasy.

Allowing this fantasy to continue will frustrate a salesperson because they rarely hit that number. There has to be a formula that helps salespeople be better at this monthly process.

There is.

Experience helps

Early in my sales career, I kept meticulous notes. I tracked leads, meetings, proposals, and sales. After a while, patterns begin to emerge.

I began discussing my findings with other people and found theirs were similar. Mind you; we were all in the same industry selling to the same type of prospects. I wondered if it held for other sectors.

Then I left that industry and changed companies. I went from monthly route sales to one-off sales of equipment. The change was both harder and easier than I thought, but success came rather quickly.

Why? I knew how to figure a monthly sales projection, and I don’t remember a time I didn’t make my number. I wasn’t low-balling the forecast either. It didn’t take long for my manager to use my number when giving his team number to the Regional Vice President.

He would doctor most other numbers, but learned mine was as close as one could get in the type sales we did.

How do you get to the number?

Historical data is the secret sauce. I noticed a pattern that seems to hold for most industries (I’ve used it in four different industries) and is easy to use.

Referring to the earlier example of the salesperson with the $100,000 funnel. Real-life shows us that 1/3 will close, 1/3 will push, and 1/3 are lost. The correct projection for this person is $30,000. Yes, I know that is only 99%, and that $30,000 is not quite a third, but I like round numbers.

Using this formula is also an excellent way to increase your sales. There is magic in the numbers.

How do you increase your sales using the funnel?

How can a funnel increase your sales? Working the rule of thirds means if you improve the number of correct prospects and close the same ration of 1/3, you will increase your sales. Need to sell 100,000 per month? Increase your funnel to $300,000.

Increasing your sales funnel is the easiest way to increase your monthly sales. It’s not easy, but it is the easiest. 

Make that extra call on the way back to the office. 

Make another dial before breaking for lunch. 

Do the work for more sales.

Will some months exceed the number? Yes. Will some fall below? Yes again.

Just a rule of thumb

We all know sales is a hard business. Monthly projections are only our best guesses of what number we can confidently hit for the month. Trust me, your sales manager might grimace when you give a smaller amount, but after a few months of close, accurate numbers, they will begin to appreciate the new you.

Use the rule of thirds for yourself for a few months and see how close it gets to your actual number.

I’m betting it will be on target.

Let me know your results. I am always collecting data for sales projections accuracy.

Later we’ll discuss the other two ways I know to increase your sales.

If your talking, I'm listening