I wrote a blog post back in March 2010, I revisited today as an update to a wonderful story that’s still unfolding. The blog was called:
A rather ridiculous thing, running and sales and was an introduction to my monthly newsletter at the time, because I had a rather ridiculous story to tell.
In May 2009 I received an email from Ian Kinsella pictured above, the content of which I’m going to reprint for you. It’s inspirational and its genuine. After you have read it there’s a YouTube link to a presentation that Ian has just delivered that I recommend that you share as a reminder of just how much your chosen attitude can influence your life.
An inspirational email
I want to give you a little background to the email. It’s from a salesman that I have worked with for a number of years. He’s in his mid-20’s and he lives and works in Dublin. He’s been one the best delegates that I have trained (and is to this day), he’s enthusiastic about training, he likes to learn and he’s not afraid to try.
This is his email exactly as he wrote it:
Hi Brian,
How the hell are you? I had to email you as I did something that is rather ridiculous in the current economic climate and if anyone would appreciate it, it’s you.
As you know, I’ve had a difficult year; in fact, about a month and a half ago I lost my Grandmother too which was like rubbing salt in the wound after losing my mother. Basically I hit an all-time low and didn’t think I could pick myself up again, I had no interest in selling cars because it all seemed so insignificant……………..so I made a decision, to try beat the sales record in the middle of this recession, I thought that setting such a crazy goal would keep me focused and make me get back into selling again, I also knew that I can do anything if I put my mind to it.
So I gave up drink, I worked every day and every hour I could, I answered every phone first, got to every customer first and I started to get back in the groove very quickly and before I knew it I had delivered 60 retail cars in 26 days; breaking my old record of 58 set back in January 2007.
Maybe in these depressing times when your training around the world this story could be worth telling other sales people who are struggling and think that you can’t make money in this recession.
From the 9th of April until the 7th of May: 61 Hours a week, 244 hours in the month, 2.3 sales a day over 26 days – Record broken by 2 units.
Hope your well,
Regards
Ian
Postscript
This landed in my LinkedIn feed this morning. Please take some time to watch it.
https://www.youtube.com/watch?v=2Xy-K_aGs9o
Its Ian’s story in his own words 7 years on , its 15 minutes long and one of the best presentations I have seen delivered in a long time. Its professional, its motivational, it’s real and its meaningful. It’s worth sharing with your sales people, it’s worth sharing with your friends and with your family. It’s truly inspirational and for me was a great way to start my day. It should be a TED talk on a much bigger stage.
When I wrote the blog I was concerned that people would think that the story was an imaginary tale! Well I think you can see it’s clearly not and if you are a salesperson or manager then you need to take on board Ian’s message.
Ian had focused on what he could do, he had set himself a goal and he had worked hard to achieve it. He had focused on his activity and he had taken every customer inquiry seriously. Perhaps that’s why he and his team are still breaking sales records in his new career.
I love the line that he soon got back into the groove, because that’s exactly what we all need to do. Back in 2009 Ireland was rocked by the recession it faced, and it really is only coming out of it now in 2016. Stay focused. Lift yourself up, challenge yourself, rev your motivation and point yourself in the right direction, that’s what Ian did and look what he achieved.
Running and sales targets
If you know me well you know that I get off on running. I completed my first half marathon in 2009 coming in at 2.00.52 on the clock (Ian’s marathon times put me to shame but then again he is 25 years younger than me :-). I’ve done many half marathons since but not a full one and I think Ian’s gentle reminder to me today was just what I need to get me back on a full marathon track.
So what’s running got to do with sales? Well targets for most things in life fall into the categories of quality, quantity, cost, profit and time. Running is said to be simple to measure; you have a distance and then complete the distance in a time (the 100 meters for example). It’s not that simple though; what if the distance is all uphill, what impact will that have on the time? What if the temperature is going to be high or the humidity high?
The conditions will have an influence over the result and you will have to work harder in tougher conditions (and smarter) to achieve similar results to the race before. It will have an impact on your time as well unless you train differently for the different conditions (and as Ian points out you have to have the right gear and training to truly compete.
Well that’s the same in sales in my mind, if the market conditions are tougher so we need to work harder and train differently. If there are fewer prospects around so we really need push the boat out with every customer, give them the best presentation we can, present the offer in the most enthusiastic way, communicate all of the positives and really do our best for every customer. The market today needs us to treat every customer like they are gold (because they really are) and treat them to the very best of our ability.
I truly believe that we all need to train harder for these changing economic conditions. I train 5 days a week for the reward that it gives me. I train to make sure I’m prepared. I do it because I love it not because I’m forced to do it. I make time for it because if I didn’t then I might either injury myself or fail to meet my goal. Now there are people around me that say I’m mad (which is probably true), why bother, what’s the point. The point is that I’m doing it for me, the point is that enjoy it and the point is that it is rewarding for me.
And that’s exactly the sale in sales, if your salespeople don’t enjoy it, don’t find it rewarding, if they don’t want to work harder in a tougher environment and they are not prepared to train (or for you to train them) then don’t be surprised if things don’t improve.
I think that Ian’s email and his presentation says it so much better than I do. Nobody forced him to work so hard, he did it because he wanted to, to challenge himself and to see what he could really achieve. He achieved his goal and I know that he got his reward as well.
I hope that Ian’s story has touched you, it did me. I can’t wait for the next chapter!
Regards
Brian
https://www.youtube.com/watch?v=2Xy-K_aGs9o
P.S. His Berlin time was under 2 hours 46, 8 minutes under his personal best. Way to go Ian!
Most sales managers tend to approach budgeting simply by looking at the unit and bottom line figures. Here, Brian looks at a different approach – one which he implemented at a dealership towards the end of last year.
Starting point
I started my projections by looking at how many units were sold in each month of the previous year, and then converted each monthly total into a percentage of the total (alternatively, you could take the average monthly sales over the past three years, to iron out the effects of any special promotions or market anomalies). I was working on the basis that those monthly percentages were unlikely to be significantly different in the year ahead (although the number of sales might be).
Next, I took the 2015 sales targets (2300 new and used retail units) and broke that down into 12 monthly targets, based on the previous year’s percentages. From that I was able to work out how many prospects the dealership would need to talk to (based on a 20% closing ratio, which I believe is the industry average – in the Digital sales age your sales team may well be closing 25%-30% of the prospects they talk to to achieve the required level of sales each month as customers are better informed than ever before.
Staffing levels
From this you can calculate how many salespeople you actually need to do the job, and whether you currently have enough or too many. In this example, the dealership currently has 8 salespeople. They will require an extra two to meet the January target, two more in February, and a further one in March. By the time April comes around you might think the sales department will be over-staffed, but of course you have to remember that, one, there will be a degree of staff turnover and, two, you also have to cover holiday and sickness as well. The projections are based on each salesperson delivering 180 units per year.
Test drives
Having determined that the sales team needs to speak to 1,200 prospects in January, it follows that they will need to give 600 of them a test drive. Again, that is based on standard industry figures – for every ten prospects you demonstrate to, you should sell four cars. So, for example, in January 600 demonstrations should lead to 240 sales.
Customer follow-up
Similarly, with customer follow-up, experience suggests that each prospect who leaves the showroom without buying a car needs to be contacted three times to maximize your chances of converting them into a sale. The first follow-up is usually to thank them for visiting the dealership, and to establish if there are any other ways in which we can help them. That contact, whether it is by phone (preferably), a handwritten note, an email or a text, should be made within 24 hours of their visit to the dealership, unless they have visited on a Saturday in which case Monday is the best time to re-contact them – Sunday is a bit too intrusive in my mind. The second might be some additional information and an offer of a second demonstration to help the prospect make a decision. The third should be to establish the next course of action.
Caution!
If you are doing three follow-up contacts per prospect, then you are working pretty hard. If 360 follow-ups are required per salesperson during January – that’s around 15 for every working day of the month. 15 call-backs per day is basically two hours work on the phone, which is probably as much as a salesperson can productively manage, bearing in mind that most of them are probably doing a delivery a day as well. So, any more than that and you are probably going to have to give your sales team some extra support
That is the trouble with most budgets – we tend to budget for results when what we should also be budgeting for is the salesperson’s activity levels.If you want your salespeople to be effective, then you simply have to budget for their time to follow-up prospects. If you don’t, you will probably find that your team is not big enough and inevitably they will reduce the number of follow-up calls they make. This in turn will reduce their effectiveness and your sales.
Does it stack up?
The next stage is checking to see if this all stacks up as a budget. This year, in our example, we required 24 unit sales per salesperson per month on average. Last year it was 22. So the question is, can we expect to get an 8% increase out of our sales team? In this particular case the answer was most certainly yes, since we were working with a more experienced sales team now.
Also as a cross-check, last year the average per salesperson was 19 units and we managed to raise that to 22.
F&I potential
On a 50% finance penetration in January, the dealership would sell 120 cars on finance and get $174,000 in finance commission. But if they could just raise that penetration to 60% they would sell 144 cars on finance and bring in $208,800. If an extra 10% penetration means an extra $420,000 profit over the course of the year, you have to ask if it would not be worth considering investing some of that money in an additional business manager to ensure we get that extra revenue? Or, it might mean looking again at the way in which we sell finance to try and maximize the potential.
Use actual results
My first attempt at the budget, was done using only the dealership averages. My cross check was done on actual results, which means I am now developing a budget that is based on each of the salespeople’s real activities in previous years. It’s a much more accurate way of looking at whether or not we can achieve our budget.
First we look at what the individual salespeople should be able to contribute during the new year in terms of units, and at what activity levels are required. Here we are working on the basis that for every two demos you do you will sell one car.
When we come to look at F&I, we see that if they continue this year as they did last year then they should be able to bring in $2.4m of F&I commission, which is in line with our projection. It means we are going to have to do something with finance if we want to raise it $1.4m.
So this now becomes a very good check against the original activity-based budget. If that came in at $1.9m, for example, we’d have to do something radical with finance. But as we are in the ball park in this example then we can be confident that there is definitely an extra $0.5m up for grabs.
Excel (email us for the attachment)
The beauty of developing your budget on an Excel spreadsheet is that you can interrogate it to ask ‘what if?’ for example, our example spreadsheet shows 1,000 new and used units. Replace that with, say, 550 and all the other figures will change accordingly.
Looking across the top of spreadsheet, sales turnover is based on average selling price. If you changed the average selling price from $20,500 to $25,500 the figures would change again.
You can use this to get a feel for the volume of sales you think you are going to do, which will be important to you in terms of identifying cash flow and for making your cash flow projections. Say you have 50% finance penetration, 60% trade-ins and you sell a car for $25,500. For three days you will have outstanding, say, $18,000 worth of finance and you might also have a trade-in that is tying up your cash.
Final point
Most dealerships will only do a result based budget (which is much better than doing no budget at all). They don’t tend to think through what their salespeople are going to have to do to get there. And there’s no cross-checking. Dealerships need to look at carefully at what they have done this year before they start budgeting for that % increase next year.