People in sales, especially people in direct sales, talk a lot about the Law of Averages. You will hear people credit the Law of Averages for their successes and, less frequently, blame it for their setbacks. Still, understanding the Law of Averages could make a valuable impact on your sales.
What is the Law of Averages?
The sales-y people of the world condense the Law of Averages down into the catchy phrase “more equals more.” To be a little less pithy, the Law of Averages implies that the more doors you see (or prospects you call) the more sales you will make. Furthermore, each person develops his or her own personal Law of Averages to work with. For example, over time, you might discover that you successfully sell paper to one out of every 22 people you meet. That means that if you want to make ten distinct paper sales, you need to pitch right around 220 people.
(For the mathematically inclined out there, you are probably realizing that the Law of Averages is a false generalization of the law of large numbers, which is a concept in probability. For the purpose of this exercise, let’s just go ahead and forget that the Law of Averages is not necessarily a mathematically sound enterprise.)
Once you understand how the Law of Averages works, you can get started making it work for you. Here are three easy steps to get the ball rolling on using the Law of Averages to help improve your sales:
Do the Math.
For the next two weeks, keep doing exactly what you have been doing. The only thing you should do differently for the time being is start taking better notes. Note the number of people you meet or call, note whether you were able to reach the decision maker and then, of course, note whether you sold them anything. At the end of the two weeks, bust out a sheet of scrap paper and figure out your ratios. I recommend tracking a few different things (all in ratios):
- Number of Decision Makers to Number of Doors.
- Number of Sales to Number of Doors.
- Number of Sales to Number of Decision Makers.
Do the Work.
After you know your personal Law of Averages, you can get to work meeting your sales goals. The more doors you see, the more sales you will make – now you have a clearer picture of how many doors you need to see to hit your numbers.
Improve your Law of Averages.
After you have had some time to familiarize yourself with the Law of Averages, you can use it to make improvements to your sales. This is why I recommend keeping track of your numbers every day, even if you think you already have a good handle on things. Look for small ways to improve your pitch method and then use the Law of Averages to determine if you are really seeing results and improving your ratios.
Using the Law of Averages to improve your sales can be a somewhat labor-intensive process. Nevertheless, tracking your Law of Averages is worth the time and potential aggravation if it improves sales for your business.
Does your business keep track of the numbers? What do your ratios look like for sales?
Latest posts by Elizabeth (see all)
- Organic Pet Food: An Exercise in Knowing Your Audience - November 6, 2013
- 7-Eleven Expands from Malt Liquor to High End Wine - November 5, 2013
- What’s Up With the Twitter IPO - November 5, 2013