As per your request, I conducted an analysis to establish whether a sales target of $10,000,000 over the next twelve months was realistic given a constraint of 100,000 customers. I am glad to report that the target is indeed realistic and the sales target can be attained in the following ways.
I anticipate converting 5% of suspects into prospects, and 45% of prospects into customers. This will translate into contacting 88,889 suspects out of a market potential of 100,000 people. To attain a 5% conversion rate, I will have to evaluate the needs of the customers and match it to our value offering. Converting 45% of the prospects into actual sales will require me to identify the main factors motivating the customer buyer behavior so that I can formulate my value proposition in a way that will have the greatest appeal to the customer and motivate them to buy. This will require me to also understand and address the concerns that may hinder the customers from making a purchase. For instance addressing concerns by; providing delivery alternatives, convenient means of payment, or an assurance that the product is of high quality.
I have made use of Buying Power Index (BPI) to decompose the sales targets across the 10 market segments that we currently serve. The BPI shows the purchasing power of particular U.S market segment. A higher BPI shows more buying power than a lower BPI. Areas with a higher BPI are forecast to have higher sales. The basic formula for calculating the BPI is given as:
Where
I = Proportion of U.S. disposable personal income in the market segment
P = Proportion of U.S. population in the market segment
R = Proportion of U.S. retail sales in the market segment
Co-op advertising refers to the advertisement carried out by retailers in respective market segments that include the mention of the manufacturer who refund the retailers the amount spent on the advertisement. The budget allocates 1% of sales to Co-op advertising in each of the ten market segments. Market segments with higher sales will receive higher allocation for Co-op advertising.
Paying the sales people based on the amounts of the sales they make will make them motivated to close sales. The compensation arrangement encourages goal congruence by tying the sales person income to the amount of sales they generate. In addition, I will use other non-financial incentives such as recognizing the best performing sales person on a monthly basis. I will use three main criteria to select three top performing sales people, the sales person with the highest sales, the sales person with the most improved sales, and the sales person with the highest number of customers. The recognition will boost the morale and esteem of the sales staff, and keep them motivated.
Sales people will discuss with me at the start of each month about their sales targets. The sales targets will be SMART and will form the basis of the monthly performance appraisal. The targets will be challenging but realistic. I will conduct weekly meetings to discuss the effectiveness of various sales activities in driving sales. I will also provide individual feedback on a weekly basis to keep the sales people focused on their targets.
