Using Key Performance Indicators To Grow Your Engineering Business

Feeling overwhelmed by your sales targets? You're not alone. Even the most seasoned sales professionals experience bouts of target-induced anxiety, particularly when goals are elevated or the month's prospects appear grim. However, there's a systematic way to make this climb less daunting—the "mathematics of selling." This analytical approach breaks down the journey toward your sales target into manageable, realistic steps.

The Mathematics of Selling: More Than Just Numbers

We all have lofty sales targets to hit. The key to achieving them without a meltdown? Turn to the mathematics of selling, a structured approach that goes beyond mere revenue goals. Instead of solely focusing on the end target, the maths of selling allows you to track your progress, like signposts on a cross-country trip.

Think of it this way—picture your sales process as a funnel:

• Start by making a certain number of sales calls.
• This leads to conversations with decision-makers.
• Conversations pave the way for permission to send introductory emails.
• Emails open doors for quoting opportunities.
• Quotes eventually turn into orders.
• Finally, enough orders get you to your sales target.

The real magic lies in knowing how many sales calls to initiate to move smoothly through this funnel. That's where understanding your Key Performance Indicators (KPIs) comes into play.

KPIs: The Milestones on Your Sales Roadmap

So, what are these KPIs? They are the quantifiable objectives that break down your larger goal. For example, in high-velocity sales environments, a failure to meet daily call volumes can lead to disciplinary actions. Why? Because businesses know that missing KPIs consistently could jeopardize the revenue goals.

To harness the power of this analytical approach, you need to identify several KPIs:

• Number of orders needed to meet your sales target.
• Number of quotes required to win an order.
• Number of introductory emails or meetings needed for one quoting opportunity.
• Number of decision-makers you need to reach.
• Number of calls required to reach one decision-maker.

To play devil's advocate here—without proper tracking over a reasonable timeframe (say, three months), your KPIs would be based on guesswork. And let's be realistic, relying on guesstimates in sales is akin to sailing without a compass. So, keep track and refine.

Tailoring the Approach to Engineering and Manufacturing Sales

It's a known but somewhat surprising fact that engineering and manufacturing sectors typically under-invest in marketing. According to Carl Jarvis' book ‘Marketing For Manufacturers’, these sectors often spend a meager 0.5% of their budgets on marketing, while a healthier investment would be between 5-10%.

Because of this, you may find that your KPIs in these sectors are a little more demanding. You might need to make more calls or send out more quotes to get the same results. Don't underestimate these KPIs; otherwise, you might end up with an unpleasant surprise at the end of the month.

Adapt and Survive: A Continuous Cycle

Though the maths of selling provides a foundation, keep in mind that external variables like market trends can sway your numbers. So if you find discrepancies in your well-calculated formula, it's probably time for a KPI health check. By treating these metrics as fluid, you can nimbly adapt to market changes, always staying one step ahead of the game.

In summary, the maths of selling is not about chaining you to a formula but about equipping you with a dynamic, adaptable roadmap. When it comes to sales, especially in complex fields like engineering and manufacturing, a little planning goes a long way.

Your Actionable Next Step: The Sales KPI Challenge

Ready to put this knowledge to work? Let's not leave it as just a thought exercise. Here's a simple but impactful task to set you on the right path. We'll call it the "Sales KPI Challenge."

The Task:

1. Start by identifying one Key Performance Indicator (KPI) that you believe has the most impact on your sales. It could be the number of calls you make, or perhaps the number of quotes you send out. Choose one that's a pivotal point in your sales process.

2. Track this KPI diligently for one week. Make sure you log every instance—whether it's a phone call, email, or quote.

3. Analyze the Results: At the end of the week, tally the numbers. How did you do compared to a typical week? More importantly, how closely did this KPI correlate with successful sales outcomes?

4. Refine or Pivot: Based on your one-week experiment, decide whether this KPI is a reliable indicator for your sales success. If it is, think about ways you can improve or scale your efforts. If not, consider focusing on another KPI and run the experiment again.

This task isn't just a numbers game; it's a way to align your daily actions with your larger business objectives. And while it may sound simple, sometimes the simplest shifts can lead to the most profound improvements.

So, are you up for the challenge? Remember, data without action is merely trivia. Let's make these numbers work for us.

By integrating this task into your workflow, you'll not only gain a deeper understanding of your sales process but also enable a proactive approach to meeting—and exceeding—those daunting targets.