Activity Ratios are some of the best tools in your arsenal to quantify and improve your business. Here are three quick scenarios how.
“How many calls do I need to hit quota?”
It could be calls, or demos, or any other activity type. A salesperson wants to translate their quota into a number of actions they need to do in a given period of time. The answer: track your activity ratio of X-to-Deal, probably over a trailing 90-day or 12-month range.
In the example to the right, this customer is a staffing firm and has chosen activities specific to their sales funnel: Job Orders, Internal Submissions, Sendouts, Interviews, and finally Placements. The JO:Placement ratio tells them that they need on average 3.7 new job orders to close a deal (placement). In fact this customer’s last five months have been better than average with a ratio in the 2.0 – 3.0 range.
You can also define “intermediate” ratios for activities in the middle of your sales funnel. For example, how many trials does it take to get a demo? As you can see, this customer needs on average 2.0 sendouts to get an interview, and they are getting better (the ratio is trending downwards) over time.
“What do my veterans do differently from my rookies?”
Rookies often take a “shotgun” approach to winning deals: do as much activity as possible, in order to make up for quality through sheer volume. As they become more experienced you often see a shift to a “rifle” approach, doing fewer but higher-quality activities to achieve the same result.
If you break out your ratios by employee, differences in how each employee approaches their sales funnel quickly become clear. Examples to the right:
- William Howard Taft is a veteran with 45 deals (placements) won. His overall ratio is 2.6 Job Orders to each Placement. He also needs only 7.2 submissions for each placement — he is a “rifle” shooter.
- James Madison is a relative rookie with 15 placements. His overall ratio is significantly worse at 3.5 job orders per placement, and it’s easy to see why. He needs 118 submissions to get each done, more than 16x the effort done by Taft.
These differences help you quantitatively troubleshoot and help your employees improve their process efficiency.
“Why does this client seem so difficult?”
Often a client will be difficult to work with, but it can be hard to put a finger on exactly how they’re different from the norm.
If you break out your ratios by client, differences between them will quickly jump out:
- CHS, Computer Sciences, and Arrow Electronics are all relatively minor clients (1-2 placements each) but require 20 – 30 job orders for each win, indicating they are quite difficult to work with. If you look at their Submission to Placement ratio, they also require a lot of submissions — another indicator that they are very picky.
- Verizon, Citigroup, Union and Medco are all heavy buyers with 14 – 20 placements each. They’re also much easier to work with, as seen by their 5:1 JO-to-Placement ratio which is 4-6x better than the clients above.
Knowing which clients have a higher bang for the buck will inform your business of where to place its effort and priorities.
Know your ratios, know your business
These activity types will vary by industry and customer. You’ll need to choose the activity types that match your business, and we encourage business to figure out what the most meaningful activities and ratios are. Once you do, ratio analysis can help you more accurately project your sales funnel and improve both your employee as well as client efficiency.