Sales; to some it is a nasty word, to others it is a way of life and to still others it describes a department made up of a group of hyper-extroverted, fast talking, take no for granted crazy people. Whatever the case, without sales or the people that actively pursue them, nothing else would take place. Until someone buys something, nothing happens. You do not need a tire manufacturing company if no tires will be sold. You will not get a job unless you sell yourself to the hiring manager. Oh and by the way, whether you believe it or not, everyone is a sales person. You sell yourself, your beliefs, and your actions to someone every single day so welcome to the sales team of life.
Now since we are all salespeople and the act of sales is the first tier in the business cycle; let’s examine some vital yet misunderstood aspects of the job. Sales positions scare away many qualified people before they even give it a chance because of another word that carries an equally negative enigma; “commissions”. Many people panic if they do not know exactly how much money they will be earning each week. When you are paid by commissions your pay can fluctuate greatly; Right? Well not necessarily, it depends on your knowledge of the Law of Large Numbers.
To answer this question completely it is easiest if I describe two different types of people; in general, one is meant to be paid on commission and the other should be content with a fixed salary. The first person does their job to the best of their abilities, taking pride in the quality and quantity of their performance. They are good communicators, enjoy helping others and are usually sought out as problem-solvers; Solutionaries if they are extremely talented. They do not watch the clock; they call it a day when their work is done not before. They are confident once trained but not in a reckless manner. They see themselves as a successful person; willing to pay the price to reach their goals. This person should never be paid by salary; they are being under paid because all companies set their salaries based on the other type of individual.
The second type of person is just the opposite. They are not really driven by the quality or quantity of their work, as long as it passes the watchful eye of the supervisor. They usually clock in at nine in the morning, take the full hour for lunch, and clock out exactly at five regardless of their workload or deadlines. They are focused on today and lack vision for the future. They may be a good communicator and may like helping others but neither bring them fulfillment or they allow their fears to overwhelm them. Think of the wall-flowers at a teen dance. They cannot draw enough courage to dance. The fear of rejection paralyzes them to the point of inactivity. This individual should never take a commission job. They will be miserable. It does not mean one type is better than the other; the work force needs both to thrive. We are just wired differently.
The main falsie of salary over commission is the illusion of a secure income. As a person who has had to hire and fire employees I can attest that if you do not do your daily job activities every day, regardless of your compensation package, your weekly income is not guaranteed. In sales, like with every other position, there are required duties that you must accomplish in order to keep your job. If you are the sales type of person and do the required amount of sales activities your income can be calculated and predicted on a weekly, monthly, and annual basis using the law.
The Law of Large Numbers is a law just like the Law of Gravity; it has to happen. For instance, if I am standing on a roof and I drop a brick; what is going to happen to the brick? Right! The brick will fall every single time that I let it go. It will never float because of the Law of Gravity. However, if there is a cross wind of fifty miles an hour and I drop the brick; the wind will push the brick sideways. It will still fall but not straight down. In other words, you can’t change any law but you can affect every law. This rule is true and applies perfectly to all Laws of Nature.
The Law of Large Numbers is all about establishing ratios and most everyone understands this part of the law. This law is critical in determining the types of sales activities that needs to be done each day and the exact number of these activities needed to reach an income goal. As an example, if a person needs to make $1000 a week the first thing they have to know is how much money they will make for each sale made. To make the math easy, if they averaged $500 per sale they would need to make two sales per week. Since most people do not buy much without first talking to a sales person; we would need to determine how many sales interviews will need to be conducted in order to have two people say yes and buy. Surprisingly not everyone that we speak with will buy but because of the law we can determine an individual’s closing ratio. As a new salesperson, the ratio used might be the office or company ratio at first but after several weeks of personal activity their ratios would be established. For our example the ratio would be for every three interviews held one person would buy. So to make two sales we would need six interviews. Next, we have to figure out how many people we will need to call or contact to arrange those six interviews. A good rule of thumb could be ten people to get one to agree to be interviewed. If that is the case, the salesperson would need a list of sixty prospects each week.
In review, to make $1000 a week, our sales person would need to call and speak to sixty people, to schedule six interviews for two of them to buy. Is this predictable? Sure! The real question is not “if” the salesperson can do this the question becomes “will” they do this. If the salesperson does not accomplish his or her weekly activities they will not hit their income goal. They also must truly believe and follow the law. Remember the saying, “you cannot change the law but you can affect it”. Every salesperson will have ratios, it is a law, and it has to happen. It is their job to perfect their craft thus affecting their law. The new salesperson will have their lowest ratio the day that they are hired. Just like the toddler who must learn how to walk, so the salesperson must find their steadiness too. The Law of Large Numbers says that once a ratio is established it will never get worse, it will only improve. As the person learns the scripts, masters the art of handling of objections, and becomes confident in their position their ratios will continue to improve. It is not luck, not a fluke but a science.
Once more the Power behind the Wisdom of Three has shown us how to solve problems. In the case above, the problem is how to create a predictable income stream for commissioned associates.
Anthony “Tony” Boquet, the author of “The Bloodline of Wisdom, The Awakening of a Modern Solutionary”
If this is my last post, I want all to know there was only one purpose for all that I have written; to have made a positive difference in the lives of others.