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Impact Analysis of “Working Harder and Smarter”

Impact Analysis of “Working Harder and Smarter”. Ted Mitchell. Sales people can be. Viewed as Two-Factor Marketing Machine. Two Factor Machine Generating Sales Closed, N, from Sales Calls, C. Output, Closed Sales, N = (Conversion rate, r) x Input, Number of Calls, C

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Impact Analysis of “Working Harder and Smarter”

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  1. Impact Analysis of “Working Harder and Smarter” Ted Mitchell

  2. Sales people can be • Viewed as Two-Factor Marketing Machine

  3. Two Factor Machine Generating Sales Closed, N, from Sales Calls, C • Output, Closed Sales, N = (Conversion rate, r) x Input, Number of Calls, C • Conversion rate, r = close rate R = N/C • Called a close rate and is often spoken of as it was a simple percentage • But is should be called the rate of sales closed per 100 calls (Input and output are different metrics)

  4. Simple Business Machine Number of Sales Calls Conversion Process Efficiency = Sales, N /calls, C Crank Handle Output $ Number of Calls being Closed with a completed sale, N $ $ $ $

  5. The concept of ‘Working Harder’ • is reflected in the idea of making more calls, C, per month • The concept of ‘Working Smarter’ is reflected in the idea of making each call more productive and improving the sales per call rate, conversion rate, r = N/C

  6. We assume • 1) That an increase in the number of calls should increase the number of completed sales • 2) That an increase in the rate at which completed sales are produced should increase the number of completed sales

  7. Sales per Call performances It is common for percents to be discussed as probabilities

  8. Sales per Call performances The Positive Impact was greater than the Negative Impact because there was a Positive Increase in sales

  9. From the basic Comparison • We can see that the increase in the number of calls must have increased the number of completed sales faster than the loss in closing efficiency Because completed sales increased • We can see the Net Result of two Impacts • We can NOT see the relative impact of the two differences

  10. Sales per Call performances

  11. As Cartesian Coordinates • To visualize the sizes of the impacts due to the differences • 1) Put the number of calls per month, C, on the x-axis (Input) • 2) Put the rate of sales per call, r = N/C on the Y-axis (the conversion rate, r, NOT the Output • 3)The number of sales, N, is the output and is calculated as the areaN = r x C • ∆N = Impact of ∆r + Impact of ∆C

  12. Plotting the Impact of Two Changes Rate of sales per call r= N/C The Area C1 x r1= N1 50 x 20% = 10 sales made in period 1 r1=20% ∆r =-5% The AreaC2 x r2= N2 80 x 15% = 12 sales made in period 2 r2=15% C1=50 C2=80 Number of Calls per Month, C ∆C = 30

  13. Impact of difference in calls made, I∆C, on the difference in Sales completed, ∆N • The impact of the change in calls, ∆C, on the change in number of sales, ∆N, is • I∆C = rmin1,2(∆C) = rmin1,2(C2-C1) • The minimum of the two rates is 15% or 0.15 • I∆C = 15%(80-50) = 0.15(30) = 4.5 sales • Working harder generated would have generated 4.5 more sales

  14. Sales per Call performances

  15. Impact of Difference in conversion rate, I∆R, on the difference in Sales, ∆N • The impact of the difference in sales per call rate, ∆R, on the change in number of sales, ∆N, is • I∆r= Cmin1,2(∆r) = Cmin1,2(r2-r1) • The minimum of the two call volumes is 50 • I∆C = 50(0.15-0.20) = 50(-0.05) = -2.5 sales • Making more calls reduced the time for each call and the reduced efficiency lost 2.5 sales

  16. Sales per Call performances

  17. Plotting the Impact of Two Changes Rate of sales per call r= N/C The Area C1 x ∆r = I∆r 50(-5%) = -2.5 sales is the impact of the change in sales r1=20% ∆r =-5% The Area∆C x r2 = I∆C 30 x 15% = 4.5 sales is the impact on the change in sales r2=15% C1=50 C2=80 Number of Calls per Month, C ∆C = 30

  18. Sales per Call performances

  19. The crucial features • are that • 1) the impact of the difference in the inputs (calls) is measured in terms of the output (completed sales) • 2) the impact of the difference in conversion rates (sales per call) is measured in terms of the output (completed sales) • 3) and the relative importance of the two differences can be compared using a common metric (completed sales)

  20. Impact of Differences in the Machine’s Factors on the difference in Sales completed, ∆N • There is Zero Joint Impact • The sum of the two impacts must equal the change in sales • I∆r+ I∆C = ∆N • –2.5 sales + 4.5 sales = +2 sales • Sales increased because working harder had more impact on sales than the loss of sales conversion efficiency.

  21. We will use Impact Sizes • For more diagnostic information about • Multi-factor analysis • Elasticity of Price and Return on Promotion

  22. Impact Analysis is Important • Any Questions?

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