Calculating the formula for success in 2023
TThis is generally the time of year when most people, including business owners, think about goals, resolutions, and objectives for the year ahead. If you’re lucky enough to be one of the flooring retailers to record record sales over the past two years, you’re probably wondering how to maintain the strong sales growth for 2023.
Fortunately, there is a formula you can follow to reach/exceed your goals for success in 2023. This exercise is like baking a cake: you need several key ingredients: your 2023 revenue goal; your average ticket size; and your average closing price.
As we approach 2023, you need to start with a vision: a goal you want to achieve. It’s like going on a journey; you need to know the destination. But you also need to know where you stand. The next step is to build your map to reach your destination. The simplest goal is the total sales you want to generate. As a rule of thumb, I like to add 30% to my previous year’s sales.
For this particular exercise, let’s say you made $1.5 million last year. A 30% increase would be $1,950,000. In 2023, we’re going to do $1,950,000.
Which brings us to your average ticket size. It’s easy to figure out: it’s your total sales divided by the number of customers you’ve sold. We had $1.5 million in revenue and 312 customers; therefore our average ticket is $4,807.
Next is to determine your closing price. How many leads/opportunities did you divide by how many customers you sold. Before you calculate that, you need to define what a real lead is. A lead is when you capture their information i.e. name, address, phone number, email, etc. It is someone you can market and advertise to. Someone you can hopefully give an estimate to.
Now take your sold customers and divide that number by your total number of leads. That will give you your closing price. I had 312 customers sold and 852 leads. Therefore, 312 divided by 852 = a closing percentage of 37%.
Summarized: My goal for 2023 is $1,950,000. Divided by my average $4,807 ticket = 405 customers needed; 405 divided by 37% = 1,094 leads/opportunities needed; 1,094 divided by 12 months = 92 leads/month. 1,094 divided by 52 weeks = 21 leads/week.
Now you have your “magic number” – 21. That’s the number you need to focus on and watch each week. How do you get 21 leads per week? It is very difficult to focus on a dollar amount; it’s hard to go after money. But you can focus and measure your lead count. The monthly figure is good to know so that you can measure your progress every month.
What marketing tactics will you use to get 21 leads per week? What can you do better? Boost your SEO/PPC; use your Google business profile; promote on Facebook; network in your community; market to previous customers.
If you want to achieve your goals beyond increasing your closing price, you should also consider increasing your prices, which will increase your average ticket. If you do these things, you will need fewer leads each week.
Jerry Levinson, a former retailer, owns Profit Now 4 Flooring Dealers. He provides sales training, processes and systems for flooring dealers to help them grow their business and profits while working fewer hours. He also runs the Flooring Dealers & More group on Facebook.