. 4
( 8)


Sales & Marketing Expenses
Sales commissions
Direct mail
Other sales & marketing expenses
Total Sales & Marketing Expenses
Overhead Expenses
Payroll taxes
Group life & health insurance
Workers compensation insurance
Employee benefit plans
Officers™ salaries
Employment expense
Temporary help
Total Personnel
Property tax
Repairs & maintenance
Property & liability insurance
Total Facilities
Accounting services
Bank charges
Computer supplies
Charitable contributions
Depreciation & amortization
Dues & subscriptions
Interest expense
Legal services
Office supplies
Other professional services
Total Administration
Total Overhead Expenses
Income ( before taxes)
Income taxes

Net Income
100 Set High Standards

• Are variances in cost of goods sold influencing your gross profit

• Are your variances in the areas most companies find difficult to
control: sales, marketing, and personnel?

• If the variance is negative, can you make immediate changes in
your operations that will reduce the variance from budget?

• If the variance is positive, are you spending enough to support
(what is probably) the increase in sales? Do you expect this in-
crease in sales to continue?
Understanding the Numbers


Budgets can be wildly above or below actual performance. Unforeseen
factors can change the business a company does in a given time period.
Projections”even good ones”are always suspect. However, last year™s
actual numbers are real, and it™s important to take them into account.

This exercise allows comparison between individual months this year
with the same months last year. This comparison allows for cyclical trends
and historical perspective that many managers use as a basis for forecast-
ing. It™s important to compare your current numbers to prior years,
especially when you™re trying to grow a company. At publicly traded com-
panies, stockholders always want to see if the company is doing better
than last year.

Making It Happen

For the same month last year, enter your sales and expense numbers
on Worksheet 3.5. Then use the same numbers from the Budget Variance
Worksheet (3.4) to fill in the second column for the current month. Sub-
tract last year from this year, and divide that number by last year to get
the percent difference. A positive percentage indicates an increase from
last year to this year. Do the same calculations again with year-to-date

Reality Check

Consider these questions about your completed worksheet:

• If the variance is great, again, do some investigation into what
changed from last year.

• Are there variances that are greater than 10 percent? If so, can
you explain them in a way that makes sense?

• Are your expenses up in any one category more than another?

• If the variance comes in the year-to-date column, in what month
did it begin to occur?

• Are you prepared for any cyclicality you see with adequate cash?
102 Set High Standards

Worksheet 3.5
Same Month Last Year Variance Report
Month-to-Date Year-to-Date
Last This Last This
Year Year Difference Year Year Difference
($) ($) (%) ($) ($) (%)
Cost of Goods Sold
Beginning inventory
Materials purchased
Salaries & wages
Production supplies
Temporary help
Shipping supplies
Mailing & shipping
Less ending inventory
Total Cost of Goods Sold
Gross Profit
(Sales ’ Total cost of goods sold)
Gross Profit % (Gross profit/Sales)
Sales & Marketing Expenses
Sales commissions
Direct mail
Other sales & marketing expenses
Total Sales & Marketing Expenses
Overhead Expenses
Payroll taxes
Group life & health insurance
Workers compensation insurance
Employee benefit plans
Officers™ salaries
Employment expense
Temporary help
Total Personnel
Understanding the Numbers

Worksheet 3.5 (Continued)
Month-to-Date Year-to-Date
Last This Last This
Year Year Difference Year Year Difference
($) ($) (%) ($) ($) (%)
Property tax
Repairs & maintenance
Property & liability insurance
Total Facilities
Accounting services
Bank charges
Computer supplies
Charitable contributions
Depreciation & amortization
Dues & subscriptions
Interest expense
Legal services
Office supplies
Other professional services
Total Administration
Total Overhead Expenses
Income ( before taxes)
Income taxes
Net Income
104 Set High Standards


Worksheet 3.6 shows where money went besides paying for the expenses
itemized in the income statement. A company made money but doesn™t
have cash to show for it. Why? Where did the cash go, how much was
used by the operations, and how much was consumed by other things,
such as asset purchases or paying down debt? This worksheet will ana-
lyze where the company™s cash comes from and where it goes.

Worksheet 3.6 is a variation of the accountant™s statement of changes in
cash, which is a required part of a publicly traded company™s financial

Making It Happen

There are three areas of cash use shown in this worksheet:

1. Cash used for operations. Cash flows from operating activities are
generally the cash impact of changes in working capital ac-
counts and from the basic operations of the company. Examples
of increases to cash include net income, collection of accounts re-
ceivable, decreases in inventory, and depreciation. Examples of
decreases to cash include a net loss, increases in accounts receiv-
able balances, increases in inventory, and payments of accounts

2. Cash used for investing activities (buying fixed assets, making ac-

3. Cash used for financing activities (repayment of bank debt, long-
term leases).

Enter the numbers for both the current month and year to date from your
income statement (first line only) and balance sheet (remainder of the
worksheet), and total the numbers in the shaded boxes to find net in-
crease or decrease in cash for the period.

This is a complex worksheet. You may wish to get assistance from your
CPA, especially if you have sales and fixed asset changes during the
Understanding the Numbers

Worksheet 3.6
Analysis of Cash Position
Current Month Year-to-Date
($) ($)
Operating Activities
Net income (Loss)
Adjustments to reconcile net income/Loss to cash
Depreciation & amortization
Changes in Assets & Liabilities
(Increase) Decrease in accounts receivable
(Increase) Decrease in inventory
(Increase) Decrease in prepaid expenses
(Increase) Decrease in other current assets
(Increase) Decrease in accounts payable
(Increase) Decrease in current portion long-term debt
(Increase) Decrease in accrued liabilities
Total Adjustments
Net Cash Provided by (Used for) Operating Activities
Investing Activities
Additions to fixed assets
(Increase) Decrease in other assets
Net Cash Provided by (Used for) Investing Activities
Financing Activities
Line of credit borrowings (repayments)
Principal payments on long-term debt
Net Cash Provided by (Used for) Financing Activities
Net Increase (Decrease) in Cash for the Period
Cash at Beginning of Period
Cash at End of Period
106 Set High Standards

Reality Check

Consider these questions about your completed worksheet:

• Was there a net increase or decrease to your cash for the period?
For the year?

• Was the change from operational factors, investing factors, or fi-
nancing factors?

• Are there changes you can make to positively influence your cash

• Is the company generating positive cash flow from operations?

• If the company is losing money, how is that loss being financed?
With new equity? With payables?
Understanding the Numbers


Worksheet 3.7 provides a one-page comparison of all of the key financial
numbers comparing two years past to the current year. Used well, it will
give managers a broad view, over three years, of trends in their business
that relate to cash. For example, when I was running my company, I used
this sheet at board meetings and with employees to illustrate, in simple
terms, how the company was doing. It is a communications tool for dis-
playing analysis I™ve done in other worksheets and exercises.

You may also find you need to develop key indicators that are particular
to your business that may be more operational than financial. Examples
include the number of projects completed, number of clients, profit as
percentage of sales, returns for the month, employee turnover, and num-
ber of customer complaints.

Making It Happen

Keep a running total on all major financial numbers”cash, revenue, ex-
penses, and income”and enter the current month when available. Record
accounts receivable and accounts payable days, as well as total accounts

Reality Check

Consider these questions about your completed worksheet:

• Are the long-term trends (three completed years) what you want
them to be?

• Have expense increases outpaced revenue increases?

• Are accounts receivable days and accounts payable days increas-
ing or decreasing?

• Are overdue accounts receivable increasing or decreasing?

• Does this worksheet accurately display the financial strengths
and weaknesses that your company has?
Worksheet 3.7

Key Financial Indicators
1 2 3 4 5 6 7 8 9 10 11 12
This year“Projected
This year“Actual
Last year“Actual
Two years ago“Actual
This year“Projected
This year“Actual
Last year“Actual
Two years ago“Actual
This year“Projected
This year“Actual
Last year“Actual
Two years ago“Actual
Income Year-to-Date
This year“Projected
This year“Actual
Last year“Actual
Two years ago“Actual
Accounts Receivable Days
This year
Last year
Two years ago
Accounts Payable Days
This year
Last year
Two years ago
Accounts Receivable

110 Set High Standards


Worksheet 3.8”also a communications tool”provides a simple way to
keep employees informed about key indicators on which they can have
an impact and help keep the company financially healthy.

Consider sending this worksheet and its attachments to all employees
every month. In addition, have a monthly meeting to go over these num-
bers and answer questions about what they mean and how they relate to
each job done in the company.

Making It Happen

Enter the numbers from the Key Financial Indicators Worksheet (3.7) for
the current month as well as a running total for the year to date. You can
then provide a simple analysis at the bottom of the page by determining
which of the key items is up or down and translating the importance of
these items for your employees. Attach the important financial work-
sheets developed in this section.

Reality Check

Consider these questions about your completed worksheet:

• Are you on target for where you expected to be at this point in the

• Are there things employees can do to help your company reach its
financial goals and projections?

• Do employees understand the numbers and concepts presented
in this worksheet? If not, how long will it take to teach them the
things they need to know?

• Are you celebrating good news and acknowledging the effect of
the hard work of particular employees?

• Do you ask the employees responsible for the changes you see to
provide the explanation to the rest of the employees?
Understanding the Numbers

Worksheet 3.8
Financial Report to Employees
Current Prior Months
Month Month Ago Year-to-Date
Cost of goods sold
Gross profit margin
Sales expense
Total Expense
Income (Sales ’ Expenses)
Inventory $
Accounts receivable days (how long it
takes people to pay our invoices)
Accounts payable days (how long it
takes us to pay our bills)
Inventory turn days (how long it
would take to use up the inventory
we have on hand right now without
adding to it)
1. Year-at-a-Glance Income Statement
Sales were (above/below) projections by %
Expenses were (over/under) budget by %. Especially over budget were the following

2. Key Financial Indicators
Profits were (above/below) projections by %

3. Analysis of Cash Position
Our cash was (under/over) projections by %
112 Set High Standards

W H AT ™ S N E X T

In the next part, we switch from measuring the results to driving the
business. Your ability to increase revenue in a way that is profitable
is key to making your business work. It is also essential to be able to
turn first-time sales into long-term customer relationships or face
the prospect of spending all of your time in the selling process.
Always bear in mind that your own resolution to
succeed is more important than any other one thing.
”Abraham Lincoln

I n some ways, sales and customer service are simple and direct, but
their very simplicity is what makes them difficult because they offer
no margin for error. That is, a sale either happens or falls through.

If marketing is mostly theory, selling is mostly action. Selling is one-to-
one contact with the customer”talking, listening, and taking the order.
Customer service is about getting another order.

Some CEOs come from sales backgrounds and love the showmanship
and one-to-one contact. Other CEOs find sales a challenge and take
every rejection personally. Whether you have a sales or other back-
ground, your company must constantly and aggressively sell its product.
It must follow every lead to new prospects and new customers and meet
new needs for existing customers. The CEO is the company™s number one
salesperson, and, as with everything else, what the CEO focuses on gets
done. Sales must always be a primary focus.


Obviously, sales must be profitable or nothing else matters. Before you
analyze any other aspect of your business, determine the profitability of
your products and your customers. You can™t set up appropriate sales ef-
forts or sales compensation programs if you don™t.

116 Build Long-Term Growth

In general, 80 percent of your sales profits will come from 20 percent of
your customers. Try listing last year™s top 25 highest dollar-volume cus-
tomers. Determine what they buy from you and how much money you
take in per unit. Then, looking at your costs for these products, deter-
mine which customers bring in”not the most revenue”but the most
profits to your business.

Sometimes your biggest customers negotiate such good deals (because
they can) that profits are severely eroded. Similarly, your smallest cus-
tomers can be the most costly because they don™t buy enough goods to
justify the cost of servicing the account. Don™t be afraid to “fire” your
least profitable customers by raising prices.

Once you ensure that your sales are profitable, the next step is to get to
know your best customers. Your goal is twofold: You want to make exist-
ing customers™ experiences with your company better to retain and in-
crease their patronage, and you want to recruit more loyal customers
like them.


Whomever and wherever they are, your customers can get just about
anything they want any time they want it. They can purchase products
or services they need from you or from someone else, usually on the
terms they want. Consumers have grown accustomed to getting better
products faster and with a high quality of customer service. In fact,
products are generally sold on one or more of three criteria”quality,
value (more useful concept than cost), and service.


Austin-based Whole Foods Market is one company whose constant
focus on quality and service has paid off. It is the market leader in
natural foods retailing with sales three times greater over the past
12 months than its next competitor. The company™s oft-quoted
measures of success include customer satisfaction, team member
excellence and happiness, return on capital investment, improve-
ment in the state of the environment, and community support.
Mastering the Art of the Sale

Whole Foods Market describes customers as, “our most important
stakeholders in our business and the lifeblood of our business.”
The more than 20-year-old company”known for selling the highest
quality natural and organic products available”operates 150 stores
under 6 different names and employs more than 27,000 workers
throughout the United States. Each store has a distinct personality
and purchasing strategy designed to match the community it serves.

After an initial training, each new team member becomes part of
the “buddy system” and is partnered with a veteran employee for
additional one-on-one training and mentoring. Over time, individ-
uals looking for promotional opportunities within the store can
take mini-courses on leadership. To emphasize the value of each
employee, company policy states that no one person can earn more
than 14 times the average employee™s salary, including the CEO.
Policy limits the cash compensation paid in any one year to any of-
ficer to 14 times the average salary of all full-time team members.
Team members are eligible for gain sharing based on four-week
sales cycles. Teams also meet every four weeks to discuss problems
and opportunities for increased sales.

Whole Foods Market has pursued an aggressive acquisition strategy
over the past five years and hopes to increase its number of stores to
approximately 300 by 2010. The company™s commitment to customer
satisfaction, team member excellence, return on capital investment,
and community involvement are at the root of its success.


To determine who your top 25 customers are, you might ask what they
have in common. Discover whether they™re businesses or individuals and
if they fall into a particular geographic area, income bracket, gender, or
age category. Finally, you should ask whether they buy more from your
competitors or from you.

A simple but very effective way to get an idea about what your cus-
tomers think about your industry and your product is with focus groups.
You can attract customers or potential customers to your focus groups
by using small amounts of cash or product samples as inducements. In-
terview them and describe your product or service”or, better yet,
118 Build Long-Term Growth

show them”and ask for feedback. You then watch and listen to their

It™s important to review the results of focus groups with as many man-
agers as feasible. This educates your staff about the problems the product
will face and gives your company the chance to respond. Staff needs to
hear customers talking about what they want; it arouses their attention
and makes innovation more likely.

You might also set up phone, mail, or in-person interviews with targeted
customers. Send out written surveys to larger groups of customers or po-
tential customers. Ask them to describe their responses in some detail.

Here are some specific things to look for in a focus group or survey:

• Find out how customers rate quality, value, and service in rela-
tion to your product.

• Look for information about price ranges and barriers, format
or style preferences, service requirements, probable buying

• Find out how customers perceive your competition and how
your customers get information about competitors and their
products”advertising, direct mail, or word of mouth.

When you analyze the responses, focus on the features your prod-
uct should have and what would make it more attractive. Determine
where you outperform or lag your competition. Illustrate your re-
sults in graphic form and publicize them in your company. Let
coworkers know what customers think of their work and what cus-
tomers look for in the future.

Customer research also seeks to learn what motivates people to buy what
you sell. In this process, anything that tracks sales in a detailed way
helps you”this is why big retailers offer their own credit cards, encour-
age catalog orders, code their register receipts, and solicit web site regis-
tration. It™s also the reason that direct mail marketers offer free items.

In summary, you can™t control marketplace forces, but you can mini-
mize your marketing risks. When you own a reliable base of data about
your customers and their tendencies, you can sell selectively to people
Mastering the Art of the Sale

most likely to buy a particular product. If you know that middle-aged
Philadelphia men buy red ties in February, you may know all you need to
know to effectively use your marketing and sales budget.


Studies of consumer and corporate buying habits consistently reinforce
the notion that great service is key to quality sales. In some markets, cus-
tomers rate service more highly than quality in choosing one product
over another. Market research is an important tool for determining how
well you serve your customers. However, your customers™ needs and ex-
pectations constantly change, no matter what industry you™re in. As a re-
sult, how often do you overpromise and underdeliver?

Make sure your market research helps your company by collecting
information and adapting this knowledge to your changing mar-
kets. Do the following to make the most of your market research:

• Identify and define customer expectations concerning service.

• Translate expectations into clear, deliverable service features.

• Arrange efficient, responsive, and integrated service delivery
systems and structures.

• Monitor and control service quality and performance.

• Provide quick, cost-effective responses to customers™ needs.

Marketing™s primary role is to create sales opportunities. If, for example,
you enhance your product™s usefulness to your customer by offering valu-
able benefits from a related line, you create an interested listener ready to
learn more about your products. Each time you propose an innovative ap-
proach to a real need, you create a sales opportunity. To do these things,
your sales force must know exactly how customers use your products.


Sales reps can be unpopular in an organization. They are often the bear-
ers of bad news from customers. It™s sometimes difficult to come to terms
with the fact that your product may not be meeting all the customer™s
120 Build Long-Term Growth

needs or that your competitors are producing a better product more
cheaply than you are.

Make sure to pick the right people for these jobs”not everyone can do
them. Salespeople thrive on contact with people, so make sure they
have lots of contact with people inside and outside your organization.
Expect some “us against them” problems, especially if you primarily
pay salespeople on commission. A commission system makes salespeo-
ple very vulnerable to the performance of the rest of the company and
can result in one group of employees “preventing” another from maxi-
mizing its income.

Salespeople are typically the most highly compensated employees, often
earning more than the CEO. They also often receive trips and other perks
for high performance. In my role as CEO, I found there was often jealousy
between salespeople and other employees when it came to compensation
and general attention. There was a constant need to reeducate employees
about the risk and reward aspect of a salesperson™s role. I found the best
technique for minimizing problems was to pay a lot of attention to sales-
people while also training them to pay attention and give credit to others
in the company. Some salespeople understand this relationship and do it
naturally; others need to be trained to appreciate what it™s like for the rest
of the staff.

Most sales are based equally on belief in a product and trust in the per-
son selling it. People do business with people, not demographic surveys.
Customers want”and need”to believe in what and from whom they
buy. You have a great deal of control over shaping their beliefs.


It™s an irony of business that your customers™ perception of your com-
pany may be based on their contacts with some of your lowest paid em-
ployees: your customer service representatives. How these employees
feel about you and your company can determine how your customers feel
about you.

It™s essential to set high standards for professionalism, etiquette, ethics,
and positive attitude among your customer service reps. All of us have
bad days, but having a bad day probably won™t be a disaster in other
areas of your company; in customer service, it will. As a business leader,
Mastering the Art of the Sale

you can make it easy and fun for your customer service reps to help your
customers. For example, you might create quizzes to test employees on
product information and other information that customer service reps
are frequently asked; then award prizes and announce winners in the
employee newsletter.

Most importantly, train everyone working with customers how to handle
difficult situations. Keep good records about how many calls come in,
the average time it takes to handle a call efficiently and completely, and
common customer questions and issues. Also keep track of absenteeism
and employee complaints.

Make sure that your computer programs provide easy access to virtually
every aspect of product information. You should also set up programs that
make it easy for your customer service reps to place orders and to track
shipments and change information while customers are on the phone.
Making it easy for your customer service reps will make it easy for your
customers to use and enjoy your products and services.


Now that we™ve covered some of the basics about who™s who in your sales
and marketing effort, we turn to the topic of how you can manage and
monitor sales. It™s estimated that the average small company loses 20
percent of its customers each year. That means you should probably aim
for 25 percent to 33 percent of each year™s sales to come from new cus-
tomers for your company to grow. Both new and existing sales are essen-
tial to the prosperity of your business: New sales bring increases to your
top line and help grow your company, whereas sales from existing cus-
tomers are generally the most profitable.

Keep meticulous track of all your sales and categorize them in different
ways. For example, you might identify top products, what you sell, to
whom you sell and what you sell them, where you sell, and what you sell
profitably and what you don™t. It™s now possible to keep track of these
statistics in real time, which allows you to keep better track of inventory.
However, you still need to set aside time to determine what these num-
bers mean in terms of marketing and sales activities.

In addition, you should conduct monthly meetings, quarterly sales strat-
egy planning retreats, and annual meetings with most of the management
122 Build Long-Term Growth

staff to discuss the implications of the sales numbers. Discuss changes
you want to make to the product line as a whole from information you
get from the sales figures. Use the annual meeting to identify customers
you most want to retain and those that are not profitable.

At my company, we found the best way to discourage unprofitable cus-
tomers was to raise prices. We often used the quarterly meetings to dis-
cuss the performance of the sales staff and their compensation. Sales
compensation always raises an array of issues: whether you™re paying too
much or too little, whether enough or too little of the compensation is
based on commission, and whether you™re incentivizing your sales staff
correctly to make the right kind of sales. We tried a variety of methods,
some with better success than others, but always found we needed to tie
compensation to profitability.


Sales dollars are the customers™ way of expressing appreciation for what
your company does. It™s important to share information about overall
company sales by product line with all employees.

I believe it™s your employees™ right to know how they™re performing;
furthermore, they can often find ways to improve sales and profitabil-
ity when they know the score. Company success is typically measured
on sales volume or on sales volume increases. It™s a point of pride for
most employees to know and share their company™s annual revenue.
Whereas many employees don™t understand profitability or are skepti-
cal of its accurate measurement, sales volume is a number to which
most can easily relate.

The goal of your sales and customer service programs is clear: Get
the initial sale and keep the customer coming back for your product
or service. Here are ways to ensure you meet this goal:

• Get and keep the best employees you can, employees who
enjoy working with people and solving their problems, and
who aren™t easily deterred from their mission. Do your best to
keep these employees happy and help educate other employees
on their vital roles.
Mastering the Art of the Sale

• Get out and meet your best customers yourself. Put yourself in
the customers™ shoes as often as possible and don™t rationalize
problems with your product or service.

• Learn to appreciate”and, when possible, act on”customer

• Celebrate sales increases with all employees. It™s the goal of
your company and a real opportunity for employees to take
pride that the increase in sales represents their efforts to pro-
duce something of value for your customers.


The worksheets and exercises at the end of this chapter will help you
take a real look at your sales and measure your success in customer ser-
vice. These worksheets include:

• Dollar sales month-to-month.

• Product sales by customer.

• Top-selling products.

• Sales by salesperson.

• Customer service key indicators.

• Customer service survey.

• Sales report to employees.

Work on your sales and customer service effort until you can answer yes
to all of these questions:

• Are you satisfied with your revenue growth?

• Are all of your products profitable? Do you need to renegotiate
with some of your customers?

• Can you identify customers or groups of customers whose busi-
ness is not profitable for you?

• Are you satisfied with your plan to sell or deliver products via
the Internet?
124 Build Long-Term Growth

• Do you spend time with your salespeople, one-on-one?

• Do you spend time with your top customers, one-on-one?

• Are your sales and customer service people superstars?

• Have you asked for testimonials? Referrals?

• Are you maximizing the business potential from existing

• Have you “fired” unprofitable customers by raising prices?

• Have you asked customers what they like about doing business
with you and what they don™t?

• Do you have a backup plan for the “what ifs”?

” What if sales were only 50 percent or less of forecasts?

” What if a major marketing effort fails?

” What if you lose your biggest customer?

” What if your competitors cut their prices?

” What if competitors come up with a new or better product or ser-
vice than they currently sell?
Mastering the Art of the Sale


Worksheet 4.1 is a simple and straightforward way to look at your actual
month-to-month sales compared to projections by product. A great deal
of information is contained in a very simple worksheet.

Better than an overall company sales summary, this worksheet enables
you to identify:

• What is working and what isn™t.

• Which product sales are steadily increasing.

• Which products need changes to remain viable.

Making It Happen

Worksheet 4.1 shows actual sales figures compared to sales projections
by month and determines average sales by month. First, list all of your
products or product lines in the left column. Take the projections devel-
oped in the Dollar Sales Projections by Product Worksheet (2.3), and add
those in the second column. Next, on a monthly basis, add in your actual
sales dollars by product.

If you have records of past years, use the worksheets to plot the numbers
for these years as well. Add all sales by month and put that number in the
second from last total column. Finally, divide this number by the total
number of months for which you have sales figures (divide by 12 if you
have numbers for the whole year) to get an average dollar sales figure
by month.

Reality Check

Consider these questions about your completed worksheet:

• Do you see any cyclicality by product?

• Can you structure your sales and marketing efforts to take ad-
vantage of sales trends?
Worksheet 4.1
Dollar Sales Month-to-Month (Month/ Year)
Goal for Total
Current Year-to-Date Average Sales
Product Month 1 2 3 4 5 6 7 8 9 10 11 12 Sales by Month*

*Divide total year-to-date sales by current month number.
Mastering the Art of the Sale

• For which products are your goals greater than your actual sales?

• Is this because you were overly optimistic when making pro-

• For which products do actual sales exceed goals? Is this expected
to continue, or is it due to a particular marketing effort?
128 Build Long-Term Growth


A goal of every company should be to sell as much of each type of prod-
uct as possible to every customer it acquires. Worksheet 4.2 identifies
dollars each customer spends with your company. Looking at three
years™ worth of data enables you to see whether customers are spending
more or less on average than they did two years ago.

Because so much money is spent just letting potential customers know
that you exist, additional sales to existing customers are very profitable
business. Every company should have a plan to sell more products to ex-
isting customers. This worksheet can help you track whether your plan is

Making It Happen

Worksheet 4.2 helps you calculate dollar volume per customer over the
past three years. Use the same three-year lists of products and total dol-
lars per product you developed in the Dollar Sales Month-to-Month
Worksheet (4.1) for the first two columns (A and B) of Worksheet 4.2. Add
the total number of customers that buy each product for column C. Fi-
nally, divide column B numbers by column C numbers to get column D.

Reality Check

Consider these questions about your completed worksheet:

• Was this exercise difficult because so many customers buy more
than one product or product type, or are your customers generally
customers for one type of product only? (If you had a difficult
time segregating customers by product, the total company num-
bers at the bottom of the page will be most meaningful for you.)

• Which products bring in the highest dollar volume per customer?

• In which products are the dollar volume per customer numbers
going up each year?

• Are these increases because of price fluctuation, or has the num-
ber of units sold to each of these customers increased? (The
shaded box in the bottom right of the worksheet becomes one of
Worksheet 4.2
Product Sales by Customer
Two Years Ago Last Year This Year
$ per $ per
Sales Number of Customer Sales Number of $ per Sales Number of Customer
Product ($) Customers (B/C) ($) Customers Customer ($) Customers (B/C)

Total Company
130 Build Long-Term Growth

your key indicators. Measured over time, this will tell you if you
are increasing sales dollars per customer.)

• Is your customer base shrinking or increasing?

• Do a few customers account for a specific portion of a particular
product™s sales? If so, what can you do to take optimum advan-
tage of that connection?
Mastering the Art of the Sale


This exercise helps you determine which products sell the highest num-
ber of units and bring in the most revenue. If you have only one product,
this will be easy. If you have more than one, it™s important to know
which products your customers like best. But even if you offer only five
products, your top product is probably the one you should consider en-
hancing with add-on or similar products. You may also wish to analyze
how you market these successful sellers and determine if you can make
similar efforts with other products.

Making It Happen

Assemble a list of the sales in units and dollars of your products for the
past two years. Rank them from top to bottom on Worksheet 4.3, starting
with the product that sold the greatest dollar volume last year. Complete
the worksheet by filling in the projected and actual units and dollars for
the two-year period.

Reality Check

Consider these questions about your completed worksheet:

• For which products were your actual numbers above or below
your projections? What caused the variances: the projections or
your performance?

• For which products did your sales volume increase? Why?

• For which did it decrease? Why?

• Do the trends up or down in sales suggest long-term changes in
your market? Or can they be explained by circumstances in your

• Are your top products related in any way? Could you create fur-
ther products related to them? Can you market other products
with them?
Worksheet 4.3
Top-Selling Products
Last Year This Year
Units Dollars Units Dollars
Product Projected Annual Projected Annual Projected Annual Projected Annual

Mastering the Art of the Sale


Worksheet 4.4 helps you look at how well your salespeople are perform-
ing over time. It looks at sales both in terms of the individual salesperson
and in terms of whether sales are to new customers or existing cus-
tomers. You may choose to do separate worksheets per product or prod-
uct group if you sell a variety of types of products.

This worksheet will allow you to compare the performance of salespeo-
ple and help you better coach or incentivize them to a different balance
of new or existing customer sales.

Making It Happen

Compile a list of all salespeople in the left column. Next, add in projected
and actual sales for this year. You may wish to do this each month using
year-to-date figures, separating sales between those to new customers
and those to existing customers. Repeat this exercise for last year. You
may wish to use year-to-date figures in this area of the worksheet to
have comparable data in both sections.

You can also perform the same analysis by looking at products that have
been introduced over the past 12 months.

Reality Check

Consider these questions about your completed worksheet:

• Are some salespeople clearly outperforming others? Are some sales-
people clearly underperforming when you know what is possible?

• Are you satisfied with the mix of new customers and existing

• Is the performance of your salespeople increasing or decreasing
over time? By each individual? For the group?

• Were your projections uniformly too optimistic?

• Is your sales compensation plan appropriate for the sales volume
brought in for each salesperson?

• What percentage of total sales is brought in by each salesperson?
Worksheet 4.4

Sales by Salesperson
This Year Last Year
Name of New Customers Existing Customers New Customers Existing Customers
Salesperson Projected ($) Annual ($) Projected ($) Annual ($) Projected ($) Annual ($) Projected ($) Annual ($)
Mastering the Art of the Sale


Worksheet 4.5 is a diagnostic tool that helps you monitor the workload
and productivity of the customer service representatives and the depart-
ment as a whole. Keeping the pulse of activity in customer service can
provide a general indication of how well the company is performing. This
worksheet and any other measurements of customer satisfaction are key
to a general determination of operational efficiency. The worksheet can
be used to track the productivity of the individuals who answer your tele-
phones. Posting these measurements will give rise to the natural compe-
tition between individuals, especially for sales dollars.

Making It Happen

List each customer service representative by name and, if your telephone
equipment and computer equipment allows, enter the number of calls
each has answered, the percentage of time on the phone, the percentage
of time each is not available to take calls, and the dollar volume of sales
per sales rep. At the bottom of the worksheet, tally the number of calls by
month in each category over the past two years.

The bottom half of this worksheet is a good indicator for sales; the more
calls received, the higher the sales dollars for the month. If complaint
calls have increased, it may be a measure of problems in shipping or in
the quality of the product.

Reality Check

Consider these questions about your completed worksheet:

• Is the number of calls answered increasing or decreasing?

• Are order calls increasing faster than the number of calls in general?

• Are complaint calls increasing?

• How do the number of calls you receive relate to the various prod-
ucts you make or market sectors you serve?

• How do per-unit revenue or profitability numbers relate to cus-
tomer service contacts?

• Can you find ways to reward super performers in terms of num-
ber of calls taken and sales volume?
Worksheet 4.5

Customer Service Key Indicators
For (Month/ Year)
Time on Time Not Sales per Time on Time Not Sales per
Customer Service Calls Phone Available Terminal Calls Phone Available Terminal
Representative Answered (%) (%) ($) Answered (%) (%) ($)

Last Year 1 2 3 4 5 6 7 8 9 10 11 12 Total
Calls Received
Calls Answered
Calls Abandoned (%)
Average Talk Time
Calls Categorized:
Last Year 1 2 3 4 5 6 7 8 9 10 11 12 Total
Calls Received
Calls Answered
Calls Abandoned (%)
Average Talk Time
Calls Categorized:

138 Build Long-Term Growth


Worksheet 4.6 helps you look at how well your salespeople are perform-
ing over time. It looks at sales both in terms of the individual salesperson
and in terms of whether sales are to new customers or existing customers.
This survey assesses your customers™ opinions of your products and ser-
vices. Data gathered here can help improve your service to current cus-
tomers. It may also help you get back customers you™ve lost or prevent the
loss of other customers.

Making It Happen

Send this survey to each demographic group of customers. Try to send at
least 50 surveys per group, if possible. You might select demographic
groups by sales volume, product type, or particular distribution method.

You may get back only a small percentage of surveys sent. You can in-
crease this response rate if you give customers an incentive to return it”
perhaps a discount on their next order or a free premium. The larger the
number returned, the better the data you will have from which to draw
conclusions. You might consider encouraging customers to return the
form directly to the company president by including a self-addressed, in-
dividually stamped envelope. You will get a better response and the re-
sponses will be more meaningful if customers believe the president of
the company will read their survey comments. You can also conduct a
survey by e-mail or at your web site, especially if you give an incentive to
complete it.

Tabulate responses by taking each question individually, totaling the 1 to
10 score received, and dividing that number by the number of surveys re-
ceived with that question answered. This will give you an average score
for each question.

Distribute your scores throughout the company. A score of 8 to 10 means
that you™re doing a great job. A score of 5 to 7 means that you still have
room for improvement. Finally, consider scores of 4 or under to mean you
need to focus immediate attention on those areas of your company. Put
together interdepartmental task forces to devise action plans to increase
your levels of service.
Mastering the Art of the Sale

Worksheet 4.6
Customer Service Survey
Please help us provide outstanding service by rating us in the following categories (10 = best).
Question 1“10 Comments
Telephone calls are answered promptly
Customer service reps are helpful and
Your orders are filled correctly
You are informed about new products or product
We are easy to do business with
Items ordered are received in good condition
Orders are received promptly
We deal with problems efficiently and effectively
Orders are complete and correct when received
We offer good value for the price paid
Products are easy to use
Billing is accurate
Credit terms are clear
We provide timely responses to your requests
What new products would you like to see us produce (include changes to our current
product line)?

What can we do to improve our relationship with you?

Comments about other areas we missed in this survey:

There is more to say and I would like you to telephone me. The best time to call is .
Name and Company Name (optional)
140 Build Long-Term Growth

In addition, pay careful attention to the remarks in the comments sec-
tions. Call any customers who requested a response within a week of re-
ceiving their completed survey. Be sure to send a thank you message to
all customers who provide their names at the bottom of the survey. This
survey should be done annually and the results trended over time.

Reality Check

Consider these questions about your completed worksheet:

• Is customer service getting the priority it deserves in your

• Are most of your scores in the 8 to 10 range?

• Was there a similarity in customer comments, particularly by de-
mographic groups?

• What can you do to immediately change customer perception for
the better?

• Are your scores trending up or down over time?
Mastering the Art of the Sale


Worksheet 4.7 is a communications tool that provides employees with a
way to examine sales and receive a meaningful analysis of what the num-
bers mean. Circulate it once a month and discuss it at regular meetings.
You can use this report as you would the Financial Report to Employees
(Worksheet 3.8), and it gives you an opportunity to congratulate out-
standing performers on the sales team and encourage everyone to get in-
volved in sales and promotion.

Making It Happen

Complete Worksheet 4.7 with information from the Dollar Sales Month-
to-Month Worksheet (4.1) and others in this section. Provide a simple
analysis at the bottom of the page by determining which products are up
or down from projections and translating the importance of these
changes for your employees. Attach the important worksheets developed
in this section.

Reality Check

Consider these questions about your completed worksheet:

• Are your sales meeting expectations for the company overall on a
year-to-date basis?

• Are some products performing much better than expected? Why?

• Are some products lagging expectations?

• Are there reasons that can be corrected?

• What can each employee focus on to improve sales?

• Do employees understand the marketing concepts and numbers
used in this report? If not, how long would it take them to learn
enough to apply them?
142 Build Long-Term Growth

Worksheet 4.7
Sales Report to Employees
This Month Year-to-Date
Product Projected ($) Actual ($) Projected ($) Actual ($)

Total Company Sales


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