The Reliable Revenue™ Sales Calculator

At the end of the day, this system is about logically reverse-engineering sales goals back to the things we can control: inputs. We can’t control outcomes – e.g. total sales, or the number of deals won – but we can control inputs, like the number of deals we pitch and the value of them. Then we set goals for those inputs that historical CRM data tells us likely lead to the outcomes we want. We can think about it like this:

In order to close $1,000,000 in sales this quarter, I know we have to pitch about 50 deals worth $3.3M. For that to happen, we need to find or generate about 167 leads.

Alternatively we can think of it like an if this, then that type statement:

If we pitch 50 deals worth $3.3M this quarter, then we will likely close $1M in sales.

The key part is that we’re coming to those numbers logically and in a data-driven fashion (which is why you need to track sales data, ideally with a CRM). We’re not just pulling numbers out of thin air. That’s why we use something like The Reliable Revenue™ Sales Calculator.

Put your figures in the inputs, starting with your Annual Sales goal, and the calculator will automatically give you your targets broken down by year, then quarter, then month and week. I suggest screen-shotting them.

Then it’s about putting it all into practice. Focus on the Leading indicators: Pitched Deals, Total Value to Pitch, and if you want, Leads to Generate. You can’t control the lagging indicators – i.e. you can’t actually control if someone hires your company – but you can control the leading indicators, like the number of deals you get in front of prospective clients. Those leading indicators are the logs you put on your sales campfire.

After that, it’s up to you and your team to put the sales processes in place to hit those leading indicators. Those processes can and should include items like getting started with a CRM; deal sourcing; estimate and proposal strategy; estimate and proposal creation and editing (in a highly efficient manner); sales reporting; and more. I can help with that.

Let’s start with some of the basic terms and how I use them:

• Deal: An understood scope of work with a price that a prospective client wants you to quote on. For example, if ACME Corp wants a landing page for $5,000, that is known as the ACME Corp Landing Page Deal.
• Pitch: Not necessarily a traditional pitch. Think of it as any scope of work with a price put in front of a client. It can be a big flashy pitch, a proposal, a quote over the phone, a single-page estimate sent over email. All of these are constitute a pitch, or “Pitched Deal”, in this framework.
• Lead: This is an opportunity, before it becomes a Deal. For example, when ACME Corp shoots you an email saying “Hey, we need a landing page,” it starts out as a Lead until you have a conversation with them, and qualify them in terms of budget, timing, and the like. To note: a Lead in this framework is not something as simple as an email added to a marketing list.

When it comes to the Metrics in the calculator above: there are definitions in the tooltips, but here are some additional helpful tidbits:

• Total Sales: The big goal. You need this number to derive the rest, and it’s ok (and not greedy) to set a sales goal.
• Average Won Deal Value (“ADV”): This can be thought of as “average contract size” as well, and it’s critical to know. At my company, despite routinely signing $150k+ contracts, our ADV was routinely around $40k. This is because we signed a lot of small maintenance contracts that brought the average down. If you don’t know this, guess for now, but I recommend immediately using a CRM to track your sales and start getting this data.
• Number of Won Deals: When we know our ADV, and have a sales goal, we know roughly how many deals we need to close in order to hit our sales goal.
• Percentage of Pitched Value Won: This can also be thought of as “we win XX cents for every Y dollar we pitch”. This data is required to get an accurate Total Value to Pitch goal. And, if you don’t know it, you know what I’m going to say: get a CRM and start using it.
• Total Value to Pitch: Per the above, if you know you win 30 cents for every $1.00 you pitch, and you want to win $1M in a quarter, you know you need to pitch about $3.3M in order to have good odds to close that $1M quarter.
• Win Percentage: This is pretty straightforward – for every 10 deals you “pitch”, how many do you win? This is required to sort out the supporting goal, Pitched Deals.
• Pitched Deals: This is a companion to the Total Value to Pitch metric, and is a check/balance against one of your sales team pitching a singular, huge deal. That singular huge deal may meet the Total Value to Pitch goal, but if you’re way off on the number of Pitched Deals, then you’re likely looking at a scenario where everything is riding on winning one deal – a scenario best avoided.
• Percentage of Leads that Become Pitched Deals: Now we’re near the top of the funnel. If you get 100 leads, how many turn into deals that you pitch to the prospective client? We need this to sort out the Leads to Generate metric.
• Leads to Generate: The top of the funnel. How many leads does your team need to generate in order to hit your Sales Goal?

You, my friend, need to start using a CRM and tracking that. It’s absolutely critical. When I started doing it, it changed how I ran my firm. I suggest Pipedrive as a cost-friendly, easy-to-use option, but you’ll need to find what works for your business.

At the end of the day, the math is the math. If any of the numbers seem high, there are usually two steps to solve the problem:

1. Hire a dedicated sales person. This doesn’t need to be a boots on the ground person, out there shaking hands, remunerated by commission. It can be a salaried person whose week is dedicated to various activities: scouring the internet for opportunities (including, yes, RFPs), customizing templated proposals (see item 2), helping project and account managers with estimates, and more. That’s how we rolled at my firm, to great success.
2. Make your pitch process way more efficient. At my firm, we were able to turn out 50+ page, winning proposals in under 2 hours. There were multiple steps to make this process work, which I can help you implement.

Thanks! If you want to make sure you don’t miss anything, join my newsletter.