The Magic Sales Formula (from the “The Science of Sales”)

Sales Management is a scientific process and you can use this formula to focus your team on the key factors that drive $ Sales.

A couple of years ago, I was invited to present at the annual Inside Sales – Sales Acceleration Summit and I talked about “The Science of Sales” (InsideSales.com posted the presentation on Slideshare).

It was fun to see that the other presenters at this event were the likes of Steve Young, a Hall of Fame NFL Quarterback who followed Joe Montana as the 49ers QB, as well as my industry friend Aaron Ross, who is the author of the Predictable Revenue plus a number of other business leaders and growth experts.

But what was also fun was to talk about one of my favorite concepts on scaling growth – The Magic Sales Formula which is below and right from my presentation:

 

This original formula was taught to me first in 2006 by Walter Scott who was my boss when he was the CEO of Acronis. Walter is one of the Top 1% best CEOs in software and he comes from a sales background so his insights on driving sales results and growing revenue are impeccable and have proven to work again and again because he has consistently grown companies from very little to $100M+ in revenue with an average of 100%-200% in annual growth. That’s very hard to do and it’s rare.  Walter is also very analytical – he is the most data-driven CEO in software for whom I had the fortune and honor to work for.  The original Magic Sales Formula that I learned comes directly from Walter and what used to coach and develop sales teams to hit the number.

Since that time, there are a couple of things I wanted to add to this formula to make it more clearer and something that I could teach my sales teams to use so that they could control how they scale their own sales and help our business. Here are my own notes that I’ve used to coach my teams:

 

 

The obvious “levers” or factors in the Magic Sales Formula here are obvious:

  • recruit more prospecting team members (SDRs – Sales Development Reps) and you will increase the # Total Dials per Day (i.e. thus scaling your total $ Sales) – of course, this is the most expensive driver so to maintain good unit economics you have to consider a more optimal solution and, even when you build a team, you have to recruit carefully to maximize the results for the company
  • increase # of Dials per Day per SDR – this is not a silver bullet and not a simple solution (there is a lot that goes on behind the scenes to make this work effectively) but it’s important to note that there are many companies that have Outbound teams performing 150 dials per day and some even do 250-300 using progressive dialing apps (also worth noting that this is not a silver bullet and a lot of sales enablement happens behind the scenes for that work efficiently and effectively)
  • increase the % Connect (you need to determine the optimal one but there are multiple different ways that will drive that – one example is providing more quality leads, or the quality of your contact data or improve the quality of lead scoring)
  • increase the % Conversion of Lead to Opportunity
  • or improve the % Win Rate (i.e. many ways but the obvious techniques here are: hire more experienced reps or improve coaching, development and training of your reps, or improve the quality of MQLs or SQLs that funnel to your AEs)

 

One other key point to note is that while selling is both art and science, I believe that selling itself as well as Sales Management are both a lot more data-driven and a lot more “science” than people think.  This formula is one of the fundamental and most basic ways to describe formulaically how to grow sales and what inputs are the key factors that drive results.

Have you used the Magic Sales Formula?  How have you applied it as a CEO, CRO or a VP of Sales to drive results?