Download: Sales-to-Revenue Calculator

time-to-revenueHiring a new salesperson and having them work their first opportunities through the sales funnel takes time, but how much time? The answer may surprise you – especially if you are in a leadership position.

We’ve been studying the performance of new sales hires for years, and we’ve found huge differences between when leadership thinks those strategies will affect the balance sheet and when they actually do.

With complex sales, it often takes 6-9 months for new sales efforts to turn into income. On the flip side, we’ve seen company leaders lean on their sales staff to produce new income in a single quarter. Now, we’re not saying that’s impossible, but it is improbable – especially in a B2B sales environment.

Sales is judged on results, but if expectations regarding the time it takes don’t line up with reality then both leadership and the sales team could be cast in a negative light.

But, there’s a way to eliminate those perceptional conflicts. We’ve broken the whole process down into a simple formula.

Sales to Revenue

  1. Research. Let’s say you’ve hired a new salesperson or asked one of your sales people to pursue new accounts. For the first two weeks they research and document potential leads.
  2. Meetings. Over the next four weeks they are calling those leads to get an in-person meeting. If successful, they schedule the first of at least three meetings (remember, everything is decided by committee now).
  3. Purchase time. These meetings are on average three weeks apart. Following those meetings, the company says it would like to do business with you.
  4. Production & Shipping time. If they want an off-the-shelf product they place their order (2-4 weeks) and you ship (we estimate 4-6 weeks – depending on amount of production needed).
  5. Billing. They receive the invoice with the order and they pay it to your terms (most are 10 net 30 – so we tack on 30 days).

Research + Meetings + Purchase Time + Production & Shipping Time + Billing = Income Realized

or

2 + 4 + 3 + 3 + 3 + 4 + 6 + 1 = 26 weeks (or six months/two quarters)

Each business is different, and numbers change. So, we’ve put this together in an easy-to-use Microsoft Excel calculator you can download and keep.

Download the Calculator

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2019-08-08T11:24:50-05:00