Use Marketing and Sales People Effort to Drive Unit Sales

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This is a bottom-up technique for predicting during your planning stage how much revenue your company will make. It works by you stating certain assumptions about how you obtain sales of your products. Once you start leading your company, you will refine these assumptions so you can obtain a more accurate understanding of expected revenues.

Fundamental to understanding how this revenue-prediction technique works is understanding that revenue growth can occur in only three ways:

  1. You can spend marketing and sales dollars to attract new customers. This is called the paid growth model; it is also called customer acquisition or prospecting.
  2. You can take actions that cause existing customers to spend more. This is called the sticky growth model; it is also called organic growth.
  3. Your current customers can refer others to become customers. This is called the viral growth model

This revenue prediction technique assumes that 100% of your revenue is the result of the first, i.e., you have no sticky growth, and you have no viral growth. If you believe that your company will experience organic and/or viral growth, we recommend that you switch to marketing and sales technique to drive new customer acquisition. To model your company using the current technique, you only need to define a few key assumptions:

1. Job title. Some products sales will occur as the result of your direct sales efforts. Assuming that these direct efforts are performed by employees, which employees are they? Salespeople? Marketing personnel Outside salesforce? Just make sure that these personnel have already been defined in your list of employees and that their salary is charged to marketing and sales.

2. Ratio of Number of Employees to Units Sold. How many units of this product can one of these employees sell in one month? Note that the previous assumption (number of employees with this job title) times this assumption will equal the number of products you will sell in a given time period.

3. Ramp Up. How many months transpire between the time an employee is hired and the month when s/he is fully up to speed?

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