So, you’re running a DJ business. Things seem good, you’re booking events, you’re making money. But, how do you know if you’re actually doing well enough to meet your goals? How do you know if you are going to succeed, or if your DJ business is on the road to failure?
The answer is sales metrics. Sales metrics are lifeblood for me. It’s how I motivate myself, how I keep sane, how I keep calm, how I exist on a daily basis. It’s just how I’m wired. I can’t understand why other people don’t want to know this stuff.
Hopefully you’re like me and you just need to know what you need to know. If not, that’s okay. This stuff is actually really simple. Getting into the habit of tracking your contacts will let you get better every single day, and will ultimately make you more money for just doing what you love. Once you have these metrics, you can pretty confidently plan your day-to-day activities and know how much you are going to make for the entire year. And, the best part is, it’s only about 5 more minutes of effort than what you are doing now!
Critical Numbers to Track
These are the most basic sales numbers for your business. Hopefully you have started tracking them from day one. If you haven’t, start now! I’ll adapt a phrase that I have heard over and over in my sales career: The best time for you to get started was a few years ago. The second best time is today!
Contacts: How many people are you directly contacting or are contacting you by phone, email or social media to offer your DJ services on a daily, weekly and monthly basis?
Appointment Rate: Of the people you contact, how many are booking appointments to discuss their needs? Get your rate by dividing number of appointments by number of contacts.
Contract Rate: Of the people who book appointments, how many are signing a contract? Get your rate by dividing number of contracts by number of appointments.
Note: Many people would call this “close rate”. I’m not a fan of that. Your clients don’t want to be “closed.” They want to sign a contract with you and have you do an awesome job. This is such a little thing, but it can totally change your mindset. You are here to help and serve them, not to close them. The words you use drive your thoughts which drive your actions. Get that right in your head and it will show in your business.
Cancellation Rate: Of the people who sign a contract, how many cancel before their event? Again, get your cancellation rate by dividing number of cancellations by number of contracts.
Average Revenue: How much do you make on your average job? This one’s easy to calculate. Take the total you made in the last period of time (month, quarter, year, whatever) divided by the number of events you worked. If you don’t have that much data, take your hourly rate times your average event time. 4 hours is my usual event. Or, if you price by packages, take your average package price.
Bonus Numbers
Once you’ve got some history in your DJ business, you can calculate some extra numbers that will help refine your future estimates.
Average Expenses: Take the total amount you spent to run your DJ business in a time period (year, quarter, month) divided by the number of events you had during that time. I’m talking about all of it: website fees, advertising, gas, meals, postage, mileage, whatever. Are you tracking your spending? You should be! Here’s a way to do it in 15 minutes a month using Mint.com or your favorite money management website.
How much did you make? (Annual Revenue): This one’s easy. If you are keeping track of what you took in, just add it up at the end of the year. Mint.com makes it super easy for me. I just categorize all of my DJ income as “DJ Income” (duh!) and the Trends tab adds it up for me.
How much did you keep? (Annual Profit): Also pretty easy. Just take your annual revenue minus your annual expenses. Again, I just have Mint do it for me. All my income and expenses are categorized, so I just subtract.
How to track? Spreadsheets!
The key to getting good numbers you can rely on is consistently tracking your interactions. I had the great fortune of working for the reporting department before I got my current sales job. Now, my college degree is Computer Science, so I knew some of this inherently, but seeing it first hand was eye-opening. No matter how good my team was at correcting data errors, they can only be as good as the data entered in the system. And, this data is how they figure out our commission. This is real money we’re talking about here. If somebody forgets to give me credit for a sale, or the record just gets deleted somehow, in some cases there’s no way to know.
This knowledge made me a voracious tracker of my interactions with clients. Add to that the fact that sometimes my memory stinks, and my spreadsheet has become my lifeline on a daily basis. I cannot overstate the importance of tracking your interactions consistently. I have mine open all day, and when I finish talking to someone, I write down what happened right away.
I’ve taken the spreadsheet that has helped me make over $5 million in sales over the last 3 years in my timeshare business, and modified it for you. I basically sat down and said, “If I were to leave my day job and run my mobile DJ business full-time, what would I need to know about each person I talk to?” I’ve boiled it all down into a single spreadsheet, which you can have for free here.
Now, at some point, you’re gonna get big and fancy and busy and have employees and all that jazz. You’re probably going to need contact management software at some point. There’s even some free ones out there. I like the one that I use at my day job for keeping me on task and reminding me to do stuff. But, I still run my spreadsheet right next to it, because I never know what’s going to fall through the cracks. If you want to use a whiz-bang system at the beginning, go for it. You can use my free spreadsheet to make sure you are tracking all of the data you’ll need to calculate your sales metrics. And, these are pretty simple rates, so you should be able to calculate them in most contact management software.
Log it all, calc it later
Once you’ve got a system, all you need to do daily is track your activities. You’ll sit down later when things are quiet and calculate your numbers. I make it a point to not track my conversion rates in real time. They are very streaky by nature. Remember that we are looking for long-term trends. And, nothing will make a bad run worse like staring at your numbers and thinking, “Man, I really gotta do better on this next one.” Getting in your head about your numbers right before you talk to a client is one of the worst things you can do.
How to not get lost in the numbers
Just benchmark to start
In the beginning, none of your numbers mean anything. Your only goal is to track them consistently. You’ll need a good amount of data before you can learn anything meaningful, probably 3 or 6 months if you’re working full-time. If you’re not full-time, you probably need to contact 20 to 50 people before anything means anything.
Know your average, love your average
Once you’ve got a good average on how you are converting at each stage, you can use this to predict your results. This helps keep me calm when sales aren’t breaking my way. I know that if I just talk to X number of people, over the long run I will get Y number of events. And, doing the activity every single day is what will get you the results anyway, no matter what skill level you start at.
And, you can use your rates to figure out what area of your sales process you need to improve next. Maybe you’re great at talking to a bunch of people about your DJ business, but they won’t commit to meeting you. Or, you’re getting a good number of meetings, but nobody’s signing up. You can see that in your rates and figure out how to fix it.
Only freak out when it’s waaaaay off with a lot of data
Sales is a very hit-and-miss operation. It reminds me a lot of poker or blackjack. If you build your skills, you will very well over the LONG TERM. But, ask any card player, you can hit a rough patch really easily. Just ignore it! As long as your numbers stay consistent (or hopefully improve) over a 3, 6 or even 12 month period, you’ll be fine. Don’t panic if 5 or 10 people in a row tell you no. That’s business. Stay positive and know that your numbers will make a comeback.
You should really only be concerned if your numbers are off over 3-6 months or more. And, don’t forget about seasonality. You should always be comparing your results to the same time period last year. Wedding season numbers are going to WAY different than winter months, especially in colder climates. Know your averages by season, and you’ll avoid freaking out.
If you are having issues over the long-term, try not to change too much at once. Identify your areas that need improvement and implement small changes one at a time. Once you’ve got a decent rhythm established, you will throw yourself way off if you try to change too much at once. Make a small improvement and give yourself time to see the results before you try something else.
How this ties into your goals
Once you have a decent idea of what your averages look like, you can pretty accurately predict your annual income with a few simple inputs. This is so simple, but so powerful, and almost NOBODY does it! No joke, I took my wild-guess, back-of-the-envelope formula based on almost NO REALITY or KNOWLEDGE WHATSOEVER that took me 10 MINUTES to figure out in the shower into a Fortune 100 sales interview and blew them away. Seriously, it took me more time to type it into a PowerPoint template to make it look good than it did to figure out the numbers. If you do this, you will be LIGHT YEARS AHEAD of the average DJ business.
Let’s say you are just starting out. You can calculate backwards from your desired income with some placeholder rates. These are going to be totally wild guesses at first. But, once you have some data on how you perform, you’ll be able to calculate with more realistic numbers.
It’s a really simple formula. You can calculate your estimated annual income like this.
Annual Income = Annual Contacts * Appointment Rate * Contract Rate * (1 – Cancellation Rate) * (Average Revenue – Customer Acquisition Cost – Average Expenses)
Let me break that down in English: The money you make in a given year is equal to the number of people you talk to about your DJ services, times the percent of those people who will sit down and talk to you about specifics, times the percent of the sit-downs who sign a contract, times the percent of contracts who don’t cancel, times the average money you make per contract after expenses.
If you’re just starting, you probably don’t know most of these numbers. So, we’re just gonna work backwards and take some guesses. That would look like this:
- I want to make $75,000 this year. (Annual Income = $75,000).
- I’m charging $175 per hour, and I expect my average event to be 4 hours. (Average Revenue = $700).
- I don’t have any clue what my Average Expenses will be yet, but I’ll guess the total is like like $50. (Average Expenses = $50).
- I also don’t know my Appointment Rate or my Contract Rate, so I’ll use some sales industry averages. Typically, about 1 or 2 in 10 people you talk to will book an appointment, and about 30-50% of those people will sign with you. Let’s use the average case scenario. (Appointment Rate = 15% and Contract Rate = 30%).
- Cancellation rate for people who sign contracts with a cancellation fee is really low. I’ll estimate 10%, which is probably too high. I have had less than 5 cancellations in the 10+ years I’ve been running my mobile DJ business, but again, worst-case scenario. (Cancellation Rate = 10%)
Here’s my formula with my guesses inputted, working backwards:
$75,000 (Annual Income) = ($700 Average Revenue – $50 Average Expenses) * (1 – 10% Cancellation Rate) * 30% Contract Rate * 15% Appointment Rate * Annual Contacts
If you reduce this down, you get:
$50,000 = $26.33 * Annual Contacts
Which gives you two AMAZING numbers. First, you now know in this scenario that every person you talk to about DJ’ing is worth $26.33. How’s that for motivation to make a few extra phone calls?
Second, if you divide $75,000 by $26.33, you see that you need to ask about 2,849 people per year if they need a DJ to make $75,000. That seems like a GIANT number, but when you break it down, it’s not so bad. There are 50 * 5 = 250 work days in a year if you take two weeks of vacation (which you should, we’ll talk about that later). That’s only 11 contacts per day. Do you think you can make 11 phone calls a day to have a full-time DJ career? That’s all it takes!
And, if you don’t like how these numbers came out, then tweak them until you do. In fact, here’s a free spreadsheet with this formula built in so you can run what-ifs until the cows come home.
And, keep using this once you have real numbers. You can see how on track you are with your goals, and any problems will stick out like a sore thumb. You can change any of your numbers that you don’t like by just changing your efforts. Want to make more money? Well, you could contact more people, or figure out why they booked an appointment or signed a contract, or charge a bit more, or reduce your expenses, or all of the above!
This plus persistence equals profit and sanity!
Sanity because you never have to worry about where your money is coming from again. Every single day, you will do the things you need to do to get business. And, if you do this consistently, you know you will book events and make money. How much you book and how much you make is directly related to how you direct your efforts every single work day.
So, that’s it. Simple, but not easy! You need to work on growing your business every day, and track that work of maximum results. And, once you have an established baseline, you can improve where needed and trust that your proven process will pay the bills.
