Posts Tagged ‘customer service’
Cost of (Your) Sales (Force)
Are you swinging a sledge hammer to kill an ant in your sales organization or are you taking a fly swatter to a tank battle?
Better stated, perhaps, have you taken the time to calculate the costs of your various sales tools vs. the revenue potential of your product offerings to make sure you have a sales strategy that makes sense?
When I am evaluating sales management and their sales organizations this is one of the first key metrics I look at to determine if sales resources are allocated properly.
Let’s say you have sales representatives costing you $60,000 in base that have on target earnings at $120,000/yr.
In simple terms, assuming this sales representative is working 40 hours a week (stop laughing!), and has two weeks off a year, he is going to work an average of 2000 hours a year. Doing the simple math, $120,000/2000 hours, this sales representative costs $60 an hour before you factor in benefits, cell phone, car allowance, etc. Let’s estimate his cost at $85 an hour to execute his sales work properly.
Subject Matter Expert: (Could be an engineer, analyst, auditor, etc.) $80k/yr; $80,000/2000 = a cost of $40/hr. We will keep it simple and skip the benefits add on.
Inside sales representative: $40k/yr; $40,000/2000 = a cost of $20/hr skipping the benefits add on here as well.
So let’s look at our costs for these sales representatives and their potential sales tasks.
Site Visit: (Assuming 1 hour of prep, 30 minutes of travel, 1 hour meeting) $212.50 + plus the literature he left, lets call it a cost of $215 for that sales call.
Technical Sales Call (Assumes Subject Matter Expert and Sales Representative) $215 for the representative plus $100 for the SME or a total of $315.
Telephone Call: Inside Sales Representative: (est. 5 minute call) $1.68
Telephone Call: Outside Sales Representative: (est. 5 minute call) $7.10
Mail: Inside Sales Representative: (Lit cost, plus postage plus time) $3.00 for lit + $.40 for postage + $3.00 worth of time.
Etc. etc. etc. You get the picture.
Now take these costs and apply them to the products you are selling and the revenue they produce in general terms.
When I do this I am mentally asking myself what is the most cost effective method of sales for this offering (that is not going to negatively impact customer service.)
I have seen situations where entire outside sales organizations were in danger of being fired and replaced because they were not hitting their quotas. After analyzing what they were being asked to sell vs. revenues generated it became clear that the company was swinging a sledge hammer (or using their most powerful/expensive form of sales) to kill a fly (some of their least profitable more commoditized offerings.)
The obverse is true as well. I have seen inside sales teams and telemarketers trying to sell solutions that were far too complex for the tools available to make the sale.
In many cases I have been able to lower the cost of sales by making these kinds of changes and making individual groups (inside sales, outside teams, etc.) more efficient and more profitable as a result.
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About
Sales Laundry – Where did the name come from?
“Sales laundry” is a term I use to describe the personal development, the study of the art of sales and people development, planning, tactical/strategic thinking, and the real life laundry, hair cuts and shoe shines that keep me physically and mentally prepared each and every day.
This blog is a place where I share my observations and experience, hopefully giving you a chance to catch up on a little of your own sales laundry.
About Me.
Val, is founder and chief Business Development Alchemist for sales consultancy AlchemyEngine, using his sales experience amassed over 20+ years, developing, teaching and managing hundreds of sales professionals across a diverse set of industries.
Val melds entrepreneurship, 10 years of software and CE management experience focused on customer service with 15 years of technology business development, sales and executive management with start ups, regional VARs, consulting organizations and national enterprise software companies.
Previously, as Vice President of Business Development for Boomstar, Val was responsible for building Boomstar’s sales organization and participating in the development of Boomstar’s world wide sales efforts, and establishing a global client base.
“Starting at the ripe old age of 4, I opened a lemonade stand. I sold every glass of yellow sugary goodness I had the raw materials to make, made a tidy profit, and was hooked on the fine art of sales. Thanks, Mom!
At 5 I was a freelance newspaper salesman, getting permission to pick up newspapers laying in the neighbors’ yards that were not going to read the paper and redistributing them with my trusty Radio Flyer wagon to those that had the time, desire and would gladly pay a little to read the newspaper.
I founded my first company and formed my first partnership in high school working late night weekends at a local radio station, establishing a successful mobile DJ company called Sound Investment.
While working on my Business Administration degree, college brought my enjoyment of entrepreneurship, business and public speaking together as part of the Students in Free Enterprise organization, ultimately winning the SIFE International Championship for having the best college student driven business development and business education program in the world.
To this day I enjoy selling. I enjoy building companies and the sales teams within them. I enjoy developing raw recruits into star performers and being a continuing student of the art of sales, management, and building organizations that work.”
SalesLaundry.com gives me an avenue to give back and share my sales experience and knowledge with anyone interested in the many different facets of sales. You can reach me at Val {at} saleslaundry.com
