The Economics Of Selling

In last week’s column, I recommended that you fully enable your sales team to sell, and off-load everything else to less-specialized, less-expensive employees.

This is right about the point where the financial person jumps in to complain, “We can’t afford all those support people!” However, if you look at the numbers, you’ll see that supporting your sales staff to make them more productive in front of customers might just be the best investment you can make to grow your business.

Top ad sales people who understand the media sales business and have web experience to boot make between $80,000 and $200,000 per year, give or take a few thousand. If you are paying a lot less, you probably don’t have very experienced people or you have a lot of options or other perks in the package.

On the other hand, a good entry-level researcher, trouble shooter, RFP writer, or sales trainee makes $23,000 to $50,000. This is a person who can answer prospect’s requests for information, qualify prospects, chase down missing reports, and work with other departments to insure that customers get what they need.

Yes, they represent another cost. But let’s look at what they could mean to your bottom line.

If your crack-shot sales pro is really on the ball, making ten face to face calls a week, 44 working weeks a year (taking out four weeks for vacation and national holidays, two weeks for training and sales meetings, and another two weeks for two hours a week of conference calls, team meetings, conversations with sales management — all of which is very conservative!), that’s 440 sales calls a year.

(What prevents them from making more calls? Time spent doing all the things mentioned above that the sales support staff could be doing. These activities can easily add up to three to four hours a day of a sales person’s time.)

Now, assume it takes an average of five calls to close an account, and alternate month visits to keep them renewing. That’s 11 calls per client, or 40 clients a rep can handle. If a few clients are high-demand, need lots of hand-holding, or have many points of contact (multiple decision makers: like client and agency, account and media, interactive agency and traditional agency), then cut that number in half… or more.

This is not to say every call or client results in closed business, so calculate your own closing ratio into that 20 to 40 accounts a rep can handle. See how quickly the number of running accounts shrinks?

If adding a sales support person allowed your senior sales people to make just one more call per week, that’s 44 more face-to-face calls a year (on better qualified prospects) or between five and 15 new customers (depending upon close rations for your sale).

These new accounts, multiplied by your average order size, probably pay for two or three support people. And, you have the major benefit of bringing along your next generation of home-grown sales people.

Okay, I know these are general numbers. But do the math with your own real costs, and the conclusion is likely to be the same — making an investment that allows your sales people to get in front of more prospects is one of the best ways you can grow your business. In a fledgling market that is growing at a rate of 30 percent to 50 percent a year….where every new prospect requires a lot of education and hand-holding (thus demanding more selling time)…and where it is difficult to predict which new entrant will be the next big spender….can you afford to have your sales professionals doing anything but selling?

Next week, more ways to increase sales productivity through better sales management.

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