The Value Strategy News
Business Performance Improvement
|
|
| October 06, 2009 Revenue CaptureStrategies
|
CEO-Coaching Editor: Gerhard Vierthaler
|
|
Welcome,
In this issue, we talk about how to manage the cost
of salespeople. - Part 2 of this article will be published
in the next edition of this newsletter.
I look forward to your comments.
Sincerely,
Gerhard Vierthaler
Editor - The Value Strategy News
Value Strategy Group, LLC
907-222-2703
Follow us on twitter
|
Help Salespeople Be More
Productive,
Sell More, and Cost Management Less - Part 1
By Paul DiModica
Managing and growing a sales team is expensive. In a market where base salaries range from $50,000 to $120,000 per year (plus commission and bonuses), hiring a salesperson who fails or does not meet their quota is an expensive issue that most managers must deal with in their career at some time.
When salespeople fail to hit their quota . . . it is not always their fault.
Selling successfully requires an integrated team approach. It is then up to the individual to succeed or fail based on his or her own initiative.
To increase individual salesperson success, firms must integrate and align internal support systems. The average non-selling salesperson costs a firm OVER $1,000,000 a year.
That's right, over a $1,000,000 a year.
To calculate the cost of a non-producing salesperson, you must include the lost gross margin contribution you expected from them during their selling year.
Additionally, a first-time sale with a new prospect should generate three times more revenue (lifetime value of the prospect) over the next three years (through add-ons, maintenance, upgrades, new projects, etc.).
To accurately determine what the lost revenue effect is to your firm caused by the non-selling salesperson, you must multiply their lack of gross revenue capture by a factor of 3.
Lost Sales Analysis Calculation Example
Using an example quota of $1,000,000 and calculating gross margin on quota at 30%:
|
Cost of Salesperson
Base Salary
|
$ 70,000
|
|
Cost of Benefits (Estimated at 30%)
|
21,000
|
|
Estimated Cost of T & E
|
12,000
|
|
Cost of Headhunter Fee
|
18,000
|
|
Lost Gross Margin ($300,000 x 3)
|
900,000
|
|
Annual Cost of Non-Productive Salesperson
|
$1,021,000
|
So, each month that a salesperson does not hit quota, they are costing you $85,000.
Instead of writing off this amount, why not invest in an internal business structure that minimizes the failure of salespeople and increases your firm's ability to hit your corporate goals.
This internal structure is based on aligning your sales hiring and sales training process with corporate revenue objectives so that all departments work in unison to help the salesperson succeed.
Corporate Sales Performance Alignment Chart
Through the above graph, you can see how internal systems should be created to support the individual as well as the team's performance based on corporate goals.
Yes, this analysis looks at salespeople over a 12 month period and salespeople may hit their sales quota on some of their available months during a fiscal year. But when a salesperson is hired, it is a one-year commitment by management to their fiscal forecast. So, isolating an individual's monthly performance is not truly reflective of the true cost of a salesperson.
Next week, we will talk about how to use the Corporate Sales Performance Alignment Chart above to hire the right salespeople and manage their success path to reduce the high cost of failure.
To help your sales team sell more, you should reduce your focus on individual performance evaluations. Instead, focus more on the synergy between performance and the internal support systems you have designed for them.
Every month you don't support your sales account manager, it is costing your firm $85,000!
P.S. : We hope you enjoy the newsletter and encourage you to
share it with anyone you think might benefit from the
business and skill-building tips it provides.
 |
|
|
The Value Strategy News / Revenue Improvement
Strategies is published bi-weekly and provides proven tactical and
strategic sales techniques to help you accelerate your revenue capture.
The Value Strategy News provides
best practices that Senior Management, Marketing and Sales Executives
can use to increase corporate profitability with proven strategic and
tactical sales techniques to help you sell to senior management of
Fortune 1000 companies and presidents of privately held firms.
If you wish to send a specific correspondence to Gerhard Vierthaler, please send your message to the editor. If you have a general question or wish to inquire about an event, please send your message to Customer Service.
|
|
|
|
=====================
FREE WHITEPAPER
=====================
|
6 Reasons Why CEOs Need to
Use a CEO Coach to Help Grow
Their Business Profitably
Click Here!
Call us today for
a FREE 30 min consultation!
907-222-2703
|
=================
TELESEMINAR
SERIES
=================
Next up:
Storytelling
as an
Advanced
Sales Tool
FREE EVENT!
Special Presentation
by Paul DiModica,
CEO & Founder of the Value Forward Network
Register Now!
October 14, 2009
8:00 am AKST
To sell senior mgmt teams, you need to use a business communication method that positions you as a business peer instead of a vendor!
Storytelling in the exec- utive office is a polished premeditated successful sales tool when done correctly accelerates your sales cycle.
Agenda:
* How to use storytelling as sales tool to communicate value;
* 7 techniques to build your business story in a logical format so senior executives will listen; * 9 words you should always use when building your business story; * Learn how to use cadence, pitch and business examples while telling your story to generate the next sales action step * How to use storytelling to educate senior management on technical concepts; * 3 primary types of storytelling methods and which method to use for different types of business situations; * Discover why using traditional case studies pulls you into a commodity position with senior management; * Why using "your brand" in the storytelling process can spell trouble for your sale! ... and much more.
Register Now! |
|
=======================
VALUE STRATEGY GROUP
=======================
Gerhard Vierthaler is president and founder of the Value Strategy Group and offers sales &
marketing best practices workshops, business strategy engagements
& executive coaching in North America & abroad tailored to
clients needs.
We
develop dynamic strategies and processes that sustain competitive
advantage and company value to succeed in any market condition. Our
content rich workshops and strategy sessions on leadership, sales,
management and marketing bring about immediate changes and long-term
results.
For more information visit valuestrategygroup.com or call 907-222-2703.
|
|
|
|
Recommendations provided are to be used at your discretion and are provided solely as an independent opinion.
With the exception of forwarding this article in its entirety to a colleague, we prohibit any unauthorized copying, distribution or redistribution of the content. Specific authorization must be obtained in writing from Gerhard Vierthaler at Value Strategy Group LLC, 10625 Washington Circle, Anchorage, AK 99515. Violations of copyright are subject to substantial penalties as provided by the law plus attorney's fees incurred as a result of violation.
Copyright © 2008 - 2009 Value Strategy Group. All rights reserved.
|
|
|
