Saturday, January 14, 2012

Are Your Sales Teams Putting Out Fires When They Should Be Closing Sales?

In this age of economic problems, strained budgets, reduced revenue and increased competition; companies the world over are doing what is necessary to survive. Often this includes reducing expenses, and rightly so. However, there is one area where reducing expenditures can cause more harm than good. In fact, you may think about increasing your budget in the area of Sales Support.

Let the Sales Team Do It
While it seems to make sense to decrease or cut out support expenses for sales people, this often decreases sales. How much time do your sales people spend filling out paperwork and other mundane administrative-type tasks, trouble shooting, or solving very basic customer service issues?

For every minute a sales person spends putting out fires or pointless admin, is a minute they are not closing a sale. It is true that depending on your organisational structure, this may not be an issue, but for many it is.

Income Producing Tasks
Sales people should handle customer issues that give them the opportunity to broaden the relationship with the client or to find new opportunities, but some issues should be the responsibility of the support staff. Your sales people should spend 90% or more of their time doing one thing…selling. That does not mean they should only be asking for the order; they should be performing income-producing tasks.

Sales Person or Administrative Staff?
Ok, so you figure you will save £20,000 if you choose to eliminate a support position as the sales people can handle those tasks. However, now the sales person must personally print the letters or brochures, stuff the envelopes and get the mailers in the post. They then must run the needed reports, along with other pre-sales work. After closing the sale, the sales person must handle the needed time-consuming paperwork, set up the account in the delivery system and more.

In the midst of all of this, the sales person must spend hours speaking to customers on the telephone about routine maintenance issues and answering elementary questions that anyone on the staff could answer. What does this actually cost your firm?

What is the Cost?
Look at this example: Your average sales person closes ten sales per month, generating £50,000 in revenue, averaging £5,000 each sale. Also, on the average, it takes the sales person 100 "touches" to achieve the objective. That is, adding up all the sales related tasks such as emails, phone calls, and personal visits, the sales person makes 100 contacts with prospective clients before closing one sale.

Let us further assume that each tasks takes the sales person an average of 20 minutes to perform. So, emails may take but a minute or two and cold calls average perhaps 5 minutes each. It takes the rep 45 minutes to prepare a proposal and the sales interactions run about an hour. Let's just assume that when averaging all of this, each income-producing touch takes the sales person 20 minutes.

"Do the Math!"
Therefore, it takes 100 touches to close one sale that generates £5,000. Those 100 touches took 2,000 minutes (20 minutes x 100). The average sales person in this example generates £2.5 per minute! Do you really want to pay £150 per hour for someone to stuff envelopes? Also, you not only pay that £150, you lose it.

High-Level Executives
Realise that your sales people are high-level, high-paid executives and should be treated as such. In fact, depending on your organisation and sales structure, you should give your sales executives enough support so they can spend the majority of their time actually speaking to or in front of prospective buyers.

Thanks to Sean McPheat / MTD Sales Training

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