Posts Tagged ‘Marketing’

What is the real cost of a B2B sales call?

what's the real cost of a sales call?I must be living in a parallel universe somewhere. A sales manager buddy of mine was trying to convince me that the cost of a [human] sales call—the face-to-face variety—has stabilized or is going down. And further, that the cost was somewhere close to $50/call.

Why do you care? As you know, the cost/sales call is critical in the calculation of a marketing budget. If sales calls are truly “cheap,” marketing can’t justify the same budget allocation as when sales calls are expensive.

So, I did a little research… and sure enough… the devil’s in the details. The reason for the discrepancy is in the assumptions (and you know what they say about the word: ASSUME … that it can make an ASS out of U and ME).

Turns out they assumed the average $40k sales rep made 16 sales calls/week [that's 3.2 sales calls/day] for 52 weeks [ holidays] = $48.08.

But in my parallel universe, sales reps can’t physically make 16 calls/week. In fact, for technical products and services, I have a hard time believing anyone can do this.

Then I came across this post at Sales Laundry [a worthy read, btw]:

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 (or really has an hourly revenue rate of) $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 [SME]: (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.

While this second, albeit more rational approach, differs in the process of calculating the cost per sales call, I can at least say I feel better.

But how about you? What rule-of-thumb do you use for the cost of a sales call for your company?