This really opened my mind to sales process of higher ticket items. The true cost of anything is usually a 3x higher than would you think it is.

I’m really impressed with the quality of the comments here. wow.

thx

Both examples were not just B2B, but also OEM. High tech, long sales cycles, multistate territories. In this type of sales environment you only average 5-10 face to face sales calls per week. Many of those require an SME (systems engineer, or someone from R&D) on the call, as well as air travel.

Your example of a $40K rep making 3 calls/day (likely driving distance) may give you $50 per call. But multiply his salary 4x, give him a 10 state territory, a complex product to sell – the cost per call easily goes into the hundreds.

Coming from a sales-process guru, like you, thinking of your sales reps as $1000/hr would lead to higher productivity… Like using these company “assets” to better understand their customer problems and how their products and services uniquely solve those problems.

Rather revolutionary thinking!

If a rep has a quota of say, $1 million dollars per year (though in many industries it is a lot higher), us THAT number to calculate the required productivity per unit. Not cost, salary, mileage, etc. Those are the chicken feed.

If you can get 1000 hours of productive (value add) time from an average salesperson in a year, then on a million dollar quota, those hours must each produce $1000 in revenue.

Value add time is what the customer would be willing to “pay for” (i.e., with their attention, their time, cooperation, and ultimately, their money). Non-value add time (i.e., waste) is things the customer would not pay for, like sales meetings, administrative work, most travel time, etc.

It might sound outrageous, but most companies would do well to focus on what they can do that would make their customers willing to pay (the equivalent of) $1000 per hour to talk with their salespeople.

Thinking along those lines is likely to lead toward higher productivity.

Michael Webb
http://www.salesperformance.com

Then there is meeting prep, travel time (30 minutes seems low, unless your territory is small or highly populated), meeting time and follow up time. If you are meeting with the right contacts at the right company, there will be action items that result from most sales calls. And yes, these tasks may include a sales rep and a sales engineer or SME.

Travel costs could be the .55/mile or airfare, plus other T&E. In my experience, the more successful the rep, the higher the expense report given the amount of in-person meeting activity, for which there is no substitute. While web conference technology has come far, meeting face-to-face builds trust and can reduce the sales cycle.

If I had to pick a round number, I would say that for B2B solution sales the cost is between $200-$300/meeting, and higher with air travel. Although reps should be responsible for securing multiple meetings to reduce costs when it is feasible, the goal is to be out of the office and with prospective clients as much as possible. If this isn’t resulting in closed deals, then the strategy needs to be re-evaluated given the required levels of investment in each sales rep.