If you have had the opportunity to hire salespeople, you already know how difficult it is to find an effective person who will be a good fit for your company and at the same time, meet their financial expectations.
In an optimistic scenario, finding a good salesperson and verifying them takes about 2 lengths of the sales cycle plus the time needed to find the person you want to hire. If it doesn’t work, you start from scratch.
Can the sales team’s results be increased solely by hiring more salespeople? In addition to working on the effectiveness of sales and marketing activities (e.g. improving the quality of leads or your sales skills), there are other ways to make sure the salesmen conduct more talks with potential customers on a monthly basis. One of them is a presales, who will help salespeople arrange sales conversations.
Let’s see what would happen if your top 3 salespeople could have 180 additional talks with clients per year?
Even if you know who usually sells the most, without data on the current state of sales, it will be difficult for you to assess how effectively you attract customers. The more accurately you measure the effectiveness of your sales representatives at particular stages of the customer acquisition process, the easier it will be to estimate what needs to happen for a presales to be a real support for the team.
For the purposes of our conversation, let’s assume that the average transaction value is USD 2,000 and you have three slightly different in terms of effectiveness salespeople. Conversions from a talk to a paying customers are 45%, 35% and 30% respectively. This is the data:
The next step is to determine how much time salesmen take:
To make matters easier, the numbers in the example have been rounded — they will probably look different in your company. The sale of a service for USD 2,000 a month requires different commitment than the sale of a several hundred thousand dollars service or a production line costing millions of dollars. Moreover, not every lead takes the same amount of time — some of them we give up on during the first conversation and negotiations with others may take months.
Having data on how much time the average sales opportunity takes and how many leads are handled by the salespeople on a monthly basis, you can assess how much time sales reps spend at the stages of the sales process.
Perhaps your interest was spiked by the fact that a salesman deals with sales only for 46 hours on a monthly basis, while the working month is about 160 hours. Yes, we are not the first to notice this surprising occurrence. It is not a mistake, but a rule. Your salespeople spend most of their time not selling. 🙂
In this example, we assume that the presales would deal with the first contact with a potential customer, i.e. arrange meetings with a sales representative. If a salesman didn’t have to do this, he would gain about 10 hours of free time per month. Since it takes 2 hours to take a lead from a sales talk to the end of negotiations, it means that a salesperson could deal with about 5 more sales opportunities per month.
An average salesman has been able to carry out 18 business talks per month so far. Thanks to a presales he will be able to have 5 more — 23:
In the hypothetical example, salespeople could get 5 more customers, the team’s monthly sales increased from USD 38,000 up to USD 48,000 (or 26%), so the presales helped generate USD 10,000 additional income. Remember that we adopted USD 2,000 as the average transaction value. The higher the average transaction value, the more revenue will be generated due to the fact that presales allows salespeople to conduct more business talks.
None of these assumptions have to be true. It may also be case that the effectiveness of the presales will be higher than that of salespeople. Or that a positive first experience (call back after 5 minutes) will also translate into an increase in conversion from meeting to transaction. Let’s check what the presales’ effectiveness must be so that he can make up for his salary.
The employment cost of a presales in this example is USD 4,210.
In this case, the presales will reimburse the cost of his employment if he arranges meetings with the leads that the company provides him with a 50% efficiency.
The above calculation method will help you clarify the conditions under which a presales will contribute to increasing your sales results. Of course, some indicators will need to be estimated, so it is worth adopting two scenarios: a conservative and optimistic one to objectively assess the likelihood of effects. Good luck!
So you want to hire a salesperson, without having to fire him during the trial period….
In my work, I sometimes hear: “We’ve never seriously analyzed our sales, but great people deal…