> Sales Person ROI
Sales Person ROI
I've done some basic calculations lately on my time spent and was wondering if anyone has ever considered their Return on Investment in terms of time.
I sell to small businesses and my commissions per sale average $1500/ea
I close 12% of my appointments and see approx 8 new contacts per week. I work about 50 hours.
In that time I:
- cold call
- drive to see new contacts
- make presentations.
Would you say then:
- I invest 6.25 hours per week in each new contact.
- I close 12% of a potential ($1500 times 8 appointments=$16000) per week which makes $1440 per week.
- Each appointment is worth $1440/8 = $180
- Each hour is worth $180/6.25 = $28.80
How would you say these figures vary for a sales person earning $200,000 per year or more
Higher commission potential per week?
Higher close ratio?
More hours worked.
More appointments (using a limited resource - time)
Weekly Income = "Salesperson Closing Ratio" * "Average Possible Commission" * "Appointments per week"
I'm new to sales but you would think that it's easier to market/sell to customers that would offer double the return if closed, rather than DOUBLE your close ratio to say 24%
- by luka.
At some point in time, in order to make a lot of money, you need to be either selling higher priced goods, or find ways of selling that use very little of your time (passive income).
Remember though, the factors in your "sales equation" aren't independent of each other.
Higher priced goods may well have a lower closing rate - unless you improve your sales skills to compensate. Very high priced goods also typically take a lot more time to sell - taking multiple meetings with multiple influencers of the buying decision.
And, of course, the techniques (and sometimes personality) which make you successful at selling lower priced products often are not the ones needed to sell higher priced products (for example, early and repeated closing attempts are often counterproductive in large sales)
Ian - by ianbrodie
I applaud your analysis. The numbers you mention will continue to give you a clear indication of how you are performing.
It's very difficult to compare numbers like these from your industry to numbers in another industry. There are just so many variables.
If you want to increase your income, you figure out which of the following (or combination of the following) will help get to your goal:
1. Increase your closing percentage. I had a 82% closing percentage in an industry where average performers sold 40-50% and good performers closed 60%. It makes a huge difference and is worth developing your sales skills to achieve an increase like this.
2. Increase your average sale. Sell more to each customer that buys from you. Or, choose to spend your time with customers that will spend more, and give the lower volume customers to someone else if you're lucky enough to have enough prospects to be able to do this.
3. Get more opportunities. This depends upon your resources such as time and budget. At some point, it may pay to have an assistant doing some of your work while you spend your time closing deals. Referrals will have a positive impact on this number, too. Cold calling, marketing, promotions can all have an effect on this metric.
4. Increase repeat business i(f it's possible in your industry with your product).
5. Increase profitability of your sales. I'm not sure how you get paid, but make sure the margin in your deals is sufficient to give you the income you desire.
Do those five things and you'll be maximizing your revenue and your commissions. That's really all there is to it! (but of course, none of it is easy).
Skip Anderson - by Skip Anderson
I applaud your analysis of your time and productivity. Very well done. However, eventually a light bulb is going to go off inside of your head like it did for me years ago, and you're going to come to the realization that you just might be better off working for yourself and keeping all or most of the profits. Try crunching those numbers. I did, and I haven't looked back since.
Dale King - by Dale King
The Importance Of Simplicity In Sales
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