How to Decrease the High Costs of Sales People By Pat Ryan

Posted on Oct 9, 2012 in Archive

Sales people are expensive—good ones and bad ones. Maybe that fact is easy to overlook for organizations churning out record sales numbers—but what about everyone else marketing to corporate HR and training?

Some costs can be avoided. Beyond salary, commission and benefits, there are additional expenses you incur resulting from inefficiencies in your sales process.

We can illustrate this using the subject of a recent article (“The Number One Productivity Killer in Prospecting”)—and explore the Return-on-Investment (ROI) that can be achieved when you avoid the top prospecting productivity killer.

Normally our articles are written for those of you living in the “prospecting trenches.” This one is no exception—but it would be of particular interest to the CFO, Controller or “check writer” (whose investments in your sales and marketing environment are so important to your success).

Over the last 10+ years of prospecting, we have discovered the shocking truth about prospecting within corporate HR & training—75% of “tele-prospecting” time is WASTED using inappropriate, cheap lists targeting the wrong person. Instead, a wiser investment would be to use a pre-drilled-down list containing leaders within corporate HR & training—responsible for:

  • Spearheading projects
  • Creating new initiatives
  • Controlling the budget
  • Making the decisions

Subbing out the drilling down “grunt work” creates an optimum environment for your sales people to prospect efficiently, perhaps for the first time! Securing such a specialized list requires a greater investment since there is so much “legwork” involved in building and, more importantly, maintaining it – BUT – the ROI numbers are astounding (see illustration below).

According to sales pipeline expert Chris Simone, breaking the sales process into two pieces—bifurcation—will “jump start” sales:

“The traditional sales process starts with the initial cold call(s) to drill into the organization on a quest to discover the ‘right’ person. At this stage, sales people are using data provided on generic prospecting lists, or worse, data collected manually over the Internet. AFTER this time consuming process, conversations with the ‘right’ people occur and hopefully active sales processes follow. Therefore, the front-end of the sales process is mostly characterized by basic, laborious tasks performed by highly skilled and expensive sales people. 

With a bifurcated approach, sales organizations better align their skilled resources with appropriately challenging activities (those crucial to achieving revenue goals) resulting in decreased cost AND increased revenue. This is the kind of trend that every Finance Executive and budget holder dreams about! Subbing out the laborious work of converting basic commercially available data into valuable prospect information will jump start your sales processes.

What does this mean for you in practical terms? Rather than starting at ground zero, sales processes will start with meaningful conversations with the right people; and the enhanced preparedness and credibility of your sales people will result in more immediate transactions (i.e. shorter sales cycles) of higher dollar value. Simply put, this means MORE money SOONER! Does this sound like something that the CFO might be interested in considering?” 

Supply your sales force with the information they need to be highly efficient prospectors! Apply resources (like MTG’s lists) that are specifically created to drill into corporate HR & training organizations to find the actual decision makers and buyer influences you seek. Calculate the ROI and you’ll be amazed at the resulting cost savings!  See examples below.

Using basic sales person costs (or substitute your own numbers!), let’s look at the real cost of your having your sales people do the prospect “digging” grunt work:

Hard Costs

  • Salary ($50K) + Compensation Plan: Commission ($25K on plan) = Total: $75,000/year
  • Add Benefits (25% of $50K = $12,500) = $87,500/year
  • Cost per week = $87,500/52 weeks = $1682.69/week

Given a 40 hour work week (hopefully, they put in more!), the cost per hour per sales person = $42.07.

That’s $42.07 per hour—EVERY hour—regardless of their productivity! So make sure they are always doing $42 per hour work!! For example, drilling down in search of the corporate HR & training decision maker is $14 per hour work—so why would you pay someone $42/hour to do it?

MORAL:  Don’t make your $42/hour sales person do $14/hour work!

It’s a poor economic choice—and sales people don’t like to or want to do it anyway! Instead, sub out the “digging” work to realize both cost savings AND a better deployment of resources!

Soft Costs

It’s difficult to quantify soft costs—but these costs are also very real.  Soft costs are those associated with:

  • Excessive turnover
  • Lack of productivity
  • Opportunity costs
  • Lengthened sales cycle
  • Lack of FOCUS—distractions take away CLOSING time
  • Time to competency—time it takes to close the first deal

Now, calculate Return-On-Investment (Substitute your own numbers!):

  • Let’s say your sales people spend 50% of their time prospecting = 20 hours/week.
  • Since 75% of prospecting time is wasted using inappropriate lists requiring drill-down (verify this with your sales team!), they are wasting 15 hours (75% x 20 hours) EVERY WEEK—and that costs you $631.05! (15 hours x $42.07 per hour)
  • That’s over $2700 per month! ($631.05 x 4.3 weeks per month)
  • That equals $32,562 per year in wasted prospecting costs!!

Consider this: if you paid $5000 for a highly qualified, pre-drilled-down list, it would be paid for in less than two months in reduced costs and improved efficiencies…and that’s if you have ONLY ONE sales person!

What if you have two, four or six sales people? Multiply that times each sales person you have—and ask yourself, “Can we afford to continue wasting this much money?” The ROI case for outsourcing your list development to a high quality list vendor is staggering!

Hard cost savings alone will pay for the list more than six times in less than one year—and the Return on Investment is nearly 650%!  Now factor in soft costs savings like increased productivity, reduced turnover, greater job satisfaction and shorter sales cycle—and ROI skyrockets!

Substitute lower hard costs if you wish—and less prospecting time—and the ROI numbers are still quite compelling!

Call us today at (651) 457-8600 to learn more about saving time and money with our highly accurate, targeted lists of the decision makers you seek!

P.S. Don’t forget – we are a highly specialized company offering select “best of breed” services to e-learning/training/HR companies. You can outsource to an expert in your business. Call MTG today.


Watch a 2 minute message about the kind of success MTG clients have seen using our highly accurate lists and then give us a call. We’re here to help you!

Mentor Tech Group, Inc.

“Empowering Enterprises Today – To Build the Sales Pipelines of Tomorrow”  


©Copyright 2002-2012 Mentor Tech Group, Inc. All Rights Reserved

Leave a Reply