There are times when I meet prospects and share with them the cost of our face-to-face meeting. The conversation goes as this:
‘This meeting is costing both our organizations around INR 100,000, so lets make the most of it and conclude with business’.
Surprise and a look of amusement is usually the result of such talk. Surprise because they never did calculate such costs while entering a meeting. Amusement at the fact that a prospective vendor is bringing up such a topic during a business meeting.
As an illustration here are some numbers worked out to show how much it costs for an average customer meeting done by a business sales representative
Mid Level Sales Manager earning INR 100,000 per month ,Mid Level Overheads 20,000, Rent, Computer, Mobile, Phone calls, Support services, Travel cost10,000. In Town costs Incentives and benefits 20,000 TOTAL Monthly150,000 Number of meetings held 25 On an average one meeting per working day. 5 day week with annual leave and other holidays leaves us with around 220 working days per annum Cost per business meeting6,000Conversion rate10%1 in 10 meetings results in a customer Cost of acquiring a customer 60,000
Senior Level Sales Manager earning INR 300,000 per month. Overheads 20,000,Rent, Computer, Mobile, Phone calls, Support services Travel cost10,000. In Town costs 50,000Out of Town travel Incentives and benefits 50,000. TOTAL430,000. Number of meetings held 20. On an average one meeting per working day. 5 day week with annual leave and other holidays leaves us with around 220 working days per annum. Cost per business meeting 21,500. Conversion rate 5%1 in 10 meetings results in a customer Cost of acquiring a customer 430,000
Costs do not include the cost of an inside sales team and cost of supervision and management
When we factor in the cost of time of the persons attending the meeting from the prospects end, the cost of the meeting can easily double or more.
It is a good practice for organizations to be aware of the cost of sales business meetings and to be able to ascertain the cost per sales visit.
Organizations that rely heavily on this channel can improve their productivity and therefore reduce the cost per sales visit (though the overall cost will go up).
Some ways to improve productivity:
Set up a good inside sales team. The focus of this team should be to get to prime prospects through adequate research, prospect database development and targeting communication. The single objective would be to get good quality meetings set up with the relevant prospect. This team can be in-house or outsourced .
Implement and use a good sales management system. There are several such SAAS products available including Zoho.com and salesforce.com .
Hold the team accountable for the field visits and the reason for the visit. Closely monitor the number of visits (first time and repeat visits) and therefore the investment being made in pursuing prospects. Do this exercise regularly and prospect by prospect, This will help understand the investment being made in meetings and discussions with each prospect .
Create a compensation plan that is skewed towards pay for performance.
To get more insights or to engage in a discussion of how to set up an inside sales team, write to the author.