Thursday, June 27, 2013

How many Business Development or Salespeople Do You Really Need?

How many Business Development or Salespeople Do You Really Need?

Before you hire anyone ask yourself this question, how big is your market opportunity?

Here’s a ten (10) step approach The Learning Strategy, found that works:

1.       Begin with your average contract amount multiplied by your average profit margin.  Let’s say $40,000.00 (gross) divided by 35% = $26,000.00 (net).
2.       Let’s say your combination of new and existing accounts equal 300 per year with an average gross revenue (AGR) of $120,000,000.00, average net revenue (ANR) is $7,800,000.00 per year.
3.       Current ratio sales per account is 1 salesperson|100 accounts totaling 3 salespeople accountable for $4,000,000.00 AGR, $2,600,000.00 ANR each.
4.       Now you need to identify the size of your market, what type of training customers are buying and what type of training customers will be buying.
5.       Let’s say you can identify 2000 businesses with an employee size of 100 or more.  Now you need to eliminate businesses that don’t qualify as part of your served market.  For instance, if you providing high-ticket sales training, you may want to eliminate industry codes having to do with retailing who sell through distributors or non-profits.  Then you might want to eliminate all non-headquarters businesses (if headquarters are where the decision-makers are).  You may be down to 1000 businesses.
6.       Then you may want to validate and score.  Are these ideal customers? Rate them by Dollar Potential, Access & Credibility, Product Training Fit, Community College Value-Added Fit, Leverage and your Personal Conviction.  Uh oh, down to 300 targeted business prospects!
7.      Next, add your existing accounts plus the targeted prospects (300) by the number of calls or outreach attempts.  You’ll want to segment the opportunity here, “awarding” more sales calls and outreach attempts to businesses with larger potential.  You may also want to budget more touches with businesses you already do business with (you don’t want to lose them!).
8.       Go back to item 3 for a second…  Using the 1 salesperson|100 account ratio, let’s say it took seven touches or 700 calls a year or an average of 20 calls or outreach attempts per week.  Use this as your model example.
9.       Now you simply multiply the total number of existing accounts and new targeted business prospects by  the amount of touches per year to determine how many touches a typical salesperson can make.   Be sure and reflect the time your salespeople spend in non face to face activities like research, planning and reporting, custom development projects, quality assurance and training which is about 30% of the week. 
10.   Based on the above scenario, to maintain your existng accounts and target new business prospects totaling 600 accounts, would require 4,200 touches.  4,200 touches divided by an average of 700 touches per salesperson works out to 6 full-time salespeople.  So if you have 3 people now, you could:  
a.       Add more full-time headcount (in this case an additional 3 salespersons) or,
b.      Increase the size of the opportunity for the targeted business prospects or,
c.       Hire the Appointment Lab via to reduce the amount internal calls/touches, reduce the amount of research, planning, reporting % and ultimately maintain the amount of full-time headcount capacity refocusing their efforts on nurturing the business relationship.

How do you determine you’re Business Development (BD) or Sales budgeting if you are providing corporate/contract training to businesses? And how can you grow your gross and net revenue if adding more salespeople is not warranted?  And what sort of approach should you use if your BD or sales team includes the Appointment Lab?  How critical is it for you to ensure that the partner you choose understands what your values are and how you are represented in the business community you serve?  We’re helping Community Colleges competitively position themselves in the markets they serve!

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