Build Your Business for Less Through Marketing
What's a more cost-effective way of making a sale? Saving the one-to-one approach until the end.
- By M.H. McIntosh
- October 01, 2006
Most of the fastest-growing Microsoft partners don't rely solely on one-to-one
sales contacts to grow their business. Why? It's difficult to find effective
salespeople, and often it takes too long for new salespeople to start showing
a favorable return on the company's investment.
Instead, the more successful Microsoft partners leverage lower cost-per-contact,
one-to-many marketing tactics to address the front end of the sales pipeline:
prospecting and qualifying. Then they focus their more costly one-to-one in-person
sales contacts on the end of the pipeline: the heavy lifting of doing demos, crafting
proposals and closing sales.
If the initial steps in the sales process -- prospecting and qualifying --
can be effectively accomplished by using less costly one-to-many marketing contacts,
you'll save your company real money and free your salespeople to be more productive.
This is true even if more marketing contacts are needed to get the job done.
It Makes Dollars and Sense
Research on the cost of sales calls by Reed Business found that the average cost
of a business-to-business in-person sales call was $392 in 2001 (and it's probably
higher now.) The same research said that it took an average of 5.1 in-person sales
calls to close a sale. So the total cost of sales visits required to close an
average B2B sale was just a hair under $2,000.
Even if your sales are large enough to justify this big expense, wouldn't
it be nice to keep some of that money as profit instead? You can. Simply replace
a couple of those expensive, in-person sales calls with lower cost-per-contact
marketing tactics such as direct mail, e-mail, telemarketing and pay-per-click
Do the math again replacing two of the $392 sales calls with five marketing contacts
at $30 each for the prospecting and qualifying steps. The result? You've invested
only $150 to complete the first two steps that otherwise would have cost you $784
with in-person sales calls.
Wait, There's More
The research I referenced earlier also showed that the average salesperson spent
less than a fifth of his or her time meeting with new prospects. This works out
to be approximately one day of every business week. When you consider vacations
and other time off, that works out to less than 50 days of new business development
How many prospects do you think your salespeople can visit during a given day?
Unless their territory is limited to the immediate neighborhood, I'd say they'll
probably be able to schedule a maximum of four meetings a day. Add these numbers
up and you'll find that your average salesperson can complete 200 in-person sales
visits a year at most (50 days multiplied by four visits).
Divide the 200 visits by 5.1 (the average number of in-person sales calls required
to close a sale, as mentioned earlier), and you'll find that if they close 100
percent of the sales to prospects they visit, they'll close a maximum of 40 sales
a year. However, my experience says that the average close rates for Microsoft
partners are closer to 20 percent to 30 percent, meaning average salespeople will
only close between eight and 12 sales from their 200 in-person sales calls!
How much more productive would they be if they only had to make an average of
three sales visits to close a qualified prospect that was generated for them by
marketing? The answer is 40 percent more productive at closing sales.
So instead of adding more salespeople to knock on more doors, use marketing
to cost-effectively contact your prospects and fill the sales pipeline with
qualified leads. Doing so will result in more sales-ready opportunities that
your salespeople can turn into new business, meaning greater sales revenue and
profits for your company.
M.H. "Mac" McIntosh has been providing marketing and sales consulting services for Microsoft and many of its partners for more than seven years. More than 1,000 Microsoft Partners across the United States and Canada have attended his Marketing Boot Camps and Marketing for Leads (tm) live and Web seminars. You can contact Mac via www.sales-lead-experts.com.