USE MARKETING TO BUILD YOUR BUSINESS FOR LESS
Lower cost-per-touch tactics pay dividends
Most of the profitable, fast-growing companies I know don’t rely solely on the folks in sales to generate new business. Instead, these successful companies use a marketing-driven sales approach to get more sales for less.
They leverage lower cost-per-touch, one-to-many marketing tactics to address the front end of the sales pipeline: prospecting and nurturing their prospects until they are qualified as sales-ready leads.
Then they focus their more costly one-to-one touches by salespeople on the later steps of the prospects’ buying process: the heavy lifting of doing demos, crafting proposals and closing sales.
Do the math
Research on the cost of sales calls by Cahners and Reed Publishing companies found that the average cost of a Business-to-Business sales call in 2013 was over $518 (This is the most recent research I could find on the subject, so the cost of a sales call is probably much 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 under $2,650.
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 e-mail, direct mail, telemarketing and pay-per-click advertising.
Do the math again, replacing two of the $518 sales calls with 12 marketing touches at as much as $15 each for the prospecting, nurturing and qualifying steps. The result? You’ve invested only $180 to complete the first 3 sales steps that otherwise would have cost you $1,554 with in-person sales calls. And the total cost per sale goes down to under $1,300—a nearly 50% reduction.
Wait, there’s more…
The same research showed that the average salesperson spent less than a fifth of his or her time meeting with new prospects. (The rest of salespeople’s time is used for things like sales meetings, training, paperwork, travel, writing proposals, entering orders and problem-solving for existing clients.)
This works out to be only one day of every business week for meeting with new prospects. When you consider vacations and other time off, that’s 50 days or less for new business development in a year!
How many prospects do you think your salespeople can visit per day? Unless their territory is limited to the immediate neighborhood, I’d say they’ll be able to schedule a maximum of six in-person sales calls a day, or 300 in a year (six per day times 50 days).
Divide those 300 visits by five (the average number of sales calls required to close a sale), and you’ll find that if your salespeople close 100 percent of the sales to prospects they visit, they’ll close a maximum of 60 sales a year. However, my experience says that average B2B close rates are closer to 30 percent, meaning that the average salesperson will only close around 18 sales a year!
How much more productive would those same salespeople be if they had to make an average of only three sales visits to close a qualified prospect that was generated for them by marketing? The answer is 70 percent more productive, allowing them to close 30 sales instead of only 18.
A marketing-driven approach to B2B sales makes dollars and sense.
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 more sales, revenue and profits for your company.