Thursday, July 24, 2014

How to Measure the Effectiveness of Full-Time Salespeople

by David Burstein, P.E.

Account executives, account reps, BD reps. Regardless of what you call them, they are essentially full-time salespeople—and they’re very expensive. 

How expensive? When you add up their salary, fringe benefits, admin support, travel costs and—most costly of all—the time of your technical people to write the proposals for the leads they find, it totals around $300,000 per year or more. If your firm’s average profits are 10 percent of gross revenue, that means each salesperson must find leads that generate $3 million per year—just to pay their additional overhead costs.

But can a full-time salesperson realistically bring in over $3 million per year in additional work? In very large firms, the answer is definitely yes. But in medium-size firms, the projects generally aren’t large enough to accomplish that goal.

Want a better way to measure the effectiveness of full-time salespeople? Base the success of these professionals on their ability to:

1. Identify and hook strategic clients. Each year, have each salesperson develop a list of “strategic clients” to pursue. Strategic clients should have a lifetime value of several million dollars or more. Measure success based on how many of these strategic clients he/she brings in—regardless of the value of the initial assignment.

2. Maintain the relationships. Salespeople should actively work to maintain their relationships with those strategic clients and be on the lookout for additional sales opportunities. Their success can be measured by dollars of sales booked during the year.

This way, each salesperson has two measurable goals—how many new strategic clients they land and how much additional sales are secured from strategic clients secured in previous years.

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