Sales Advocate Newsletter
Managing the Sales and Marketing Budget for Maximum Results in Today’s Economy
November 2001
Many of our clients have asked us what to about their sales and marketing budgets in these times of decreased revenues. Obviously, cost-cutting measures are in order. Now that fewer customers are buying, is it a good time to cut off sales and marketing programs and wait it out?
Rather than obliterate your sale and marketing budgets, we adamantly urge you to use this time to re-examine your sales strategies and operations and adjust them to meet today’ needs.
Decrease costs and increase sales productivity with less expensive sales headcount.
If you are forced to lay off a portion of your sales staff, or if you need to dramatically increase the results of existing staff, consider keeping, or hiring, lower-cost sales employees to keep your pipeline-building and lead qualification activities going. These lead development reps, using the phone and Internet to communicate with customers, will leverage the time of your more experienced and expensive “closers”. Plus, they are specifically trained and given incentives to perform these critical “early sales cycle” activities. Without a healthy stable of leads, your revenue results will suffer, not only in this fiscal quarter, but also in Q1 and Q2 of next year.
Our clients who implement pipeline-building or sales development programs typically see the following results:
- Sales pipeline tripled
- Sales cycle decreased
- Sales expense as % of revenue decreased by 8-20%
- New sales rep productivity increased by 50%
- Field sales team quotas increased
- Several million dollars added to the bottom line within the first year
Here’ a summary of the kind of numbers you can expect to see before and after implementing a sales development or pipeline-building function, based on a field sales organization of 10 representatives and an sales development team of three.
| Impact of Pipeline Building | ||
| Before | After | |
| Field Sales Salary and benefits | $3,000,000 | $3,000,000 |
| Sales Development Salary & Benefits | 0 | $330,000 |
| Sales Development Mgr. Sal/Benefits | 0 | $182,000 |
| Additional Phone, tools, systems | 0 | $40000 |
| Field Facilities | $240,000 | $240,000 |
| Travel expenses | $360,000 | $360,000 |
| Average deal size | $50,000 | $50,000 |
| Sales cycle | 6 months | 3-6 months |
| Field sales rep quota | $15,000,000 | $20,000,000 |
| Total sales expense | $3,600,000 | $4,152,000 |
| Sales expense as % of revenue | 24% | 20% |
| Money added to the bottom line! | $4,448,000 | |
Now is an ideal time to reassess your sales approach and restructure your sales organization for maximum results and decreased costs. Use this end-of-year planning time to reposition your company to generate respectable sales results in the year 2002.
This newsletter is provided as a complimentary service from Phone Works, Inc., the San Francisco Bay Area’ leading sales consulting firm. Phone Works helps technology firms increase revenue, shorten sales cycles and implement successful, repeatable sales models. The industry’ largest technology companies and newest start-ups turn to Phone Works for lead-generation, lead-qualification, telesales and sales-productivity programs.
You can reach Phone Works at 510.749.9073.
