Sales Energy Audits: How to Increase Revenue by Shifting Your Sales-Energy Use
Twenty years ago, the connection between energy efficiency and environmental benefits was poorly understood by the general population. Today, nearly everyone agrees that it’s important to save energy. Business owners and corporations are stepping up their efforts as well, recognizing that saving energy adds to the bottom line. And that last sentence is a bit of an under-statement.
But there is another way that businesses can benefit by improving its use of energy. In this case, I’m referring to its use of Sales Energy. Each salesperson has a limited amount of sales energy (or sales capacity) to use throughout the year. Tallying up the sales capacity for your team or entire organization will give you your over-all sales capacity. As a rule-of-thumb, we estimate there are 215 selling days totaling 1720 hours per rep.
Here is the important take-away: You maximize revenue when you optimize the use of that limited capacity. Learning how reps use their sales capacity is not much different from conducting an energy audit in your home. Home energy auditors take a look at a number of factors such as the orientation of your home to the sun and the type of windows and insulation. They can estimate the energy wastes and tell you what to do to conserve and lower your energy bill.
To make sure you’re getting optimal use of Sales Energy, you’ll want to conduct a Sales Energy Audit. The end-goal is to reduce the energy waste (sales capacity spent on non-selling tasks) and increase the output of your use of energy (revenue).
The first step in a Sales Energy Audit is to assess the amount—and use of—energy used during each stage in the sales cycle and for administrative/operational tasks.
|Administrative Tasks||Converting Leads||Converting Prospects||Closing Deals|
The easiest method is for you as the Sales Manager to make your best guess at the total number of hours, or the percentage of time, spent on the highlighted tasks (talking with prospects) and the total spent on the non-highlighted tasks (everything else). A more comprehensive audit would include interviewing reps. If you were to ask them, you’d likely find that salespeople will report-back a far different estimate. It can get complicated. That’s why, as with home energy audits, it’s useful to have an outside company like Smart Selling Tools perform the evaluation.
Research has shown that on average 35% of a Sales Rep’s time is spent selling, remanding the bulk of their time—65%—to other activities. Where it gets interesting is when you calculate the potential increase in revenue made possible by a slight shift in those percentages. According to our Sales Efficiency Principle, a small shift of time-use results in a significantly higher percentage gain in revenue.
An organization with 100M in sales should generate 28M in incremental revenue by increasing their time spent with prospects from 35% to 45%.
Admittedly, simply spending greater sales energy on meeting with prospects is not enough to catapult revenue if other factors don’t remain the same. This is an “all things being equal” proposition. Changing underlying variables such as a declining”quality of prospects” will keep you from recognizing the full benefits of your sales energy optimization efforts. The same holds true in the case of home energy projects. It won’t matter if you install double-pane, Low-e, windows if you leave them open when the air conditioner is running.
The challenge for sales organizations is to realize that sales capacity is limited. There are a finite number of days and hours in a sales year. A close examination of sales capacity utilization will tell you whether you’re getting the highest amount of output possible from your use of sales energy.
Author, Nancy Nardin is the foremost expert in sales productivity tools. As President of Smart Selling Tools, she consults with many of the top sales productivity software vendors as well as end-user organizations looking to select the right tools. Click to get Nancy’s What & When weekly digest with invitations to complimentary webinars and informative publications. Follow Nancy on Twitter @sellingtools or subscribe to her Tool Talk blog. Nancy can be reached at 916-596-3035. To schedule a free 30 minute consultation click here.