Maximize Your Return on Sales Effort through Customer Focus

Maximizing your time in front of the right customers

Your time is one of your most valuable assets and more importantly one that is finite.  Whether you are selling to a national market or a more defined and limited geographic market, your challenges are the same and you must effectively plan where and how you allocate your time in the market place.  Effectively allocating your time among your customers and prospects will allow you to maximize your revenue and responsiveness to your most important customers.  Conversely, poor planning on how you spend your time or allowing your customers and prospects to determine how your time is spent can exhaust your valuable time resources and set precedents that will be hard to reverse.

Time and territory math

There are many books and courses on Time and Territory Management and most of them are essential for all sales folks to read and understand at some point in their careers.  But ultimately it comes down to this…..the adage “Time is Money” remains true. Time offers revenue realization and charges opportunity cost.

So what does this mean to you?

Ask yourself these questions:

What is the value of my time?  Let’s look at it from both the cost and revenue opportunity perspectives through a couple of examples.

Cost. Let’s keep the math simple and assume your annual income (just salary cost, add another 15% -20% for fringe) is $120,000.  That’s $10,000 per month, $500 per working day, and $62.50 per hour.

So what’s the cost of a sales call or customer visit?  At $62.50 per hour your face time is easy to value, but don’t forget planning, preparation, travel, and waiting time.  And include the buffer time before and after the call to ensure that you treat your client with respect by not showing up late or having to rush out of his office for your next appointment.  You get two meaningful calls into a typical day and you probably have done well.

Revenue. Based on your particular business, your annual sales revenue may vary greatly but the relationship between amount of customer time and sales transaction value will probably increase proportionally.  For illustration purposes and to probably track closely with the cost example above, let’s assume that your annual sales revenue is $2,400,000.  That means that you will need to produce $200,000 in revenue each month, $10,000 each day, and $1,250 per hour.

Maybe your cost is not that important to you, you’re probably not paying it, but every wasted hour or day of revenue opportunity doesn’t go away but instead gets added to tomorrow’s total.  Waste one day each week, and you will need to increase the numbers above by 20%.

Can this client or clients deliver x$ on an annual basis?  We have a process established to determine your cost and sales revenue needs.  We can now apply it to your market place.  In the simplest terms and based on the revenue example above,  you have to select a group of clients that can collectively provide $10,000 in revenue each month.  Some may be greater, some may be less, but in order to reach your revenue goal, they have to add up to $10,000 each month.  You can front load, back load, or allocate the number any way you wish but the underlying math will not change.  If the numbers don’t add up to the desired goal, you have a problem and you will need to make adjustments to your customer/ prospect portfolio.

Can I afford to give this client x% of my time?  If you have a customer portfolio that delivers the revenue that you need, good for you.  You are set for today.  Tomorrow, you will likely need to reassess you situation and plan for the inevitable request from sales management for you to grow your revenue base.

If your customer portfolio does not deliver the revenue you need, you will need to reevaluate that portfolio, today.  Now, it is easy to say that if your portfolio is short on revenue you can simply add a customer/prospect or two.  But we have already established that your time is finite.  Whether you have exhausted your sales cycles or have additional cycles available, you need to look at each customer and determine whether or not their revenue return justifies the percentage of time you give them each week.

If we assume that you currently have five customers (this number is not random and will be discussed below) and each provides an equal revenue base, we can hope that each also takes an equal amount of time and ideally you have some left over to do new customer pursuits.  But we know that all customers do not take the same amount of your time and it varies for many reasons including: maturity, current needs, and relationships / expectations.  The real problem presents itself when a customer or customers consumes a disproportionate amount of your time for the revenue or opportunity that they return.

Most experienced sales folks can actively manage roughly five active customers at any given time. Certainly there are exceptions to this estimate.  You can adjust based on your specific situation and capabilities, but again the goal is to maximize the return from each of your customers by giving them the appropriate amount of your valuable time and getting the greatest amount of business opportunity and return from your time spent.  Too many customers and you will be stretched too thinly.  Not enough customers and you could be famous for you attentiveness but never achieve your revenue numbers.

Maximize you returns – Plan and allocate your time with a focus strategy

If you are in the valued added business or said another way not looking for transaction volume but transaction quality, you are most certainly interested in providing the greatest possible service and value  to each of your clients.  Your value to your customers will be often be measured by the time and effort that you spend helping them solve their problems through your products and services.  The effort can be time-consuming and can easily eat up much of you productive sales time.

Recognizing that you cannot serve your entire territory equally,

1) Construct a list of your Active Clients, Developing Prospects, and Desired (but undeveloped) Targets in your market or territory.

2) Rank all active clients that are currently producing revenue or are expected to produce revenue in the near-term by current or expected (realistic) run-rate for the next two quarters (or a year if your business cycle is longer).  Calculate each client’s revenue as a percentage of your total revenue for the same period.

3) Estimate the percentage of you time you spend with the clients identified in #2 and compare this with their percentage of revenue contribution.  Note any gross mismatches in time and revenue and any unusual circumstances.  You will need to eventually evaluate Active Clients whose demand for you time far outweighs their return.  Addressing this difficult issue with clients is always challenging but most understand that if you cannot deliver the service and remain in business (or employed), the issue will inevitably need to be addressed.

3) Rank your top 10 to 15 developing prospects, in a similar fashion as #2.  These developing prospects are currently only getting that portion of your time that you have alloted to new prospect development and are waiting in the wings for their business cases or interest to be compelling enough to bump your lower ranking active clients down or to move up when one of your active client’s business declines.  These are the potential customers where you would be spending you time, if you had unlimited time.

4) Construct a desired target list that encompasses the rest of your market or territory who could buy your products and services but have yet to be developed.  These are the companies that you will keep your eye on, gather market intelligence, foster relationships for the future but spend little time on, as they have minimal chance to impact revenue in the coming periods.  The desired target list will move to the developing prospect list as their business needs change or develop and your relationship with the key stakeholders develops.

This simple stratification of your territory by sales potential and return on sales investment will allow you to focus your efforts on a rolling and periodic basis using a logical and easy-to-maintain process.  You’ll probably sleep better at night, too, knowing that you are spending your time most effectively and not trying to serve more customers than your time permits.

Revisit your plan periodically

Once each month or quarter (or more frequently if needed), review your tiered list of active clients, developing prospects, and desired targets.  Demote those active customers whose business has waned or is taking proportionally too much time, promote those developing customers who have the potential to consume more of your products and services, and increase your attention to members of the desired target list as their business needs or relationship with you grow, or your offerings better match their needs.

Over time, you will find that you are better serving your most important customers, more efficiently growing your customer portfolio, and most importantly maximizing the return on your sales efforts.

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About Tod Kerr

Tod is a senior corporate leader with 20 years of experience managing business operations in numerous functional areas, with a focus on developing and marketing business to business technology solutions to world-wide high tech markets that allow customers to operate their business more efficiently by driving out costs, improving productivity, and creating value for their clients.
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