The High Cost of Poorly Qualified Sales Opportunities

dollarsignweathervaneAs the awareness of social networking’s power grows, questions inevitably arise about how to use social media to increase sales.

It is a great question that I am asked often. The decision about which technology to use will vary from company to company. After all, each business will have their own specific set of objectives that they want to accomplish. But it seems to me that the question people really want answered is “can you” make money using social media? My answer is yes. And, it doesn’t happen overnight.

From experience I know that the blending of social networking tools like LinkedIn into a well thought out sales strategy has huge benefits for increasing revenue. Using the telephone and email doesn’t go away, but when you use social networking tools effectively, you can speed up the sales cycle.

Getting Started

Before embarking down the social media path, it first starts with getting clear about three things:

  • Purpose
  • Platform
  • Plan

You need to clarify these three things or your results will be lackluster at best. This is also an ideal time to assess what’s really working in your sales organization and what’s not. Technology is merely an enabler. The use of social media will not “fix” a sales process that is broken. It won’t do you much good if your people are not right for the role, or they lack the proper training to do their job.

Right now, people are curious to learn more about social media and they should. At the same time, I see many people taking a short-term, shot gun approach, because they are too focused on the “point and click” aspects of tools like LinkedIn and Twitter. In large part, they are not making time to ask the questions I’ve suggested. If you want to succeed with your online efforts – make the time!

An Opportunity for Driving Sales

Social networking tools like LinkedIn can and do play a huge role in the first few critical phases of the sales process: investigate and early qualify.

A rep’s ability to quickly identify, qualify and focus on the “right” opportunities remains a big challenge in most sales organizations for lots of reasons that can be discussed in another post. Why focus attention on the problem? In a word – dollars! It is very expensive. Many sales managers often don’t know what an “hour of selling” actually costs them. They know that money and time is wasted with their people chasing down phantom opportunities, but they don’t know exactly how much.

Rick McPartlin, President of The Revenue Game gave an example of the size of the problem at a recent conference I attended. Let’s say that you have a sales person with a $1,000,000 quota. After salary, commission, benefits, etc., the cost for your rep is $150,000 annually. Assuming 2400 hrs of annual sales time, your cost per sales hour is $62.50. That probably doesn’t sound so bad does it? It wouldn’t be if your rep was actually selling all 50 hrs each week.

How much time do you think your people actually spend doing their job? Consider the real hours spent “selling”, which for an average company with a decent strategy and pretty good business alignment; you may be getting 5 actual sales hours out of your people each week. At 5 hours a week, your $150,000 sales rep costs you $625 per hour, which means you need to generate slightly more than $4,100 of revenue per hour if you hope to reach your annual target.


What would it be worth to you if social networking used correctly could significantly shrink wasted money and time on the front end of the sales process?

By the way…

You should probably evaluate very carefully how much time is actually spent on the act of selling. Anything else means time is being spent on non-revenue producing activities and you should strip away anything getting in the way of sales people selling. And that’s a discussion for another day.


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