| Imagine this situation. You are competing against two | | | | the Real Cost Calculator to determine your real |
| other firms for the same piece of business. One firm is | | | | exposure) |
| the 900-pound guerrilla in your market and the other is | | | | Let's look at a salesperson with a $40,000 base salary |
| a competitor of about the same size. You have the | | | | and an annual quota of $500,000. Salary and benefits |
| best technology, the big company has the most | | | | for six months cost $27,000. It cost you $5,000 to |
| market share and brand recognition and the third | | | | recruit the person. You spent $3000 on training classes |
| competitor has the lowest price. Who gets the | | | | and materials. And those are just the hard dollar costs. |
| business? | | | | Your soft costs begin with lost opportunity. If John had |
| The answer is extremely predictable. The company | | | | been successful, how much revenue would he have |
| that gets the business is the one with the best | | | | generated? You have to add 50% of your annual |
| salespeople. Good salespeople win more deals | | | | quota to the total for lost opportunity. (Cost $250,000) |
| regardless of the circumstances. Are you going to win | | | | How about your time? Would you have been more |
| the next time you find yourself in this position? | | | | productive using your time working with someone who |
| The best opportunity you have to impact the | | | | was generating revenue? (Cost 15% of your annual |
| productivity of your organization is every time you | | | | compensation ($17,000) Make sure you add separation |
| make a hiring decision. Good hiring decisions propel you | | | | and administrative costs. (Cost = $3000) |
| to success. And, all the managing, coaching, systems, | | | | And the two real intangibles in this equation are |
| training and technology can NOT help you recover | | | | employee morale and customer cost. Your good |
| from a hiring mistake. | | | | employees resent having a non-performer on the |
| Over and over again we see examples of companies | | | | staff. It makes them look bad and they have to work |
| with inferior products, over-priced products and poor | | | | harder as a result. And, there is cost with your |
| reputations win the business. Why? Because they | | | | customers as well. They have to deal with a sub-par |
| have the best salespeople. If you can fix only one thing | | | | person, which can sour the relationship. (Cost: What is |
| in your company, upgrade your sales force and you | | | | the cost of one lost customer?) |
| have the best chance of succeeding. | | | | Your cost of one hiring mistake is roughly $305,000 |
| Most sales organizations suffer from the 80-20 rule. | | | | without counting the cost of low employee morale or |
| You get 80% of your revenue from 20% of your | | | | lost customers. And here is the really sad part, if you |
| salespeople. This applies to hiring as well. For years I | | | | do make this hiring mistake, you have to do it all over |
| have listened to sales managers talk about hiring five | | | | again doubling all the numbers! How does $610,000 for |
| and keeping one good person. This is a terrifically | | | | each hiring mistake sound? |
| costly way to do business. Let's translate some of the | | | | Now you can see why the "hire a bunch and keep a |
| costs so you can see just how much this flawed | | | | few" staffing strategy is a mistake. The good news is |
| strategy is costing. Here's an example: | | | | you are on your way to fixing the situation as we |
| You hire John to sell in your Seattle office. After a | | | | speak. The first step in upgrading your sales force is to |
| month it doesn't look good. After 90 days it is really | | | | recognize the problem. Next, you have to put a great |
| bad. At six months you give up and let John go. | | | | recruiting and hiring process in place that gives you the |
| This all too familiar scenario happens time and time | | | | highest probability of hiring top talent. |
| again. Unfortunately, you get lulled into believing that all | | | | A great way to get started is to invest in your |
| you lost was six months of salary and benefits. | | | | education. The more you know about recruiting and |
| Nothing could be further from the truth. In addition to | | | | hiring good sales people, the better chance you have |
| salary and benefits you lost six full months of sales | | | | of building a winning sales team. Reading books and |
| opportunities, management time, administrative costs | | | | attending workshops will help you expand your |
| and training costs. | | | | knowledge base. If you are not expanding your |
| And these are just the obvious costs. Some of the | | | | knowledge base, when you compete against |
| hidden costs you may not have considered are | | | | someone who is, the outcome is fairly certain. |
| vacancy costs, replacement costs, customer costs, | | | | Once you realize the economic impact on your |
| separation costs and employee morale costs. The final | | | | business, you're ready to take the steps necessary to |
| cost is loss of competitive edge. Just think of all the | | | | get on track. Recruiting and hiring top sales talent has |
| deals you lost because you were outsold. (Visit to use | | | | to be your top priority. |