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Two Hours to More Sales, More Profit
February 07, 2008
Watson Wyatt's latest study highlights the differentiators between low and high performing sales forces
By Stacy Straczynski
Did you ever wonder whether your sales team would be more successful if they weren’t wasting time with non-selling duties? If so, you're overwhelmingly correct. A new study from Watson Wyatt found that shifting as little as two hours of your reps' valuable time back to selling each week could result in millions of dollars gained.
Watson Wyatt released the results of its "2008 Report on Sales Effectiveness and Compensation" last month with results that would shock any manager into adopting more efficient team practices. The report, which surveyed 800 salespeople from about 500 large companies (defined as those organizations with 2,000-plus employees or large scale sales forces), set out to build upon the 2007 study’s findings, which focused on the differentiating characteristics between high and low performing sales forces and how—and with whom—the reps spent their time.
The report's key findings are of particular note to sales managers. It was found that when companies restructure salespersons' responsibilities from administrative functions to focus more on selling tasks—even as little as two hours per week—it could mean a potential increase of millions of dollars in additional sales. Additionally, sales forces with clearly defined roles, properly allocated time and proper guidance when seeking new prospects could gain up to an additional $700 million in revenue.
"I think there are two major themes in this study. The first, if sales could shift as little as two hours to more productive acts a week—working smarter—it would equal millions for them and billions for their companies," says John Bremen, global practice director, sales effectiveness and compensation for Watson Wyatt Worldwide. "The second is making sure that sales people have the administrative technology to help with these [non-selling] activities and the compensation to support that."
Expanding upon these themes, the survey found that top performing sales persons—as opposed to their colleagues—characteristically:
• Spend about 200 hours more annually on selling activities, spending 63 percent more time with qualified leads and 61 percent more time closing deals.
• Communicate with clients in person and spend 62 percent more time entertaining and cultivating those relationships.
• Spend 35 percent less time writing proposals.
• Adjust their activities to their company’s business cycle, spending more than twice the amount of time with qualified leads during high-growth periods, and focusing on customer renewals during slower periods.
The report then goes further to break down a sales rep's typical activities—lead generation, travel, current relations—to show their potential/lost value per hour. For example, the average value-per-hour of seeking qualified leads is reported as $1,025. Top performers typically dedicate 288 hours annually to lead generation, while average and low performers clock-in at 177 hours. The difference (111 hours) comes to a potential loss of about $114-thousand dollars in sales.
Another major find to note is that companies who utilize variable pay typically improve results and sales success.
The study found that high performing sales reps:
• Are 45 percent more likely to be measured on total sales from new accounts and almost three times more likely to be measured on revenue from new products or services.
• Earn 46 percent more sales-related variable pay. This accounts for almost 90 percent of the pay gap between high and low performing reps.
"While financial incentives are an important part of driving sales growth, the key to long-term success is freeing up salespeople to develop and build customer relationships," said Craig Ulrich, North America East Division practice leader for sales effectiveness and compensation at Watson Wyatt. "Companies that take steps to implement the right sales structure and design compensation plan incentives to focus on the highest-value activities can expect to increase sales and profitability."
Readers can find more information on the report by visiting the Watson Wyatt Worldwide Web site at www.watsonwyatt.com/saleseffectiveness.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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