How Many Education Salespeople Do You Really Need?
Precisely as many as the market opportunity can support.
OK, but short of hiring to the point of diminishing returns, how do you decide how big the opportunity is? Heres a simple approach weve found that works:
A. Begin with the minimum annual dollar volume an account must offer to justify field sales attention, say $40,000;
B. Then divide by the average spending per individual trained (this is a people business, right?). Lets say for your sort of training that comes to $400. So $40,000 divided by $400 is 100. So an account (or site) needs 100 individuals who require the sort of training you offer in order to justify field sales attention;
C. Lets say you can identify 2000 sites with a population of 100 or more in the job function you serve. Now you need to eliminate sites that dont qualify as part of your served market. For instance, if youre selling high-ticket sales training, you might want to knock out SICs having to do with retailing, basic industry SICs that sell through distributors and the non-profits. Then you might want to eliminate all non-headquarters sites (if headquarters are where the decisionmakers are). Whoops, now youre down to 200 sites;
D. Now you need to multiply the number of sites by the number of sales calls required to adequately address the opportunity they offer. Youll want to segment the opportunity here, "awarding" more sales calls to sites with larger potential. You may also want to budget more calls to sites you already do business with. Lets say you wind up with a total requirement of 2000 face-to-face sales calls thats an average of 10 per qualified site. (You may also want to budget for phone contacts but lets keep things simple.);
E. Now you simply divide the total sales calls required by how many calls your typical salesperson can realistically make. Lets assume thats 150 calls per year, or an average of about 3 per week. (Be sure and reflect the time your salespeople spend in non face-to-face activities like account planning and reporting, supervision of custom development projects, delivery quality assurance and personal development);
F. Dividing the 2000 sales calls you require by an average of 150 calls per salesperson works out to 13.3 salespeople. So if you have six salespeople, you can probably afford to add a few. And if you have 15 salespeople then you need to be looking at how to increase the size of the opportunity, not the size of your sales organization;
So how do you handle sales call budgeting if you sell customer education through systems or software reps? And what sort of approach should you use if your sales team includes telesellers? And how can you grow education sales revenue if adding more salespeople isnt warranted? Well address all of these topics and more in future issues.