Printing salespeople are generally very familiar with how much they get paid to successfully sell a variety of printing jobs. However, it is rare to find salespeople that calculate how much time, effort and compensation they lose by not making a sale.
Time is a scarce resource for
salespeople. It is easy to get distracted by sales that do not pay out in the long run. Knowing where to go and how to spend your time to get the best ROI is
a critical factor in the success of any printing salesperson.
What Is ‘Opportunity Cost’?
“Opportunity cost” is a term commonly used in economics that means the cost of an opportunity given up, or the value of the next best alternative forgone as the result of making a decision. Though it is a concept most used by printing company owners and general managers, it is a critical concept for salespeople to master as well. Salespeople’s time, energy and their company’s support capabilities are both limited and scarce resources.
For instance if a salesperson decides to spend their time attempting to sell a one-time, $5,000, price sensitive print job, the opportunity cost to the salesperson is time and effort that they would have exerted on another high value sales opportunity instead. In spending all their time on the one-time job, the opportunity the sales person may have given up may have resulted in a much higher monetary return and/or customer satisfaction, bringing the salesperson more business in the future.
In addition, spending time on expanding the business with a current customer, or prospecting for new customers to sell a higher value traditional direct mail campaign may have a much lower opportunity cost than pursuing a one-time commodity print sale.
Understanding opportunity costs and the impact they have on sales performance is a skill that, for most of us, does not come naturally. But managing these costs can be the difference between mediocre and high sales performance.
To make matters worse, an occupational hazard for salespeople is acting on hope and wishes versus reality. Many salespeople have difficulty walking away from any perceived opportunity, and feel an irresistible attraction to a short and a quick sale.
Sales training experts and consultants have, over the years, made many sophisticated studies of account prioritization. Simply stated, there are two important values; first, the sizes of the expected amount of business involved; and second, the degree of difficulty in securing the order. Ask yourself, if you had a choice of pursuing two sales situations: one would provide $5,000 worth of business, and your chance of closing was 80 percent; the second order would result in $50,000 worth of business but had a success potential of 30 percent. Which would draw your attention first?
I would prefer closing both, but if I had to prioritize I would put the second account ahead of the first. My reasoning is simple, 30 percent of $50,000 is more than 2.5 times the sales volume of 80 percent of $5,000. Big accounts with big order potential are sometimes complicated and can break your heart. But when they come through, you’ve done it. The secret is to keep the potential order funnel so full that, when you lose an order, you simply replace that prospect with another.
Learning When To Walk Away Is Key
When working with new salespeople, we often find that it is not their skill or knowledge holding them back from being a top-seller. They are simply spending time on the wrong opportunities.
I have found it is not very hard to get salespeople to sell new printing products and services. I find it much harder to get salespeople to stop selling solutions they are comfortable with, but yield poor returns for their effort. From a sales person’s point of view, how I should spend the next hour of my time can be determined by answering three questions:
- When do I go forward?
- When do I say no?
- When do I quit?