How to Take a Major Hidden Cost Out of Your Sales Operations

In this post I’m going to talk about a particular hidden cost that can be quite significant and applies equally across all types of sales channels, from outbound desk and field sales to account management.

This hidden cost manifests itself in the form of a reluctance of sales staff to pick up the telephone and call somebody who they don’t know to build a relationship and gain some commitment.

I have seen this apply to desk-based agents as much as it does to a Global Account Sales Director, where the opportunity costs of each call that is not made are significant. I have even heard some very ‘experienced’ sales people openly brag that they can’t remember the last time they made such a ‘cold’ call. They considered this type of sales activity to be beneath them.

Now, if you consider that the life blood of any company is winning new business, how many opportunities to grow the customer base are lost by a reluctance to make a call to a potential new customer?

With complex and changing decision making processes in large accounts, even a Global Account Director who manages a single strategic account needs to act upon a referral with a large account.

They need to proactively contact a contemporary of their existing contact within another division or department, in order to introduce themselves, build a relationship, gain some commitment to a first business meeting and open up new opportunities to deliver future growth.

To begin addressing this important issue of ‘lost opportunity’, when training delegates, I like to spend significant time getting them to answer for themselves why they don’t like to make these calls. After a considerable discussion about the causal factors behind this behaviour and digging deeper into their underlying reasons, we always arrive at the same reason. That reason is ‘the fear of rejection’.

The fear of rejection is the universal, common reason why people don’t pick up the phone. We wrongly anticipate that we may get some form of rejection. At the heart of the matter is that we are all primarily driven by emotion rather than logic, and one of the most powerful emotional drivers in all of us is ‘the avoidance of pain’.

So, as we anticipate that a cold call could result in pain due to rejection, sales people find every possible excuse to avoid it. They send another email, process some paperwork, make another drink, or write a report. Anything rather than pick up the telephone.

So how significant is this hidden cost?

Well, in the past I have worked with call centres to introduce call recording devices. Once installed, the sales managers at these centres have found that the recorded outbound talk time was less than one hour a day – and this was not an isolated occurrence.

On the basis of a 7.5 hour working day, this infers that just 13% of the working day was spent actively progressing new business.

Let’s assume that the total cost of a sales agent (including all of the direct costs, such as wages, National Insurances contributions and bonuses, as well as the indirect costs, such as rent, rates, utilities, IT costs) is around £18,000 per annum (pa).

This means that the unproductive time spent by an agent who is not making outbound calls represents a cost of some £15,660 per annum. This is a huge hidden cost that many businesses simply overlook.

These figures are only indicative. However, the serious point remains that, given the right corrective action, there is a significant upside to be achieved from increasing the amount of time that sales staff spend actively progressing new business.

At Sterling Chase, our proven PACE (Process, Attitude, Competencies, Execution) sales transformation model has helped many companies to achieve and, more importantly, sustain a step improvement in sales and cost effectiveness.

This model is predicated on not only transforming the sales person, but also (and most importantly) transforming the sales management team’s effectiveness. In particular, the model encourages first line managers to understand the situational needs of their team so that they know when to lead, when to manage and when to coach their people to achieve a sustained improvement in performance in terms of: Process (techniques, methodologies and structure); Attitude (motivation, confidence and courage); Competencies (ability, skills and behaviours); and Execution (energy and focus in driving the interactions, relationships and campaigns forward to deliver and exceed individual and targets).

I would love to hear back from you about your own experiences of these hidden costs in your sales function. Feel free to leave a comment below.

Written by: Adrian Atwood, Client Development Director at Sterling Chase