5 Reasons "Cost of A Sales Call" Doesn't Measure Sales Efficiency
Posted by Jim Kasper on Wed, Aug 19, 2009 @ 03:53 PM
Why "Cost of A Sales Call" Won't Work
Much discussion has taken place on blogs, social media sites, and boardrooms on the actual importance of measuring the cost of a sales call and sales efficiency. From the discussions that I have participated in, the most significant points of contention have been:
- Differing opinions as to the definition of a true sales call (f2f or a telephone conference)
- The varying formulas involved in calculating costs (many do include cost items like worker's compensation or interdepartmental overhead charges)
- Inclusion of such items as lost opportunity costs (no one seems to be able to clearly specify what these are or how to calculate them)
- The impact of erroneous reporting on calculating the mean cost of a sales call
- Tying the cost of a sales call into the concept of sales efficiency
Unique Formulas Present A Barrier
Every company seems to have a unique way of calculating its own cost of a sales call. For internal measure purposes, this may seem quite adequate. However, unique formulas do present a barrier to creating industry wide best practices thereby affording companies a true comparison to their own efficiencies against their competitive peers.
The "Sales Efficiency Index" Is A Better Method
The "sales efficiency index" (SEI) is a much better way and more meaningful method of ranking the sales efficiency of your individual sales reps and sales regions. It provides a uniform measure within industries for individual competitors to assess their performance against others. It totally eliminates:
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Need to define sales call
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Erroneous sales call reporting
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Impact of lost opportunity costs
SEI Is A Universal Formula Based on Good Accounting Practices
Sales efficiency indices are calculated using a universal formula that focuses on good accounting practices to determine true ROI. SEI is a indicator with which you can stack rank your sales team by efficiency. Also, SEI should be at the top of your dashboard on your CRM reporting tool.
Photo Credit: Hribar
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