How to make more profit by calling on LESS Stores

Today, I’m going to expose a common sales management mistake that prevents you from getting the most money out of your accounts.

1 simple mindset shift to make more money this year

In the last blog post, I talked about the importance of extracting the most money out of every account you manage.

Even though you have to optimize sales revenues for ALL your accounts, you have to be careful because you may not get the same return on investment from each one of them.

Actually, spending too much time and effort on some accounts may actually be counterproductive.  You may spend important sums of money on doing unproductive work for those stores.

There’s a saying that says that 80% of your profit will come from 20% of your accounts and that is exactly what I want to talk about today.

NEVER fish in an empty pond

You need to figure out where to spend most of your efforts when it comes to optimizing your sales revenues.  I’m talking about getting to where the real money is.

Some stores may be too small for you to warrant your sales reps undivided attention.  Nurturing the relationships you have with all your clients is important, but some of them may not have enough gross sales to have your sales reps spend countless hours inside their stores.

How to prioritize your efforts for maximum ROI

Let’s pretend that you made a list of 10 tasks that needs to be completed in order to improve the sales performance in a store.

Out of those 10 points, 4 of them are the most critical to work on and 6 are things that are nice to have when you want to make most money out of a store.

What you should do first is start by grading your accounts based on potential value.  Once this is done, you can then put your focus on your top 20% accounts.  In those big stores, you should aim to have all 10 tasks done at some point.  Why?  Because it is the most profitable thing to do for your business.

For the other accounts, you can afford to only do 2 or 3 of those things.  You would just need to focus on the easiest and most important things to implement and that’s it!

If you try to do the 10 tasks in every category for every account, you will spread yourself too thin and waste a lot of time and money investing in the wrong places.

1 simple trick to get your laziest sales reps to make you more money while they work even less

What we found out by studying what most sales reps do, they tend to be… I guess lazy.  I know I shouldn’t say lazy…  It’s more what we could be consider as “efficient”.

For example, let’s say a sales rep go to a suburb and there’s 10 stores that need to be called on in that area.   If they go to that area 20 times a year, they usually call on ALL 10 stores every time they go, which is a bad practice.

Yes… it’s good in the sense that it’s efficient for your gas mileage and it’s good that they’re not driving around all day from one end of the territory to another to do their sales calls…

The real reason why this is a bad practice is because your sales reps are treating every store equally and they’re not created equal!  What you should do is have your sales reps go to the most important stores every time he’s in that suburb, but only go every few weeks to the lower grade stores.

By doing that, you will still be covering all your accounts, but you will be the most effective in getting the best return on investment possible.

How to get the best ROI for your reps this year

Every time a sales rep goes into a store, he’s going to do his best to get the most return on investment possible.  There’s a list of metrics to nail down in order to have a fully optimized store.  That is what most sales managers would call setting the “gold standard”.

Here’s the thing though: there’s not enough time in a year to check off all of those things in all your smaller accounts.

On the flipside, you have to make sure that all those things get done EVENTUALLY in the big stores because you’re looking to extract the most money out of your best accounts.

“Don’t I lose on the relationship if I don’t call as often?”

The answer is… both “yes” and “no”.  You will lose on the relationship for some of your clients, but if those stores don’t really have the potential for more sales, they may not need as much attention as you’re currently giving them… as harsh as it sounds.

To flip that around, it’s more important that you get a really good relationship with the accounts that really matter because that’s where the money is.

To get the best relationships with those big stores, you have to be bring a lot of value to the table.  You have to provide them a lot in term of good and valuable information from your sales reps.  You want them to educate the top stores about your marketing best practices, because it will create more wealth money for everyone.

In essence, you almost want to over-service the good guys because they’re the ones where you have the biggest potential for sales growth.

You lose 250$ on every non-warranted call

If your sales reps go to a suburbs and call on all the stores equally… it’s the most efficient way to cover their territory for sure… but it is far from the most effective way.

While being efficient is important, what’s even more important is being effective.  Being effective means you have to call on the stores with the most potential because that will give you the most return on investment.

Here are some numbers to explain this:

  • Time is limited. There’s 365 days in a year.
  • Once you take the week-ends out, that’s 365 days – 110 days = 255 days.
  • Then your sales reps have 2 weeks holidays… a week worth of sick leave… an obligatory number of meetings to go, etc. = You’re down to about a 180 productive days.
  • Lastly, you’ve got the travel time involved to reach the customers. In term of face to face time that your sales reps can have with your customers… most sales reps are averaging between 6 and 12 calls a day.
  • On a full year, they’re going be able to do between 1000 to 2000 calls.

For a company, sales reps typically cost between 100 000$ and 200 000$.  If you’re doing a thousand calls and it’s costing you 100 000$, now you know that every call cost the company 100$ on average.

By the way, it’s a real underestimate.  The estimate is about 250$ a call when you add up everything.  So therefore, if you’re going to spend 250$ to get a sales rep to spend time in a store, you have to set your priorities straight.

You need to ask yourself: What am I getting from that 250$?

 

Get more done from less work

For your lower grade stores, you can afford to call them less often.  Instead of 20 times a year, you may want to call them 4 times a year.  If you call them 4 times a year, there is still enough things to do to get you back 250$ worth of value each time your sales rep visit the store.  You can have your sales reps work on the most critical goals to hit and that will get you the highest return on investment possible for those stores.

For your higher grade stores, you can bump it up and call them more often.  If they truly are in your top 20% and you’ve done your grading right… there’s easily enough tasks to be done to increase your revenue in those stores.

With your top 20%, you will notice that they usually make you 10 to 20 times more money than the small stores.  And if they’re not… then you need to be in there to make sure they will!

You have to understand that some of the small stores are not worth the time you’re currently investing in, while the big stores may need more effort to be put in.

2 must-have skills for a dominant presence in your marketplace

All of this is easy to understand, but difficult to put into place.

You need the ability to do 2 things:

  • Being able to grade your stores correctly
  • Setting a call frequency metric against those stores.

For example, you could set a metric that says: “call on my a-grades every 2 weeks.”  Then, you have a metric in place that you can monitor for that store.

If later on some stores are not being called enough, then you will know and you will be able to address the issue with your sales reps.

How to be the sales manager that his sales reps love

As a sales manager, you have to set a standard for how things need to be done in your business.  With strong leadership, you will be able to guide your sales reps to focus on the most important things to grow your company.

The difference between “efficient” and “effective”

It’s really not about scolding your sales reps for “wasting company time”.  What it’s about is making your sales reps understand the difference between being efficient and being effective.

For example, a sales rep could drive to a shopping center, park his car, be there for 8 hours and do 10 calls.  In a sense, he had a very “efficient day”.

However, the sales rep could go to that same shopping center and do 2 calls.  Then, he hops back in his car, spends an hour driving to do 2 more calls for that day.

Even though he only did 4 calls on that day, he may have been more “effective” than that first sales rep because he focused on optimizing for the best stores and not to call on ALL the stores.

Once you become more effective, the results that your sales reps will bring in with be much bigger.  You’re maximizing the opportunities in the stores that really matter.

The balancing act of effectiveness VS efficiency

To be honest, you have to be both effective AND efficient.  It’s a juggling act really.

You still have to be as efficient as possible.  You wouldn’t want your reps to spend 80% of their time on the road and not in the stores.

It’s not just about being effective either: it’s about making the most effective actions efficiently.

How to be both efficient AND effective

If you’re not tracking how of often you’re calling on your stores… then it can get really hard to figure out how often your sales reps should call them.

Once you’ve worked the most efficient way to work your territory in the most effective manner, everything will be much easier to manage.  You will have created an efficient cycle that’s also very effective, which will make your sales reps’ actions as economical as possible whilst seeing the most important accounts most often.

To do this, you need to start tracking how your sales reps are managing their calls.  If you’re not already doing this, then you need to start right away.

Wayne Goodrich

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