Thursday, June 5, 2008

What Does It Cost To Make A Sales Mishire

Writen by Andrew Rowe

Think about how much time and energy it takes to hire a good sales person. Think about how much it costs to carry a good salesperson on your payroll, and then think about the amount of revenue needed for your company in order to help you accelerate your sales. Finally, add in the opportunity costs for your company if during a given period, particularly a long one, instead of selling a million dollars a year, you have an under performing rep. When you add in all of these factors, it's very costly to make a mistake when it comes to hiring sales people.

This is why hiring sales people is best left to the experts and why bringing in a good recruiting or search firm to do this kind of work makes absolute economic sense to your company. Most people resist bringing on recruiters and executive search firms because they don't want to have to pay the fees. What are the fees for hiring a sales person? Well, the range is between twenty and thirty percent of the base or total annual salary, which typically means you could be paying a fee of somewhere between $10,000 and $40,000 in fees. Contrast those fees against the actual cost of salary, benefits, travel, and training time, particularly during the time when you're waiting for a new salesperson to come up to speed. Analyze how many months it typically takes before you can see results from a new salesperson. Is it 4, 6, 8, 10, 12 months? A lot of that depends on the sales cycle and learning curve in your particular market.

The rule of thumb for the ramp-up of a new sales professional to hitting their sales target is typically the sales cycle, plus the learning curve, plus 3 to 6 months.

Suffice it to say that you could spend hundreds of thousands of dollars and potentially lose millions of dollars in sales if you make a mis-hire. By contrasting that with making a successful hire and the fees associated with doing it right through a good sales and marketing recruiting firm, you quickly find that it makes good economic sense to outsource your sales and marketing recruiting. The return on investment in making such a decision cannot always be assured versus doing it yourself, but often times it can.

If you don't consider yourself to be an expert in the hiring process, consider brining in an expert to help you out. What you'll find is that the value really equates to an insurance policy for your company…one that many companies, particularly in this market, are finding to be a worthy investment.

Cube Management helps companies accelerate their sales, by providing the Sales & Marketing talent they need to grow their business. Cube is a leading recruiting and consulting partner to mid-market and emerging growth companies in the technology, manufacturing, healthcare and business service sectors. We work across the spectrum of Sales, Marketing and Business Development, providing holistic solutions that drive revenue and profit success. Cube Management combines Strategy, Process and People, to produce great results. Download the Cube Management Recruiting Guide and the Cube Management Inside Sales Guide.

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