by Matt Kelm
Sales Trainer
CareerBuilder.com
October 12, 2007
Hello all and happy Friday!!
I came across a great statistic yesterday in an article published by Workforce.com.
On average, companies spend 2.5 times an individual’s salary to find a replacement, which includes recruiting, training, lost productivity and severance payments.
Often times as sales reps when we are running appointments we talk to prospects about how we can impact their business by lowering their turnover but do we truly understand the impact that we are making?
Let's take a moment to think about a common scenario many of us face each day on our sales calls.
You're calling a manufacturing company and while you are probing for their challenges your prospect tells you that their biggest challenge is that they have 100% turnover on their assembly line. Hearing this as a sales rep automatically sets off dollar signs in your head --- Cha-ching! We move forward and present a detailed solution showing how we can make an impact to their business by lowering their turnover which is obviously one of their biggest challenges - after all they told us it was right?
After presenting our solution and showing them how we will impact their biggest challenge we ask for their business. You outline a solution and ask for an investment of $20,238. Feeling confident that you've done your job probing for the bottom line challenges you wait for the "yes!" Instead what you hear is, "we don't have this in our budget" or "it's too expensive."
Leaving you thinking: Where did I go wrong?
I tell sales reps all the time you have to take what they give you and dig deeper. You have to take that challenge they've presented you and ask 3-5 questions about that challenge. It's what we learn from digging deeper that allows us to show our prospects a true business impact and will create urgency to implement our solution.
What could we have done differently in this scenario?
Going back to the prospect stating that their biggest challenge was that they have 100% turnover on their assembly line. What else could we have asked them? How could we have dug deeper?
Here are a few things I would have asked:
- How many hours per week do your hourly production employees work? 40
- How much are your hourly production employees paid per hour? $8
- How many employees are currently working overtime? 10
- How many overtime hours are they working? 40
- Are the employees working overtime being paid time and a half? Yes
BUT WHAT DOES THAT MEAN TO THEIR BUSINESS?!?!
Here is the business impact that we can NOW show our prospect after digging deeper:
The production employees work 40 hours per week and are paid $8 an hour. That roughly equates to $15,360 gross that is paid annually to each of these employees. According to the statistic above the total cost to replace ONE hourly production worker after recruiting, training, lost productivity and any severance pay is included, would be $38,400! Now imagine the cost of replacing one of you senior sales reps or an engineer who will make upwards of $100,000 a year.
We also know that 10 of their hourly production employees are working 40 hours of overtime a week (80 hours total) and being paid time and a half. On an annual basis one of these overtime workers is making more than DOUBLE that of their 40 hour per week counterparts. Annually they are paying the 10 overtime production workers nearly $400,000 gross compared to what they could be paying 20 hourly workers and a normal salary annually which would be $307,200.
In sum we know that the cost to replace one of their hourly production employees is $38,400 and that we have uncovered an opportunity to save the company nearly $100,000 by helping them hire an ample amount of workers to cover all of the production work in 40 hour weekly shifts.
Now how do you think your prospect will feel about investing $20,238?
Chances are they will be 10 times more likely to say yes because we were able to show them how turnover is truly impacting their business and how are solution will address that issue ultimately contributing to an increase in revenue.
What we should all take from this is that the next time you are pitching a prospect we need to show them how much turnover is truly impacting their business and not be afraid to pitch an annualized solution that will address their biggest challenges.
Remember: Pitch BIG or go home!
Happy Selling!
Matt
Here is the link to the article if you'd like to read it in its entirety:
http://www.workforce.com/section/00/article/25/15/68.html
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