The True Cost of Poor B2B Sales Prospecting Techniques

B2B Sales Prospecting Plans

In survey after survey, VPs of Sales continually cite their top B2B sales prospecting plans as:

1. Revising lead generation and prospecting strategies

2. Building sales pipeline

3. New customer acquisition

Many sales teams have turned to marketing leads, automated nurturing, and channel partners as a means to address these sales and lead prospecting challenges. However, an overreliance on marketing and the channel can be a dangerous thing. Though well-intentioned, these corporate initiatives are ruining your sales team!

Conversations with sales and marketing leaders confirm this notion. A Director of Marketing at a software firm said, “My team members are like baby birds…they are always just waiting for mama bird (marketing) to drop another worm (lead) in their mouths. I just got an email from my team saying that they have nothing to do because they already called all the leads.”

A VP of Sales at a technology hardware company said, “My team is completely dependent on the channel, but the channel doesn’t care if they sell our solution or Cisco’s. Unless we generate demand with the end user directly, the channel has no reason to bring us into the conversations.”

Further, a major CRM provider EVP said, “My channel partners are always coming back to me asking for more leads. I tell them, ‘Hold on…let me go over to my secret vault where I keep all the leads and get some more for you.’”

In response to missed revenue goals, sales leaders mandate dedicated lead prospecting times and call blitzes. This makes sense in theory: to close the sales gap, let’s rally around the common need for lead prospecting to build sales pipeline.

You get everyone lead prospecting and the activity is high, but 30 or 60 days into the campaign, the results in terms of quality opportunities created just aren’t there. VPs of Sales presume that the high-priced sales reps that they hired know the best sales prospecting methods. This is a very costly mistake! The reality is that your well-paid sales team lacks the skills needed for B2B sales prospecting in the age of social media and lower connect rates (22 dials per actual executive conversation). With that being said, here are the top 4 ways poor sales prospecting techniques can negatively affect your sales team.

The True Cost of Poor B2B Sales Prospecting Techniques

True cost of poor sales prospecting techniques #1: Direct cost of sales rep time.

Calculate the cost of the time that your sales team spends lead prospecting. Divide that by the number of quality opportunities created (be sure to eliminate the fluff that the reps enter into your CRM to inflate the number) to see your direct salary cost of each sales generated opportunity.

Example: an enterprise sales team of 120 field reps with an average base salary of $150,000 spends 1 day per week on call blitzes using traditional ad hoc lead prospecting. The blitzes last for 3 month.

Cost = 120 × $150,000 ÷ 200 business days/year = $90,000/day × 12 = $1,080,000

The three month blitz incurs direct costs to the organization over $1m in field sales rep salaries alone.

Let’s assume that each rep creates one new opportunity per week vs. a goal of two. Over the full three months, each rep creates 12 opportunities or 1,440 across the team. How much does each opportunity cost?

  • Poor sales prospecting cost per opportunity: $1,080,000 ÷ 1,440 = $750/opportunity created

  • Management believes that if the field sales team has a more effective method for B2B lead prospecting, they could double the number of opportunities created in the same amount of time for the call blitz.

  • Effective sales prospecting cost per opportunity: $1,080,000 ÷ 2,880 = $375/opportunity created

The true direct cost of ineffective sales prospecting for the call blitz days = $540,000 – or half the base salaries of the enterprise field sales team. Simply put, investing around $100,000 in teaching your team proper sales prospecting methods allows the enterprise sales team to create the same number of opportunities in half the time saving $540,000 in direct salary costs alone.

True cost of poor sales prospecting techniques #2: Investments in Marketing

How much money is your organization spending to generate marketing leads? Are you happy with the conversion rate of these leads to opportunities? Do you find that frequently the “lead” is a junior person in the right type of organization, but engaging this lower level person in a conversation leads to a lot of black hole, go nowhere opportunities?

Poor sales prospecting means that you aren’t getting as much ROI on marketing leads. How so? Sales reps fall into the trap of qualifying the contact rather than qualifying the account. If a non-executive drops his card in the fishbowl at the trade show, why call that person? Your best sales reps use that person as a clue that there may be a potential opportunity. Before making a call, they look at the Internet and engage the switchboard operators and administrative assistants to map the org chart, get direct lines, and do a little bit of research on the company and correct executives.

Through pre-call research, your sales reps learn of the true decision maker and have something intelligent to say in the initial conversation. By delivering the right message to the right person at the right time, the sales rep converts more of the marketing leads into qualified opportunities. This approach is vastly superior to the prevailing practice of “Call the leads!”

The cost per lead on a marketing campaign falls dramatically when the sales reps follow sales prospecting best practices. Let’s assume a $1,000,000 marketing campaign budget that generates 10,000 leads.

$1,000,000 ÷ 10,000 = $100/lead

With poor sales prospecting, 16% of the leads convert to opportunities. With effective prospecting, 25% of the leads convert to opportunities. This follows the notion that calling decision makers with a smarter message than “I see you downloaded the xxx” yields better conversations and more revenue potential.

The marketing cost per opportunity in an environment of poor B2B lead prospecting is:

$1,000,000 ÷ 10,000 = $100/lead ÷ .16 = $625/opportunity created

The marketing cost per opportunity in an environment of effective B2B lead prospecting is:

$1,000,000 ÷ 10,000 = $100/lead ÷ .25 = $400/opportunity created

Effective sales prospecting techniques lower the cost of a marketing sourced opportunity by $225. Your sales reps convert more of these marketing leads into qualified pipeline opportunities. The result is better ROI on marketing campaigns, happier sales reps, and more revenue. Sadly most sales reps are not armed with the tactics and skills to blueprint organizations to make the most of a marketing lead.

True cost of poor sales prospecting techniques #3: Lost revenue.

Direct costs of poor sales prospecting methods are expensive, but opportunity costs of lost revenue as a result of poor lead prospecting are disastrous.

Let’s continue with the example of the technology hardware company. This business generates $1.2 billion in annual revenue and projects $200m in new revenue from customer acquisition. The enterprise sales team needs to generate $100m of this number while other groups account for the other half. At the current rate of opportunity creation, the enterprise sales team is only on pace to generate half the number, $50m in revenue, from new accounts.

$50m ÷ 200 business days = $250,000 in lost revenue each business day

Every single business day that the enterprise sales team utilizes ineffective ad hoc lead prospecting costs the organization $250,000 in lost revenue. Let me say that again…every day that this company delays to fix the problem of poor sales prospecting methods is $250,000 out the window. Ad hoc lead prospecting costs your organization a lot of money!

Teach Your Sales Team the Best B2B Sales Prospecting Techniques

The good news is that investing around $100,000 in B2B sales prospecting training allows the enterprise sales team to generate new revenue of $250,000 each business day. Annualized, an investment of $100,000 has the potential to produce $50 million in found revenue for an ROI of 17,757%.

  • Cost of training workshop program = $100,000

  • Cost of sales rep time to attend two day workshop = $180,000

  • ($50m - $280k) ÷ $280k × 100 = 17,757% ROI

No one is naive enough to believe that great sales prospecting techniques alone can generate that great of a return. A stand alone B2B sales prospecting training workshop has been shown to increase our clients’ opportunity creation rates by 25-50%. In order to create a more comprehensive solution, companies are investing in a closed-loop program of training, live call coaching, management reinforcement, and metrics tracking. An intelligent sales team, when armed with the right tactics and techniques for efficient and effective lead prospecting and supported by periodic reinforcement, can produce far more than the team “doing their best” with dated, one-off cold calling.

How much does poor sales prospecting cost your organization every day? How urgent is this to fix? What happens if you do nothing? What are your options to address this issue? How impactful are your organization’s current efforts to address poor sales prospecting? Do you have internal teams that can teach prospecting best practices live on speakerphone in front of your sales reps to model the correct behaviors? Are internal efforts moving the needle or is it time to look outside the organization to prospecting experts to help bridge this gap?

If you would like help answering these questions and learning more about B2B sales prospecting techniques, contact us today, and we can help streamline your lead prospecting process!

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