Is there a ROI of the client meeting or not?
Normally, the return on investment (ROI) is a percentage calculated as follows:
ROI = ((project revenue - project costs) / project costs) * 100
But as Investopedia states in their description of ROI, this calculation does not take time into account.
Time is the most important factor when we talk about a ROI of client meetings. The cost of the client meeting is indeed the time your sales rep spends on it.
Therefore, when evaluating whether it pays off to send your sales reps out in the field, it is a matter of evaluating whether their time is well spent doing all the activities related to client meetings – i.e. preparation, transportation and the actual client meeting – or not
A study shows that outside sales reps spend 22% of their time selling. Here selling is defined as activities that is meant to seek out new business, e.g. cold calls, calling clients, presentations and client meetings. You will have to make sure that those 22% of their salary is spent on activities that will yield a return and not be wasted on pointless encounters. Alternatively, you can apply methods to increase the selling time of your sales reps.
To estimate whether there is a significant ROI that justifies sending your sales reps out in the field, try and answer the following questions:
- What does the client prefer? Do not assume that a face-to-face meeting is what the client in question prefers, ask them – maybe a simple phone call will do.
- What is your current objective of interacting with the client? How far is the client in the buying process and is there a level of interest that makes a client meeting relevant?
- What is the price of your product/service? Thinking of the ROI calculation stated above, the monetary costs of your sales reps’ time will have to be significantly lower than the price of your product or service, otherwise it clearly does not pay off to spend time in the field.
- Is the client new or known to you? It can be argued that the ROI of the client meeting will be greater for new clients than for known clients, since establishing a relationship and personal connection is important when it comes to new clients – and that is easier to do in person.
- Is the client purchasing a new product/service or making a repeat purchase? Selling a completely new product could require an in-person product demonstration, which is probably not needed when the client purchases a known product from you.
Having answered these questions, you should not be in doubt of whether a meeting with a certain client pays off or not. In the following are a couple of examples that show cases where the ROI of client meetings is too low and other forms of interacting with clients are more appropriate.
Examples of cases where the ROI of the client meeting is too low
A Bain & Company case found that in a business where the sales staff consisted of 85% field sales reps and 15% inside sales reps, customers actually preferred interaction via phone and e-mail, and the field sales reps also spent less than 20% of the time communicating with customers. Acquiring this knowledge resulted in a major shift in the composition of the sales force to focus more on inside sales, saving the company $40 million a year, while enabling sales reps to cover more accounts and spent more time with customers.
This case really proves that knowing your buyers is key, and that acquiring knowledge e.g. through interviews with clients and sales reps can provide astonishing insights into their behavior. Insights that can help you make the sales process more effective to ensure that there is a ROI of all activities.
When it comes to repeat buyers of your product or service you might also consider keeping your reps in the office and save costly time:
76% of B2B customers would like to speak to a sales rep when buying a completely new product, whereas only 15% would like to speak to a sales rep when they are buying the exact same product as they have previously bought from you.
As suggested in the figures above, your client might be able to make a repeat purchase without even talking to you. So, make sure you have the process in place that allows them to do that. Think about e-commerce platforms that allow you to e.g. buy the same cart of groceries as you did last week with just the click of a button. Again, it basically depends on knowing your customers and the buying journey they go through. This enables you to provide them with the options and information they need at the time they need it.
What do you do when the ROI of the client meeting is too low?
If you have estimated that the ROI of a given client meeting will be too low or non-existent, then you can simply find another way of communicating with the lead or client in question. Phone calls, live demos and webinars are only a few of many opportunities. But we argue that what really makes a difference is looking to those 22% selling time, and work on increasing that number.
Freeing up your sales reps’ time for selling will undoubtedly increase the ROI of all your sales activities, not just client meetings. Paperwork, e-mails, service and support are examples of tasks that hinder your sales reps every day from focusing their efforts on what really counts. Therefore, a streamlining of processes might be an important first step towards higher ROI of your sales activities. Reach out to us for an informal conversation about the potential benefits of employing a Sales Enablement platform like Napp in your organization.