The Value of a Sales Rep’s Hour

Every half-decent sales rep is making the most they can of every working hour and every working day because they understand that the most important time is face time with a customer. And that time is limited. Successful sales rep works hard outside of those hours to make sure they can take full advantage of the times their customers are available to meet. They also understand that face time with a customer is a privilege and needs to be earned by being useful. It’s good to be friendly, and it’s important to add something of value always.

With that being said and, I assume, agreed upon, we still need to know what an hour of a sales rep’s time is worth. There may be many ways to look at it ranging from their salary plus expenses like vehicle usage to a much more complex breakdown of a rep’s goals and what they need to do to get there. But even with that, there are still a lot of nuances that have to be considered.

The Calculation

First off, the comment about covering expenses is less than the minimum. It doesn’t consider many things from delivery, purchasing, invoicing and much more. The true calculation needs to take into account the sales rep’s annual goal, divided by the number of hours in that year to reach the goal. This is the number the rep needs to keep in mind when making calls. Let’s say, to keep it simple, the rep needs to sell 2 million dollars this year. We’ll say it’s a new rep starting out. The rep will likely take two weeks’ vacation and probably won’t be doing much selling the weeks of Christmas and New Year’s.

Within those 48 workable weeks of selling, many people think there is a good 40 hours of selling, aren’t most people working 40-hour weeks? In reality, first thing Monday morning and last thing Friday afternoon are pretty limited in regards to face time with customers. There’s the fact that many customers prefer different times of day to be visited but that’s more of a route and scheduling issue. So let’s say that, on average, there are 36 good selling hours in a week. Now times that by 48 weeks.

The number is 1,728 and if your goal is 2,000,000$ per year, just over 160,000$ per month, then the number you need to keep in mind every hour of the day is 1,157$ per hour. If you can make only two calls per hour, then your goal per call is 578$ per call.

The Calculations Limitations and Dangers

A few problems jump to mind. For many, especially beginner reps, this may feel like swinging for a home run every at-bat. Also, a prospect may bring in zero sales for months but may honestly have the potential to become a major customer. Should you stay away from a customer who isn’t or can’t create this much in sales every call? Maybe. If an account only buys a couple hundred dollars per month but you call on them every week and you can’t see how you can develop the account more, no matter the reason, probably you should move on. It’s not that they don’t deserve to be called on, it’s because they don’t need to be called on.

As for the prospect who currently isn’t buying, the calculation actually does work. Local outside sales reps shouldn’t be having hour-long calls with their customers. Brevity is appreciated by shops. And if it really is a prospect worth developing from zero, they should have the potential to buy a lot more than 578$ per week. If not, it’s not a prospect for you, it’s a walk-in customer for your shop.

Conclusion

As with almost everything an outside sale rep does, judgment is required. Do the calculation. Use it honestly and ruthlessly when analyzing your accounts. You need to be building business at all times because you are losing business at all times, it’s inevitable. From the competition's free will to aggressive promotions you will always be losing some sales somewhere. It’s like inflation.

The power of the calculation is to analyze accounts and to remind yourself constantly of your ultimate goal, your annual sales figure. This is the figure that your bonus is based on and your efforts will be measured. And if you really want to succeed, use the calculation as a minimum. You just, in one 15-minute call, got 3,000$ of business per month out of a customer that you call on once per week? Great! But continue! Always push.