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The effectiveness of a companies go to market strategy will be directly correlated to a company’s success. Although the sales function is a critical component of the go to market strategy and the lifeblood of any business, most direct sales people spend precious little time actually selling, even though the annual cost of a direct sales representative is very high. Incremental changes in the amount of time a direct sales rep spends on core selling activities will have a positive impact on the business. One way to increase the direct selling time for sales reps is to first understand the problem and then craft a solution.
Go to Market Strategy – The Math Behind Direct Selling
The fully loaded cost of a direct sales rep selling B2B is approximately $380K per year or $1.9K per business day worked.
Granted, the base and bonus will vary by company. However, a typical B2B sales rep with a sound track record is expensive. Below is a guideline of how to derive a meaningful number for a company’s specific situation:
Base is assumed to be $125K – $150K annually
Variable compensation at quota is approximately $150K annually
Overhead (benefits, office, taxes, phone, etc.) is estimated at 20% of total on target earnings
Travel and entertainment is estimated at $50K annually
Tip, tax and out the door this total approximates $380K annually. In addition, this estimate does not take into account any equity awards, spot bonuses or car allowances.
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