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November 28, 2024
Hiring any employee is an investment, but a great employee’s compensation structure should pay for itself. Despite this, many companies perceive sales reps as a budget-eater - a drain on operational costs. There are a myriad of hidden costs associated with sales activities - from the CRM software used to any additional benefits. However, qualified, top-performing sales reps can actually generate several times their Return On Investment (ROI). Let's take a closer look.
Even if hiring commission-only sales reps (meaning sales reps you don't have to assign a base salary to), the costs of recruiting, onboarding and training them can add up.
One factor that can be difficult to account for is the cost of turnover. Turnover can cost between 50% - 200% of the employee's annual salary. However, by hiring motivated, talented sales reps upfront, and by refining your sales training process in order to support a wider range of candidates, you can prevent costly turnover and start generating six-figure revenues. However, these are only speculations - let's break down the real costs of hiring sales reps.
There are various ways to calculate the profit and loss of each sales rep. Let's explore the key cost buckets that contribute to the total cost of sales:
The direct sales compensation should be straightforward to calculate. It spans the base salary, variable compensation (commissions and bonuses), and any additional benefits packages provided to your sales team. Typically, direct sales compensation accounts for a significant portion of the total cost of sales - usually around 30-40% of your initial cash collected on a deal.
Calculating the indirect sales costs is more challenging. The indirect sales costs are constituted of the overhead expenses associated with supporting your sales team. They include expenses such as office space, administrative staff salaries, and marketing and advertising costs. The percentage of total cost allocated to indirect sales costs can vary widely, depending on the organization's structure and its specific sales model.
Sales operation costs cover the expenses related to managing and optimizing your sales processes - such as digital sales enablement tools, CRM software, sales training and development programs, and sales analytics tools.
If you have a door to door canvassing team, other variable expenses may include door knocking tracking software, transportation assistance, and hardware (i.e iPads or cellphones for door knocking and order taking).
There are other minor costs to factor in, such as the sales manager’s time spent to hire and train the reps, the lost opportunities from turnover and the time to test new technologies or processes (to be balanced alongside cost-saving factors like the continuous improvement in the sales process).
Of course, one cost that we haven't accounted for is the cost of recruiting sales reps. Typical recruiters can be as high as 25% of a candidate's annual salary, which means thousands of dollars per year immediately spent on recruitment - even more if the recruiters source a sub-par candidate.
HyperHired's sales recruiting system is carefully fulfilled by experienced sales representatives with an acute understanding of industries. Such as:
Our clients have found that our sales recruiting system has delivered an average of 50x ROI.
Read our Client Testimonials here.
By only hiring the best sales reps that exactly match your company's mission, you can unlock a more substantial revenue stream without compromising your operational costs.
Discover why HyperHired is an industry leader in sales recruitment by scheduling a free introductory call.
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