You've heard hundreds of times the old adage that “time is money.” But how much money? That is the question too many salespeople leave unanswered. To truly measure your performance, improve your efficiencies, and increase the bottom line, you must learn to calculate the worth of your time.

Typical evaluations of sales performance take the form of call reports that are regularly exchanged between salespeople and their sales managers. The problem is that this reporting method is merely a baby-sitting device that few salespeople find truly useful for measuring performance, much less a useful tool to measure career productivity. More significantly, while these reports may produce qualitative forms of information—e.g., names of customers visited, objectives, conversation topics, and the like—they rarely yield quantitative aspects of sales performance.

Gordon Studer/www.gordonstuder.com

Quantitative measurement is essential for creating objectivity and determining available opportunities for performance improvement. Perhaps the best way to begin quantifying performance is to calculate a salesperson's “worth of time,” an incredibly simple evaluation that requires only two pieces of data—sales volume and the number of sales calls made. Once a salesperson has taken the few minutes to make the calculation, powerful performance improvements can be implemented.

As an example, let's assume a salesperson sells \$3,000,000 in products and services a year and makes an average of six sales calls per day. Factoring in 250 workdays a year, divide the sales volume by 1,500 calls per year and you can determine that this salesperson is worth \$2,000 per sales call. In other words, V=v/n, where V = value per call, v = sales volume, and n = number of sales calls.

This formula, in spite of its simplicity, can provide remarkable insights into sales performance and, more significantly, can expose opportunities for performance improvement. It can be used to determine ways in which a salesperson can improve territory management and planning skills, as well as ways to calculate the value of a customer and methods to improve the value of each individual sales call.

With this information it also becomes easy to theoretically plan future sales. How? Because if this formula is true, then the opposite is also true. That is, V x n = v. In other words, the number of sales calls a salesperson plans to make multiplied by the value per sales call will predict future sales.

Process for Improvement A salesman who wants to sell more knows that he can do three things: make more sales calls, increase his value per sales call—or do both. This realization leads to instinctive adjustments that improve time management skills and overall performance. Fitting more sales calls into the day, for example, requires a salesperson to improve territory management and daily planning to reduce windshield time and increase face-to-face time.

Studer/www.gordonstuder.com

Improving the value of each sales call takes a bit more observation, planning, and resolve. Start by using the time/value calculation in other ways to determine the worth of time invested with individual customers.

Consider the example of a \$250,000 account that, not surprisingly, requires a significant investment of time. A quick calculation reveals that, in fact, it is possible for a salesperson to devote too much time to this large-volume account. If a salesperson is worth \$2,000 per sales call (as in the earlier example) and averages one sales call per day to this customer in the normal maintenance of the account, this customer would be costing the salesperson \$500,000 in sales time (250 annual sales calls times \$2,000 per call) while yielding only \$250,000 in business.

A second account purchases \$50,000 a year, but requires only one sales call per month to maintain. This account costs the salesperson only \$24,000 (12 times \$2,000) in time while yielding more than twice that amount in annual sales!