In the dynamic landscape of business decisions, the impact of choices on revenue and growth cannot be underestimated. Sales training, as a crucial lever, can exert profound effects on a company’s financial health. This comprehensive analysis explores the multifaceted financial impact of delaying sales training by 30 days. By scrutinizing assumptions, costs, benefits, and alternative scenarios, we aim to unravel a deeper understanding of potential outcomes.
Assumptions and Context
To set the stage, let’s revisit the fundamental assumptions made in this scenario:
- Average Sales Cycle: 90 days
- Annual Recurring Revenue (ARR): $30,000
- Customer Lifetime Value (LTV): 3+ years
- Value of Each New Customer: $100,000
- Each Rep Closes One New Customer Annually: $600,000 LTV
- Each Rep Closes Six Additional Deals Annually: $3.6 million
- Valuation Increase: To be determined
- The Weight of the Decision
The initial premise of this analysis stresses the potential perilousness of delaying sales training by a mere 30 days. The assertion is that such a delay could result in the unfortunate missing of revenue targets for the year 2023 and beyond. Various reasons to delay (aka excuses) are listed, including concerns about current economic conditions, waiting for a new VP of Sales, and an expressed worry about customer retention, or what we call customer stickiness.
Deconstructing Costs and Impacts of Delaying Sales Training
Delay #1: Hiring a New Sales Leader
By examining the time and monetary costs tied to the hiring of a new VP of Sales, a critical factor is the potential delay in the VP’s start date, projected to be no earlier than May 1, and possibly extending to June.
The internal monetary cost incurred during the hiring process is pegged at $10,000. Then there is the economic impact of time, including preparation, interviews, and discussions, which is valued at 10 hours of work at $250/hr, totaling $2,500 in expenses.
Additionally, costs linked to the involvement of multiple other individuals in the organization are estimated at $7,500. This shows that before the new VP even assumes their role, substantial costs are already accrued.
Delay #2: The VP’s First 30 Days
Within the first 30 days of a new VP, there is an estimate of $30,000 for initial hard costs. The process begins with a comprehensive evaluation, involving the critical step of reviewing and refining existing processes and establishing new exit criteria. A thorough assessment of the current team dynamic is also on the agenda, seeking insights into areas of improvement and growth potential.
As for training, the current approach seems to lack substance, with minimal sales training provided. In specific instances, there might be some degree of call coaching, albeit predominantly limited to instances where team members are actively participating in calls.
However, if they do choose to engage in an external trainer, whether The Harris Consulting Group or other, this typically spans across several weeks to fully understand the context and requirements, then time for budgets to get approved.
From a logistical standpoint, the training’s commencement is tentatively planned for June 1st, under the optimistic assumption of everything aligning perfectly. It’s important to bear in mind that the company’s sales cycle operates on a 90-day cycle, with revenue closure expected by September 1st. Additional considerations come into play when dealing with End-of-Month (EOM) or End-of-Quarter (EOQ) timing, which might potentially result in a delay to July, contingent on the calendar system in place. In light of potential vacation schedules, a mid-July timeframe is projected for the training initiation. And finally, the 90-day sales cycle concludes around October 15th, culminating in revenue closure.
Delay #3: Delaying Sales Training Due to New Team Member Hiring
If the new VP opts to bring in new sales reps, further delays may ensue due to onboarding considerations and their potential impact on morale.
The compounding effect of inadequate coaching during this transitional period is underscored, potentially influencing the performance of both current and incoming team members.
Anticipating Positive Outcomes
In contrast, an alternate scenario where sales training commences promptly in the week of April 15th has proactive benefits as follows:
- Deals within the existing pipeline could be expedited or rescheduled.
- New deals initiated in mid-April stand a higher chance of closing by mid-July.
- By initiating training earlier, the company gains six full months of the year to bolster revenue.
- An enhancement in company valuation by December 31st.
The Power of Reinforcement
This analysis accentuates the value of reinforcement training, underscoring its superiority in comparison to the existing coaching approach. A 4 weeks reinforcement sales training program can catalyze behavioral changes, augment stickiness (customer retention), and guarantee to bolster revenue.
In the complex realm of business, decisions regarding sales training reverberate across revenue, customer relationships, and company valuation. This analysis aptly demonstrates that a 30-day delay in sales training can set off a chain reaction, potentially jeopardizing revenue targets and hindering new customer acquisition. While hiring a new VP of Sales and expanding the sales team might appear as logical steps, the associated financial costs and time constraints warrant scrupulous contemplation.
The alternative scenario, where sales training starts promptly, proposes that proactive measures can yield enhanced revenue outcomes and a more favorable company valuation. The reinforcement training facet accentuates the necessity for consistent and effective coaching to drive behavioral change and nurture enduring customer relationships.
In essence, this analysis serves as a reminder that economic impact decisions, even seemingly minor ones like delaying sales training, can exert far-reaching effects. By delving into the assumptions, costs, benefits, and implications outlined here, decision-makers can formulate informed choices aligned with their company’s growth aspirations. Interested to see what sales training can do for you? Schedule a time to chat.