- September 13, 2010
- Posted by: Dave Kurlan
- Category: Understanding the Sales Force
$100,000 is a ton of money.
$100,000 is peanuts.
Your perspective makes all the difference.
Suppose I told you that I could double your revenue and my fee would be $100,000?
Now is $100,000 a lot of money?
It would depend on several factors, wouldn’t it?
The first would be your current revenue. Look at the table below:
Clearly, if your revenue is below $1,000,000, then $100,000, even to double revenue to $200,000 is of little value.
But if your revenue is $10,000,000 or more, then $100,000 to double revenue to $20,000,000 or more has tremendous value and the value and return increases exponentially from there.
The next factor is the length of your sales cycle. If you have a short sales cycle, say less than 3 months, you’ll realize your return much more quickly, within the first year. Given the short time frame, there is even greater value with the current revenue at $1,000,000 – a 10x return in one year! However, if your sales cycle is long, say 12 months or more, the return may be 24 months away, making the $100,000 investment to go from one to two million less appealing.
Finally, there is a reality check factor. Look at the next table which simply adds a third column titled Realistic. It weighs how realistic it is for the current revenue to actually be doubled.
As you can see, once you hit $100,000,000, it becomes extremely unlikely that you, even with my help, could double revenue in that short time frame. While $100,000 is not a lot of money to double revenue, the credibility factor would factor in because the offer isn’t believable. So the proposition must change as the revenue increases. At $100,000,000, a 10% boost results in a $10,000,000 gain – a great return on $100,000 – and much more realistic.
With those three factors understood, we can return to the original question which was, “Is $100,000 a lot of money?”
No, $100,000 is not a lot of money, as long as your current revenue is $1,000,000 or more with a fairly short sales cycle, less than $20,000,000 with a longer sales cycle, or up to several hundred million dollars with a reduced proposition for return.
And yes, it is a ton of money if the revenue in question is less than $1,000,000.
Lesson: Your salespeople must be able to understand the value proposition of their offering from every possible angle in order to make it fit their prospects’ and customers’ different worlds. Do they?
By the way, I would be happy to help you determine what kind of increase is possible at your company. Our sales force evaluation includes a determination of who can be trained/coached/saved, what will be required, and what the return will be from developing them….