You can be on Entrepreneur’s cover!

Seriously, Here Is an Investment in Your Sales Team With 30,000 Percent ROI. Training that brings your least performing sales manager up to the level of your top people has a huge return.

By Jason Jordan

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Hero Images | Getty Images

There's no shortage of things you can do to improve the performance of your sales team. You could re-start your CRM, re-train your salespeople, re-design your territories, re-do your incentive plans, replace your sales methodology.

What has already been done?

But the issue with re-doing things you've already done is that you start to experience a decreasing ROI with each iteration. When you deployed your first sales methodology in 1987--Ding! Huge ROI.

When you deployed your first CRM tool in 1997--Ding! Huge ROI. But now that you're on sales methodology 12.0 and CRM 8.0, what will you do in 2017 to ring that ROI bell just as loudly as you did before? CRM 9.0?

The frontline sales managers.

The answer could lie in a population that's neglected within many sales forces -- frontline sales managers. In a recent study of 518 Fortune 500 sales managers, we found a surprisingly large disparity in performance.

The top 25 percent of sales managers perform at 115 percent of their teams' annual targets, while the bottom 25 percent trail far behind at 76 percent of their teams' goals. That's a whopping 39 percent difference in revenue yield between the top and bottom quartiles of managers.

We did the math.

When we did the math, that 39 percent disparity equated to $3.5 million in revenue per manager. In other words, teams managed by top-performing sales managers bring in an average of $3.5 million more in revenue each year than the teams of bottom performers. They do this simply by being more diligent managers and better coaches to their reps.

Related: It's All About Accountability For Sales Managers

Bring bottom performing managers to the top.

So there's clearly a big "R" in ROI to be had if you can bring your bottom performing sales managers toward the top--millions of dollars per manager, in fact. So what "I" would it require to get you that level of improved supervision and coaching?

Related: How to Manage a Successful Sales Team

For the sake of easy math, let's say you have 100 managers on your team and it costs $3,000 each to train them. You're clearly not going to train only the bottom 25 percent--that could hurt someone's feelings. You're going to train them all at a cost of $300,000.

What's the top line?

Let's also say that your investment gives your bottom-tier managers the skills they need to elevate their teams to the top. This means you would have 25 managers bringing in $3.5 million more in revenue each year, for a total of $87.5 million to your top line.

That's a whopping 29,067 percent return on that $300k investment. Ding, ding, ding! I'd be willing to bet you haven't seen that ROI on CRM in recent years. In fact, you might be hard pressed to find that kind of return anywhere else in your sales force.

Leverage your sales managers.

And why is the number so big? Well there is huge leverage in training your sales managers. If you're like the sales forces in our study, you only have to train one-tenth of your sales force. Investments in sales managers have a unique multiplier effect that cascades to all of the sellers they manage. You get a full "R" with a fractional "I." It's just good math.

Related: To Drive Business Success Invest in Your Managers

Other costs?

Okay, I can hear you all thinking, "With travel and other costs, there's no way I can get this done for $3,000 per manager." Well then, increase the training cost to $5,000 per manager for a total investment of half a million dollars. Now you'll only realize a 17,400 percent return on your investment.

"Is it really likely that all of my bottom quartile managers are going to improve that much?" With the right training and consistent reinforcement, our experience says yes. But for the sake of argument, say only 10 of those 25 managers improve their performance to that level. Now you're down to a 6,900 percent ROI. "But my actual ROI should be based on my profit margin, which is only 30 percent of my revenue." Now we're at 2,000 percent. Get the idea?

Related: How to Calculate ROI (Return on Investment)

It's not rocket science.

No matter how you do the math, you probably can't get that kind of ROI from any other investment in your sales force. Not sales methodology 8.0--Not CRM 12.0--Nothing. It's not rocket science--it's not even advanced math.

You simply get the full "R" with a fractional "I." If you do the math for yourself, you might agree that investing in your sales managers is the best money you can spend this year. That's math you can literally take to the bank.

Related: Investment ROI

Jason Jordan

Partner at Vantage Point

Jason Jordan is a partner at Vantage Point Performance, a sales-management training and development firm, and co-author of Cracking the Sales Management Code (McGraw-Hill, 2012). Jordan also teaches sales and sales management at the University of Virginia’s Darden Graduate School of Business.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Travel

Save on Business Travel with Matt's Flight's Premium, Only $80 for Life

This premium plan features customized flight deal alerts and one-on-one planning with Matt himself.

Science & Technology

Here's One Reason Urban Transportation Won't Look the Same in a Decade

Micro-EVs may very well be the future of city driving. Here's why, and how investors can get ahead of it.

Health & Wellness

Do You Want to Live to Be 100? This Researcher Has the Answer to Why Longevity is Not a Quick Fix or Trendy Diet

Ozempic, cold plunges, sobriety and the latest health fads are not what science reveals will help you live a longer and healthier life.

Data & Recovery

Better Communicate Data with Your Team for $20 with Microsoft Visio

Visio features a wide range of diagramming tools that can support projects across all industries.