How to Get a 500% Return on a Sales Coaching Investment

Sales coaching and executive coaching for sales managers can have an extraordinary impact on sales performance.

Sales Coaching Return on Investment

If you are satisfied with what you have, you are already rich and it may be hard to stir up the motivation to improve. If you have unfulfilled aspirations, the chances are that you know the things to do. You know the actions that will move you towards fulfilment. The question, “I know what to do so why don’t I do it?” rattles around in the mind of all those who struggle to make progress in any quest for greater success.

While the ideas in this article might apply in all endeavours, in this domain I want to discuss the quest for greater sales success. Whether you are a new to selling, an established contributor, one who gets things done through others, or cast in a role of leader, investing in a coach offers immediate support that can accelerate achievement.

“But I know what to do!”

If you know what to do and work is getting in the way, or you are struggling for motivation, or simply haven't mastered procrastination, get a coach and commit yourself to follow instructions . . . scary thought.

A coach depends on his or her reputation for success. Leaving the coached to do or not, is no way to start. Suppose Murray didn’t listen to Lendl, how long would Lendl stay? If you were a swimming coach and some of your squad regularly failed to show up for training, how soon would you lose interest in their success?

Should such written and unwritten agreements be transferred to the world of executive coaching and if they were, would it make a difference for those who know what to do yet still don’t do it?

Three Sales Coaching Modes

Discipline - The expectations of a coach inject the additional gumption we sometimes need to spur action. A coach makes you do it!

Teaching - Busy salespeople may find it difficult to make time for professional research and may be reluctant to reveal ignorance about new ideas and methods. A coach can assume responsibility for sourcing and communicating the required knowledge, help establish the habits and practices necessary for using new know-how, and provide the feedback necessary for developing skills.

Mentoring - Drawing out nascent abilities and skills harboured in all of us. This coaching activity is the opposite of teaching new know-how. It relies on a Socratic ability to avoid polluting another person’s thinking with one’s own ideas and biases. In this mode, the coach helps the coached to find their own answers and inspiration. People are much more likely to act on their own ideas than anyone else’s.

Quantifying the Investment

So how much success is equal to five times the investment? This is a question that is difficult to answer in a general way because everyone’s circumstances are unique. A single intervention might be enough to unstick someone’s momentum, help overcome a troublesome obstacle, or renew commitment. In other circumstances, continuous support of a coach can make all the difference. The degree of aspiration has a bearing on the value. For sales coaching and executive coaching, we can calculate the amount of investment and ratio of return.

Suppose your time including any missed opportunity cost is worth £300 per hour and your coach costs £400 per hour. Depending on your seniority, you might think these numbers high. You might not be receiving £300 per hour compensation yet these numbers aren't so extreme.

Suppose a salesperson had a gross profit target of £300k per year. The missed opportunity cost of a 1 hour coaching session would be approximately £160 (target divided by hours worked). If the same person earned a very modest (in the hi-tech world that I inhabit) £50k for on target performance, cost to his or her employer would be in the region of twice this number. This adds an hourly £53 to the total for £213. If our imaginary salesperson was committed to the coaching process, each session would be associated with some preparation or travel and would be likely to generate some follow on exercises that may not have any immediate impact. Let’s add another £53 to cover related unproductive time. The total hidden costs associated with an hour of coaching for our modestly compensated individual would be £266. Let's round this up to £300.

If you plug in your own numbers, you are likely to have a different total. The hidden cost of a coaching session for many in senior positions will exceed £400.

The fee a coach can command usually reflects their reputation, qualifications, and contribution. In the B2B arena, £400 a session for a credible sales coach is an approximate midpoint. You might be able to get the job done for less. Using an internal coach or working with a peer is worth exploring. Combining this estimate with a hidden cost of £300 we arrive at a total cost of £700 for a single sales coaching session. A fivefold return would be £3500 - just over a 1% increase on a £300k profit target.

This tiny increase might be realised on a single sale where coaching helped improve negotiation skills. It is hard to imagine a sales coaching session that was so poor that it failed to inspire such a slight improvement.

Suppose sustaining improvement momentum meant one session a month (£8400 for a year including hidden costs). A fivefold improvement over cost would equal £42,000 or an increase of just 14% on what might have been expected without the support of a coach.

In some cases, particularly for beginners, and those stuck in a rut, improvement can be significantly greater than five times the investment. Using our worked example, a salesperson previously achieving 80% of target, who goes on to contribute 120% of target, would have returned £120,000 incremental GP or a 50% improvement and more than twelvefold return on the investment. For those who are already getting good results, the gain may be less dramatic. A twofold return on a £300k GP target would equal to an increase in GP of £16800.

This framework scales to accommodate those responsible for teams or entire organisations. Perhaps it should form the basis for a coaching contract. At the very least, any sales coaching arrangement should encompass specific commitments associated with clear measurable objectives that are incumbent on both the coached and the coach. As Winston Churchill put it, “However beautiful the strategy, you should occasionally look at the results.”

Article by Clive Miller

If you need to increase sales performance for yourself or a team and would like to explore the use of sales coaching or executive coaching, we can help. Telephone +44 (0)118 983 3887. We will be pleased to discuss your needs or talk through some options. Alternatively Send email to custserv@salessense.co.uk for a prompt reply or use the contact form here.