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10-40% Revenue Invested Back into Sales

What Percentage Supports your Proposal?


Matthew Sheridan

PLM Director, Product Marketing

The Sales Investment: Sales Club & Effective Tools

Sales Club. It’s the ultimate reward and recognition for high-performing sales people. The cost to the organization to host such events is typically high: exquisite hotel, fabulous dinners, golf at top rated courses… In 2010, Texas Roadhouse spent about $3 million on a conference in New York City to recognize its top performers.

We’re not sure what you’re budget is, but $4,000 per person is expected spending at a bare minimum. Start adding up those costs:

A one-week, all-expenses-paid vacation for top earners. Double that to include spouses.

What about the paid time off? According to the Bureau of Labor Statistics, the average Sales Engineer makes just under $105,000. A week’s paid vacation alone costs the business upwards of $2,000. $4,000 starts to sound like it’s definitely on the low end of the spectrum, doesn’t it? Yet, there is little hesitation to spend this money.

Why? The argument is that high-performing sales representatives generate the majority of revenue. So, how much should a company spend to improve the revenue potential of all representatives? Companies have been spending money to improve sales productivity for decades:

  • Professional training, virtual training, on-demand training: Upwards of $800 monthly per person, plus the costs of assessments and materials
  • Better tools like laptops, iPads, smart phones: Upwards of $2,000 per person, just for the devices
  • Better systems such as customer relationship management: Upwards of $300-3,000 annually per person

Many of these are truly helpful. Why? Today’s sales training and tools focus on sales efficiency, product knowledge and customer relations. The theory being, if a rep knows more about their products and their customers, the better they can service that customer’s needs and capture revenue. This is true. Yet, these tools can only take a sales representative so far in the sales process. After establishing a great relationship and getting your products considered by a potential customer, the next step is to respond to a customer proposal.

The question to ask at this point is, “How well does your organization respond to proposals?” The sales force investment can be as high as 40 percent of sales, with the average company spending about 10 percent. If your sales organization is like that of most of those I know, your proposals response process has not received the same level of attention.

The Proposal Investment: Let’s See What Happens

How many times have you and your sales team worked furiously to complete a response, submitted it and then breathed a sigh of relief? Someone in the room probably even says, “Let’s see what happens,” after hitting send. At this point in the process your response is the exemplification of your business to the customer. Even if your sales representative used all their high-tech tools and training to build a great relationship, your response now stands alone. Plus, at this stage:

It’s highly competitive. The competition is submitting their responses, so yours must stand out. No matter how well you developed your ‘pre-response relationship,’ an amazing response from the competition will make your contact stop and think. You don’t want that.

There is a communication black-out. Once the proposal is submitted, many customers enforce a no-communication period to process and review proposals. The sales representative can often be ‘in the dark’ on status and acceptance.

It’s too late to make corrections. Once you submit a response, its quality must stand on its own.

So, what are the challenges that prevent companies from doing a better job before hitting the send button on a response? My next post discusses how improving the proposal process helps your entire sales organization with response time, response quality and, most importantly, customer confidence. And you can do it for much less than the cost of sales club

A NOTE FROM OMBUD: Matt Sheridan has been sharing his expertise in typical Sales Engineer challenges with our team as we’re innovating on Response Execution. We’ll be sharing his insights in this space, and this is just the first of several posts he’s written on the topic.

Matt Sheridan has a proven background working with enterprise-level sales, technical sales and proposal teams. Matt is author of A+ Demonstrations: Excellence in Sales Engineering and is a subject matter expert in helping sales teams maximize their selling potential. Matt is currently director of product Marketing for an industry leading product-lifecycle-management company and holds B.S. in Aerospace Engineering from Syracuse University and a M.S. in Mechanical Engineering from the University of Rhode Island.

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