In a perfect sales world, a salesperson, be they owner or contractor, would have new sales come in every day and hour. However, a new sale to a new customer requires a significant effort from lead development to sales calls, to closing, and with administration. It is not easy to keep a sales stream flowing without an investment in more time and resources.
Every salesperson is a business unto themselves. Every business needs a plan, or one can wander in the sales desert without a GPS for 40 years. Wandering is cured with a strategic business development plan. Set a vision, your goals and map out how to get there. Then, work on your plan.
If you sold life insurance, you would be receiving a significant sales commission on a new policy, but the income does not stop there. As long as the customer pays their annual premium, you get a commission yearly. Insurance commissions in the first year can be anywhere from 5% to up to 50% of the first-year premium. Without lifting a finger, the insurance rep will get 3%, 10% or more of the annual premium. In just a few years, a successful insurance agent can build substantial annual income from one sale called an annuity.
Following the matrix of an insurance company, by your building a portfolio of clients, who we define as “annuity clients,” you will build repetitive annual income. It will be a book of business that can increase the attractiveness and price you get if you should sell your business.
Customer development costs are high in our business and difficult to measure accurately. These costs are for marketing, advertising, administration, etc. The major cost is the personal time you take to get the sale. I use a rule of thumb that, if a distributor wanted to net $150,000 in earnings, he or she would need to earn $300 an hour. So, building a new account/sale can take 10 hours or more and literally cost you thousands of dollars in time. Your time is your investment.
Let us leave all the fuzzy math behind. In looking at annuity programs, we are looking for a client that can be on a systematic ordering program. We are looking for a client where reorders are frequent and as automatic as possible. We are looking for a client where the selling part is done, and the only cost is in administration. This objective is your business development strategic plan. Is this easier said than done? Perhaps, but the next time you work on customer development, ask yourself what return you can get for your time and how much sales service that client will require if you want to keep them buying. If there is a red light at that door, meaning it does not agree with your strategy, find another door to open.
Annuity programs are out there. Certainly, those familiar with sales recognition or service programs know that like clockwork fulfillment orders come in with little need for a salesperson. Apparel programs can be annuity programs with apparel for new employees or refreshing wardrobes. My own company has an outstanding program. A birthday card program needs only the first sale, and then every day we send out cards without any additional help from the salesperson. One hospital program is now running 9 years. Membership programs can be annuities. Company stores are annuities. You get the point, but it requires dedication to your plan. That does not mean you turn away from other sales, it simply means you invest more time seeking annuity type programs.
Annuity programs come with a price. If you work for a big house distributor, they will bear the cost. If you are a small distributor, whatever internal staff will bear the cost. Annuity programs require administrative and customer service time. However, they do not take a $300 an hour sales rep out of the field. Buyers need to know if you have the infrastructure to take care of their orders. The big guys have an advantage. The smaller company needs to present their competitive servicing capabilities to the prospect through an effective communications and marketing program when making initial contact. While the smaller company can offer lower prices, annuity program buyers are savvy enough to know it is not about price, but service.
To sum this all up … it takes discipline to write a plan and govern yourself by it. Decades ago, when my wife tried promotional product selling, I advised her, while cold calling door to door, to look at the building directory and ask how much annual business she could get from a prospect. I advised if that number was not large enough, seek another door to knock on. This is the same advice - seek clients with annuity sales opportunities.
Joel D. Schaffer, MAS is CEO and Founder of Soundline, LLC, the pioneering supplier to the promotional products industry of audio products. Joel has 48 years of promotional product industry experience and proudly heralds “I was a distributor.” He has been on the advisory panel of the business and marketing department of St. John’s University in New York and is a frequent speaker at Rutgers Graduate School of Business. He is an industry Advocate and has appeared before the American Bankers Association, American Marketing Association, National Premium Sales Executives, American Booksellers Association and several other major groups. He has been a management consultant to organizations such as The College Board and helped many suppliers enter this industry. He is a frequent contributor to PPB and Counselor magazines. He has facilitated over 200 classes sharing his industry knowledge nationwide. He is known for his cutting humor and enthusiasm in presenting provocative and motivating programs. He is the only person to have received both the Marvin Spike Industry Lifetime Achievement Award (2002) and PPAI’s Distinguished Service Award (2011). He is a past director of PPAI and has chaired several PPAI committees and task forces. He is a past Chair of the SAAGNY Foundation, Past President of SAAGNY and a SAAGNY Hall of Fame member. He was cited by ASI as one of the 50 most influential people in the industry.