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What is the ideal number of visits to a current customer to retain his loyalty?

 

Guest articles > What is the ideal number of visits to a current customer to retain his loyalty?

 

by: Dave Kahle

 

Here I go again. It depends.

So many questions in the world of professional sales are answered by that phrase.

It depends on how detailed your product line is. The more complex and difficult it is for the customer to decipher, the more visits by you. The more simple the product line, the fewer the visits.

It depends on how active your competitors are in the account. The more active, the more visits. The less active, the fewer visits.

It depends on the relationship the customer has with your colleagues and inside people. The broader and deeper the relationship, the fewer visits are necessary on your part. If the customer knows no one he/she can rely upon in your company, the more you have to be there.

We could go on and on with these variables. But, probably the biggest is the economic equation. You should never invest more time in the account than it is worth.

Here's a way to understand this. Start out by calculating what it costs your company for you to make one live, outside sales call. A simple way to do this is to take your gross wages then add about 30 percent more to it to account for fringes, taxes, expense reimbursements, etc. For an example, let's say that you made $5,000 last month. Add 30 percent, and you probably cost the company $6,500.

Now, how many sales calls did you make in that same period of time? I mean real sales calls, where you uncovered an opportunity, and/or presented a solution – not those where you just stopped by to say hello because you happened to be in the area.

For our example, let's say that you made two of those a day, for 20 selling days last month. Do the math. Divide the $6,500 by 40 calls and you have an average cost per call of $163.00.

Now, the number that we are after is the ratio of what it costs to what you get in return. Remember that we are working with general rules of thumb here, so that there is room for error on both sides of this equation. With that as preface, I generally believe that you can not cost the company more than 25% of the gross profit if you want to be profitable to your company. In other words, if you get a sale that brings in $1,000 of gross profit, you should not have invested more than $250.00 in your costs.

Let's use this understanding, now, to determine how many calls to make on a customer. The first question is, "How much gross profit does this customer produce per year?"

Let's say the answer is $10,000. OK, what is 25% of that? $2,500. And, if you cost the company $163 per sales call, how many sales calls can you afford to make? ($2,500 divided by $163 = fifteen). Easy. Simple. Economically defendable.

Let's review the process to make sure you can use this for every customer.

  1. Calculate your cost per sales call. (Total costs divided by total sales calls)
  2. Calculate the expected gross profit from the customer.
  3. Divide the gross profit by the average cost per sales call. Bingo. That's the economic calculation.

 


Dave Kahle is the country's premier sales training educator. Since 1988, Dave has worked with over 400 companies, helping them to increase their sales and develop their sales people. He's been published over 1,000 times, has authored seven books, and writes a weekly Ezine which you can subscribe to for free at http://www.davekahle.com/mailinglist.htm. He has a gift for creating powerful training events that get audiences thinking differently about sales. Dave’s website is available at http://www.davekahle.com, and you can follow his sales blog at http://www.davekahle.com/salesblog.


Contributor: Dave Kahle

Published here on: 10-May-09

Classification: Sales

Website: http://www.davekahle.com

MSWord: articles/articles09/What is the ideal number of visits to a current customer to retain his loyalty.doc

 

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