You probably noticed – sales managers are one dimensional thinkers, mostly at least. They have to be. The revenue target is a hard place, and the CEO is a rock. Those guys are somewhere in the middle, hoping not to get crushed.
That means there’s not too much spare time for learning about other things, which is a shame because there’s a very big lesson to be learned from Pay Per Click marketing.
When the going gets tough, when sales are short and the team is light on prospects, the sales manager falls back on Activity Rates. Work harder, hit the phones, make more calls, kiss more frogs.
The typical response is simply turn the wheel faster. It’s wrong, and Pay Per Click advertising shows why.
Before getting into the explanation, it’s worth reprising the age old model.
Since the beginning of time, sales operations have been based on the Activity model. The numbers are different for each business, but a useful example could be the computer business from back in the 80’s. Those guys reckoned any sales guy needed to make 100 cold calls to find a prospect who would agree to a demonstration. For every 10 demonstrations, one would buy. Ergo – more cold calls equals more sales. And it did, sort of.
That’s where the Kissing Frogs theory comes in. Every time you kiss a frog there’s a chance it will turn into a Prince (or Princess depending on your persuasion). Kissing more frogs equates to more Princes and making more calls equates to more sales.
Pay Per Click advertising is today’s equivalent of kissing frogs. There may well be a relationship between the number of clicks, and the number of sales which result. But there’s no guarantee the numbers add up. That’s why there are so many horror stories about companies losing their shirts doing it.
The secret to successful business advertising with PPC is the conversion rate. The calculation is the cost per click multiplied by the conversion rate (the number of clicks which don’t turn into sales) taken away from the gross margin made on the sale. It’s only good business when there’s margin left at the end of the day when all the clicks which didn’t result in a sale have been paid for.
This isn’t rocket science. Whether PPC is a profitable lead generation strategy depends on the accuracy of the keyword selection, the cost of that keyword for advertising, the conversion from click to sale, and the margin achieved in that sale.
Of course it works, provided the advertiser has done the homework. The keywords have to speak to the prospects interests. The advertisement has to catch the attention. The landing page has to convert the interest into action. The margin in the sale has to be enough to pay for all the failures.
So that’s what sales managers can learn from PPC.
The value proposition has to be compelling to a market demographic. The sales process has to be effective and efficient. The sale has to make enough margin. The sales guy has to make a living.
And the bottom line is?
Sales managers need to have a strategy which directs sales people at the right targets. They need a value proposition which converts. And they need a business model which properly compensates sales reps for their efforts, whilst still making a profit for the business.
And that has nothing what so ever to do with kissing frogs.
