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The True Cost of Making Cold Calls

Since making cold calls typically plays some sort of role in an organization’s sales strategy, it can be a productive exercise to look at what the true cost of that activity is.  The following article drives to an estimated cost per cold call by dissecting the cost per employee per hour and then uses an assumption of ten cold calls per hour.


Total Compensation

Of course the majority of cost for any employee is the base compensation and benefits.  For the purpose of this exercise, we will use a base salary of $50,000 per year.  We feel this is a conservative number as there are many sales positions that provide larger base compensation packages, but there are also lower plans as well, so this is used as the average.  We have used $20,000 per year as the total benefits as on average between 20% to 30% of an employees total compensation is comprised of benefit costs.  When we divide those annual figures by 52 weeks, and then by 40 hours per work week, we arrive at $33.65 per hour for total compensation for this sales employee.


Overhead

The next largest expense for a sales organization when making cold calls is overhead.  This includes office space, power, insurance, administrative staff, IT support, hardware and software systems, phone, internet, etc.  Building out conservative assumptions in each of these areas, we arrived at total weekly cost of $320 per sales employee and when we divide that by 40 hours per week, we arrive at $8.00 per hour for overhead.


Training

Another key component and cost for making cold calls is training.  Sales staff will need to not only be trained and continually groomed in the area and art of cold calling, but they will also need to be trained in the areas of products and company systems.  For this analysis, we have used a figure of $2,000 for annual training cost, which is very conservative when you factor in all of the costs associated with delivering training.  When we divide the annual number of $2,000 by 52 weeks and then 40 hours per week, we arrive at right below $1 per hour for training per sales employee.

 



Management

A cost that could easily get over looked when analyzing the cost of making cold calls is that cost for the managers that are managing the sales staff.  For every team of cold callers, you have a manager that is responsible for managing who the callers are calling and monitoring and managing their productivity and effectiveness.  For this analysis, we uplifted the employee's compensations by 25% to arrive at a manager compensation per hour and then assumed that the manager is responsible for ten cold callers.  By dividing the hourly cost of the manager by 10, we arrive at a cost of $4.21 per hour for the management of the cold caller.


Total Cost per Cold Call

If we sum up all the cost outlined, we arrive at a total cost per hour for this sales person to be $46.80.  If we then assume that this individual will make 10 cold calls per hour, we arrive at a cost of $4.68 per cold call.

 

Launch Pad Solutions provides cold calling services helping companies to decrease the cost for making cold calls.
 

 

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This article was published on Saturday 11 December, 2010.

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