Picking up on my last post about the passing of time, I thought I would talk about the concept of Opportunity Cost. Wikipedia describes it as a key concept in economics that plays a crucial role in ensuring that scarce resources are used efficiently. They go on to say that the concept is not always restricted to monetary or financial costs and that the real cost of output forgone, lost time, pleasure or any benefit that provides utility should also be considered opportunity costs.
By opening the definition to include non-monetary terms all of a sudden opportunity cost thoughts are everywhere in our lives. Even the non-financial examples provided in Wikipedia relate to decisions about television shows, dinner choices and family vacations. We face thousands of these decisions all the time and rarely take the time to consider the alternatives and the opportunity costs of our choices. It starts from the moment you wake up, should I hit the gym or the snooze button? Should I wear this or that? Should I drive this way or that way to work? It goes on and on. Is there an app for keeping a running total of opportunity cost for the day? I doubt it because we do most of the calculations unconsciously in order to survive.
As a sales professional however, I am constantly weighing the pros and cons of how I spend my time. Should I be out meeting with people, networking, and prospecting the old fashioned way by pounding the pavement and meeting face to face over coffee? Or is it more effective to hunker down, write a blog post, update my website, my LinkedIn, Tweet, and dive into social media? What about advancing my knowledge and skills by taking a class, going to a conference, or reading an industry book? The answer most would say is to do a little of all of them and to track the results to see which activities provide the greatest return in order to make a more informed decision.
I would argue that most successful sales people should be constantly valuing their time and evaluating how they are spending it, the returns they get from their activities and the opportunity cost of not doing the activities that work. I’m clearly not alone in this thinking because why else are there the golden rules of sales metrics, like it takes an average of 7 to 9 contacts with the same prospect to close a sale, and sales management. However, I don’t think many sales people and their leaders are considering comparing the opportunity cost of buying external expert solutions to building internal solutions with a partner that are based on what is working to improve their results.
I believe the reason for this is that most sales people and their leaders jump to the conclusion that the improved revenue answer needs to come from outside and therefore they often just look to buy the most credible expert and their packaged offering as the preferred solution. We see it differently at Gimbal Systems. Our goal is to partner with organizations and work with their top producers to identify what makes them successful so that processes and training can be developed to teach and reinforce the critical behaviors to others that are less successful. This is a highly customized approach that focuses on looking inside an established sales team for the answer and building upon it rather than bringing in and buying a prescribed solution from the outside.
In the end whatever choice an organization makes between buying the best external expert solution or building with the best internally, the opportunity cost is what they get with in terms of improved results. The key factor we believe in that comparison is the level of confidence in the future results that comes from the identified solution. Expert consultants with proven methodologies will argue based on their extensive experience with other companies, industries, etc. that they will get X percent lift. The concern I have with that business case is this; how directly does that equation fit with a company’s culture, industry, salespeople, competitive landscape, marketing plan, rules and regulations, business processes and overall willingness to change? All of these items impact how well a training solution, for example, sticks in an organization and drives results.
So our challenge to sales people and their leaders is this. Don’t just unconsciously decide to buy increased revenue solutions externally like we do with some of the choices I mentioned earlier. Take the time to have the conscious opportunity cost comparison conversation. Truly consider the differences between buying the externally packaged expert sales solution and working with an expert guide to help identify the ideal for your organization based upon what is already proven and working on your sales team in order to build a customized solution for your revenue growth. Yes the later may take more time, but consider the benefits of less resistance, more credibility and faster adoption that come from that approach and ultimately drive the success of any initiative. Now that is a conversation I want to have and in my judgment needs to happen more often. What do you think?