Calculating Every Sales Rep’s Worth with Value to Date
Who are your most valuable sales reps?
You might instinctively say it’s the ones in your highest tier. Or the ones who increased their sales the most in 2018.
You might also make an argument for the sales reps who know your products the best, have sold the greatest variety of them, and have the best-developed sales skills.
Or, you might answer, “The reps with the broadest and deepest downlines.” After all, another name for direct selling is “multi-level marketing.” If you can keep adding levels, you’ll win at this game.
But each of these answers is only complicating the issue. There’s an easier way.
How do you calculate the value of a customer? You simply tally up all the purchases they’ve made with you, right?
We propose that the best way to measure a sales rep’s worth to your organization is by adding up the value of all their sales. This metric is called Value To Date (VTD).
VTD may be easy to measure, but it’s critically important to your business. Here’s why.
What Each of Your Sales Reps Is Worth Right Now
Your direct selling firm probably has hundreds or even thousands of distributors. Each is at a different point in their distributor lifecycle. Each has a different amount of potential.
But you’re trying to measure their value to your business right now. How do you do that?
Do you assign more value to the new rep who burst onto the scene in 2018 with a great first year, or to the 10-year rep who has quietly put up solid numbers since her third year?
The great thing about VTD is that it eliminates gut feelings, intuition, or even corporate politics from this discussion. VTD is simply the sum of all the revenue a sales rep has ever generated for your company, including sales by their downlines.
So, your 10-year sales rep will probably have a much larger VTD than her hotshot rookie counterpart.
Why does this matter? Because when you’re deciding how hard you should try to save a sales rep who’s at high risk of churning, VTD gives you a factual look at how much this person has been worth to your organization.
It’s not about what this person could have done, should have done, or will do someday. It’s about what they’ve actually generated. It strips away all of our biases and puts a dollar figure on each distributor.
How VTD Can Help You Drive Improvement
VTD isn’t just about figuring out who has been the most valuable so far and then making more of an effort to retain these people when they’re at risk of quitting. It’s also an essential metric when you’re looking for ways to motivate your distributors towards incremental improvements.
You can’t improve what you can’t measure. By calculating VTD for all your reps, you’ll give yourself a baseline. You can then work towards motivating all your sales reps to make, say, one more sale per month or quarter. Multiply that improvement across hundreds or thousands of reps, and you can imagine the impact it would have on your revenues.
Here’s how it works: our platform can segment your sales reps into distinct groups based on their behavior. Each of these groups has an average VTD. If you notice that some sales reps in a particular segment have a lower-than-average VTD, then you’ll know that these are people who may need a little extra motivation, training, or mentoring. They have untapped potential!
Increasing the VTD of each sales rep by just a tiny amount can have a huge effect on your bottom line. I’d love to explain more about how that works. Drop me a line.
Learn how PM-International achieved up to 27% revenue uplift over 6 months by extending the lifespan of its distributors and customers around the world. Download the case study here.