To follow up on my last article: Sales representatives replaced by B2B e-commerce by 2012? Here comes the big question that all SMEs selling B2B model, should seriously ask themselves.
Should I hire an additional salesperson or invest in e-commerce?
As you know, the majority of (B2B) buyers search for their suppliers, as everyone else via the Internet.
So, before talking to someone from your company, they will consult your offer via your website. If it lacks relevant information to enable the making of a quick decision, it is likely that your prospective buyer will move on to another site: there you see the value added of a transactional website.
As mentioned in my previous article, the current processes used by manufacturing companies can irritate some category of buyers. Easing this process will have beneficial effects for your company and for the treatment of cost control of orders.
How much costs a B2B sales representative?
The average cost of a sales representative varies depending on the sector of activity and the level of complexity of the product sold. Nevertheless, based on the Job Salary Guide in Quebec, here is a general idea.
Taking into account the base salary, commissions, benefits (fringe benefits) and miscellaneous expenses, the cost of a sales representative is approximately $86,750 per year.
A sales representative, usually divides its time in business development, taking and following up of orders, problems management and introducing new products available.
But often as the time passes, the human being what it is, a majority of the representatives fail to do these tasks in order to spend most of their time solving problems or discussing about pointless subjects with their clients and very little time is, in the end, spent in business development.
To sum up, the performance of a representative decreases like a flower fading in a vase filled with water. But the annual expenditure does not decrease, it increases every year on.
Human relationship remains very important in business, a sales representative will always have an important role to play in an organization. But in order to increase sales volume, SMEs frequently turn to hire an additional representative, which is expensive. The addition of additional sellers, requires sometimes the addition of a sales manager and the meter keeps on running…
How much does e-commerce cost?
Several options are available on the market and for all budgets. The objective here is not to dissect all possible variants but to establish the average cost.
For the financial year I planned my budget based on a manufacturing company with an average turnover of $ 500,000 per year.
The platform (Software)
The platform (software) often offered as SaaS (Software as a Service) for which you pay a monthly fee of between $80 and $500, depending on the features. (Let’s establish an average cost of $ 2 500 per year)
Design and integration
For the design fees of your website and the integration of your inventory, for a nicely designed website with about 250 products and a few pages of content, the average costs can vary between 2 500 and $ 5,000. However, this expense can be spread over 2 to 3 years, because websites have a shorter lifespan than in the past. To do so, let’s establish an average cost of $2,500 per year.
Marketing and promotion
If you already have a customer base, some will migrate through your online store to your new order process. However, the objective here is to acquire new customers.
It is essential to plan on a budget and a web marketing strategy. Otherwise, the activity level of your online store will remain marginal and you will feel that you made a bad investment. Not investing in this part is like laying down 100 meters from the finish line of a marathon.
Several strategies can be used depending on your industry and target customers (SEO Natural SEO, Paid listings SEA, Social Networks or content platform MMS, Email Marketing…). Whether you do it on your own or you appoint an external firm, this is a must in order to get results. This expense varies greatly depending on your goals, but you should plan on an average monthly budget of at least $1,000 ($ 12,000 / year)
An efficient website requires adjustments and frequent updates (images, colors, layouts, content…). Quite often the analysis of the behavior’s user on your site via Google Analytics allows you to correct certain aspects of your site. You should not wait 2 or 3 years to do so. A site must remain as alive as a storefront. So take a minimum of one hour per week. To that end, establish an average cost of $ 2 500 per year
With an average budget of $19,500 per year, you can have the equivalent of a representative who works around the clock, 7 days a week, who can respond in real time to basic questions of a client, accept orders, take payment and send follow up on the evolution of the treatment of orders by email.
Isn’t it wonderful!
Be careful, this estimate is not an absolute rule, since the type of software used, the features, customizations requested by the client, the marketing strategy, well everything is variable. But it still gives a broad idea.
The idea was to get SME managers thinking about that.
Investing in e-commerce is definitely cheaper than hiring an additional representative. In addition, this will help you, with a good marketing strategy increase sales at a lower cost, sometimes in countries that you have not yet had the opportunity to explore.
Sylvain D. Desjardins, CEO, Ecommerce First
Ecommerce First, we power up your business in the new economy by leveraging e-commerce, using powerful tools and a winning strategy.