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The Sales Learning Curve

November 3rd, 2004 · No Comments

Ross Mayfield blogs a talk by Mark Leslie:

This method of establishing a sales force is called the sales learning curve (SLC). It’s a concept adapted from the manufacturing learning curve (MLC), which is widely accepted in the manufacturing sector. The MLC states that the cost to produce the early units of a new product normally is high, but over time, as the production team learns how to optimize manufacturing and wring-out costs, volume increases and per-unit product costs decline sharply.

When we apply the MLC to sales, we come to the following conclusion: The time it takes to achieve cash flow breakeven is reasonably independent of sales force staffing. It is, instead, entirely dependent on how well and how quickly the entire organization learns what it takes to sell the product or service while incorporating customer feedback into the product itself. Because the entire organization has to come up to speed, hiring a large initial sales staff does not speed up the time to breakeven, it simply consumes cash more quickly…

Rather than starting with a large sales force, a company using the SLC is better served by hiring a small team of sales execs with the analytical skills and patience to lead the company through an iterative learning process that includes the continuous discovery and solution of small but crucial problems…

By adhering to the sales learning curve model of sales force staffing, you can safely toss out that old adage we started with. It doesn’t have to take longer and cost more than you planned.

Tags: Management

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