The amount of money you spend on your sales stack is no joke.
After CRM, marketing automation and additional sales tools, the annual cost of your sales stack could reach hundreds of thousands — maybe millions — of dollars.
On the other hand, a report from InsideSales.com found that 36% of business executives feel that they spend “too little” on sales technology.
So how do you know whether you’ve jumped the shark (see below) or you’re holding back on sales stack spending?
First, you’ll need to calculate how much money you’re spending on an annual basis. We’ll share an example:
Let’s say you have 100 sales reps. You know that you spend $150,000 a year on your CRM system, plus another $200,000 on additional sales technologies, so you spend a total of $350,000 on sales stack technology each year.
- $350,000 / 100 reps = $3,500 per rep, per year (Total spend on sales stack in 1 year)
- $150,000 / 100 reps = $1,500 per rep, per year (Spend on CRM in 1 year)
- $200,000 / 100 reps = $2,000 per rep, per year (Spend on additional sales tech in 1 year)
Do this same equation with your own budget.Once you’ve got that number, here are a few ways to determine how much is too much to spend on your sales stack:
3 Benchmarks for Sales Stack Spending
- The Industry Standard
The same InsideSales research also found that, given the current rate of sales rep adoption, North American businesses spend $2,280 per rep, per year on sales technology (not including CRM or marketing automation software). This number is close to the $2,000 per rep, per year number we came up with in our example.
That number goes up to $6,790 per rep, per year if you account for the total addressable market, which would consider a 75% rep adoption rate. (Again, not including CRM or marketing automation).
- The Base Pay Percentage
Many sales leaders utilize a percent-of-base-pay figure to determine how much they spend on each sales rep. The idea is to spend somewhere between 15-20 percent of the base pay for an individual sales rep on their sales stack technologies.
Back to our example: Perhaps each of our 10 reps makes a $100,000 annual salary base pay. So 15% to 20% of that would mean spending $15,000 to $20,000 per rep, per year on their entire sales stack (CRM + marketing automation + additional sales tools).
For enterprise reps with lengthier cycles (who are likely making more base pay than mid-market or SMB reps), it makes sense to increase the spending on sales technology, because they’re handling a more complex process.
- The Individual Analysis
Of course, the best way to figure out how much you, specifically, should spend on your sales stack is to do your own cost/benefit analysis. Here’s what you should consider for each piece of tech in your sales stack:
- Your sales stack should save you time: If reps are only hitting 80% of quota, but the technology helps them get 100% or even more, then the ROI of that piece of your sales stack is clear. And vice versa — if you’re not seeing the return, ask yourself what kind of value you are seeing from that tech and whether you should consider eliminating it.
- Your sales stack should save you money: Ask yourself, if you didn’t have the technology to enable a certain activity, how would you do it? Would it require hiring another team member, which could cost you anywhere from $50,000-$100,000 per year? Or would your sales process work just as well without it?
Look at the sales processes that are central to your CRM (making calls, sending emails, logging activities, etc). Figure out which ones take up the most manual time, and determine whether the technologies you have in place alleviate that by saving time or money. (Go here to learn how to re-evaluate your sales stack).
Use a medley of these three benchmarks to determine whether you’re spending too much on tech. And remember: There’s more intelligence built into a human being than any software, but a human being can operate more intelligently when empowered with technology.