The true cost of B2B business development
As we have seen in previous articles, setting up a dedicated team of Outbound Business Developers to generate qualified leads for your sales people is an effective model to generate a manageable, repeatable and scalable pipeline. However, few companies know the true cost of B2B business development.
At first glance, it may seem obvious that building your own BDR team in-house is more cost-effective than outsourcing your business development. However, the cost of business development, and especially the cost of building a BDR team, is often seriously underestimated, as there are many factors that companies fail to consider when planning to build their business development team.
In this article, we will thus introduce you to the real cost of sales prospecting, which is often misjudged.
The real cost of business development
The salary seems obvious to everyone when calculating the cost of B2B business development: you have to pay your Business Developers! The average base salary of a BDR in France is around €33,000. But the salary of a sales representative is calculated in terms of target salary, or OTE (= On target earnings, or total expected remuneration if the performance is in line with the targets) ! This figure includes, among other things, the BDR’s commissions, which in France average €10,500, and can increase rapidly, especially if your sales representative is good.
To this figure must also be added the employer’s charges financing social benefits (retirement, unemployment, social security, etc…). On average, they represent 42% of the gross salary, i.e. in this case about €18,000. The salary of an internal BDR will therefore cost you about €61,500 per year, or about €5,100 per month.
The cost of the sales manager is a cost that is often overlooked when calculating the cost of business development. Less costly than a vice-president of sales, they provide ongoing support to the team and help maximise results. It is essential to the success of the business development team!
(Click here to find out how to effectively drive your BDR)
If your sales manager handles about 7 to 9 BDR (sector average according to Pavillon‘s sales development study), 12.5% of their salary can be allocated to each Business Developer when calculating the cost of B2B business development. The average salary of a sales manager in France is estimated at around €93,000 (around €70,000 OTE according to Glassdoor + around €23,400 employer’s charges). By allocating 12.5% of their annual income of €73,000, it amounts to approximately €6,000 a month.
Today, it is difficult to prospect without technology! Prospecting or CRM solutions such as Salesforce, Hubspot, Pipedrive, Outreach, Salesloft, Lemlist, databases and other software… All of these tools are necessary expenses to build a BDR team and should be taken into account when calculating the cost of B2B business development. A well-equipped sales rep is a successful sales rep!
Technical expenses are another unavoidable cost that is often overlooked when calculating the cost of B2B business development. According to Demand Drive, the cost of these tools is estimated at around €5,000 a year per sales person, raising the cost of your BDR to about €78,000 a year, or about €6,500 a month.
Attracting the right talent to your company is not easy and the cost of recruitment and the lengthy interview process can end up adding significantly to the cost of B2B business development! According to Quarsh, recruitment experts, the initial cost of recruitment is between 12 and 22% of the salary. If we consider the cost of training of new profiles (training program, time allocated), this figure will also increase. Based on an average cost of 18% of the salary, the recruitment cost is estimated to be around €6,000 a year, bringing the cost of your BDR to around €84,000 a year, or around €7,000 a month.
Another unavoidable cost of B2B business development is office expenses. Renting a space is expensive, but it is difficult to measure the impact of a single employee on the rent! We therefore based ourselves on the cost of an office in a coworking space in Paris, which amounts to about €6,000 a year. Other costs will also have to be taken into account, such as computer equipment and supplies, transport and catering costs, pay slips, team building… which we round up here to a cost of €1,500 a year. This budget increases the cost of your BDR to about €91,500 a year, or about €7,600 a month.
It comes into play in the calculation of the cost of B2B business development when your salesperson is promoted or decides to leave. As the average turnover of BDRs is high, around two years according to a study by the Sales Readiness Group, this is an important cost to take into account. According to Adecco, the average cost of replacing an employee stands for 20% of their annual salary. Assuming that you pay 20% of your BDR’s salary every two years to replace them, we can therefore allocate 10% of their salary per year in replacement costs, which is about €6,100, raising the cost of your BDR to about €97,600 a year, or about €8,100 a month.
We can see that the total amount achieved of approximately €8,100 per month is significantly higher than the OTE salary of €5,100 calculated at the start. This increase can be a shock, especially if you had budgeted €6,000 per Business Developer to build your team. However, these figures do not take into account the costs of travel, of training and of all other costs necessary to increase the competence and productivity of your BDRs.
The shortfall of an average performance
Throughout this article, we have discussed the average cost of a BDR. However, average cost: average salesman! As we have mentioned in a previous article, business development is a true growth model because it is manageable, repeatable and scalable. If your Business Developer is average, and that despite correct results it is possible to double the performance, you are missing half of the ROI (=Return On Investment) you should be achieving at the same cost… You are paying twice as much for the same result!
At Suxeed, we charge a fixed cost per month per Business Developer which includes the BDR’s salary, the office costs, the tools, and the hiring and management costs. A partly performance-based model also allows you to ensure that everyone’s goals are aligned and that everyone shares the same motivation.
We ensure that the cost of B2B business development is low enough to allow you to reallocate funds elsewhere and further develop your growth. Saving you all the hassle of replacing and training, outsourcing is a viable and healthy alternative!
Any questions on the topic? Need to know more? Write to our CEO Ephraïm Bismuth to find out how to adapt the business development model to your company!
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