Over 57 000$ in costs reduction

Innovation should be considered as the introduction of a new idea that bring economic or social benefits. If a new product is not brought to the market, it does not bring social of economic benefits. So the point is to bring innovative products to the markets.
Innovations often take years to get widely used on the market. The goal is of course to reduce the span of time for its introduction.
Industrial Affiliates commercial clusters are innovative in many ways:

• It is an innovative organization targeting its diffusion on world markets;
• It targets the successful introduction of new products and process on world markets;
• It generates the benefits of the extended enterprise to the commercial value chain;
• It brings benefits while reducing costs.
  

This article is about the cost reductions brought by affiliate marketing in the business to business commerce.

Annual cost reduction over 57 000$

Commercial cluster typically target the engagements of 50 sales agents for each company as well as the identification of 100 opportunities of requests for proposal. We estimate that the engagement of external sales force through our system cost 57 000$ less than it would for the same results without our services:

• With an annual cost of 840$ the opportunity management system generate about 4920$ in savings.
• With an annual cost of 10 000$ we also estimate that companies can save over 52 000$ with the talent follow up system.
  

Here is how we come to these numbers.

The opportunity management system

The opportunity management system provides an online descriptive catalog enabling external sales force to disclose and reserve opportunities of requests for proposals. The OMS

• Registers the members acceptance of the network policies and practices;
• Register Sales Agents;
• Records opportunities of requests for proposals (ORP) coming from external sales force;
• Puts ORP in queues until they get validated by supplier;
• Communicate and records material facts from the ORP up to the step of paying commission to external sales force;
• Reports each step of the sales process to whom it concerns;
• Reports global performance of the sales channels.

Cost comparisons

Keep up communications with external sales force
To Keep external sales force informed, your business has to :
Generate trusts and confidence with sales people through general policies and practices;
Implement systematic 12 steps follow up about material and immaterial facts of the opportunities of requests for proposals, coming from 50 sales people, 200 leads, 100 opportunities of requests for proposals, 20 contracts;
Forward and coordinate communications between sales force, salary paid technical sales force and sales manager;

Total: over de 960 emails
Estimated work : 225 hours (15 minutes)
Comparative costs: 4 800$

Reporting activities to sales director.

• Report sales activities every week:
• Number of candidates contacted;
• Number of candidates interested to become sales agent;
• Number of sales agents engaged;
• Number of Opportunities of Requests for Proposals (ORP);
• Number of ORP accepted;
• Number of proposals submitted;
• Number of sales agents engaged;
• Number of closed deals;
• Amount of sales collected;
• Global amounts of commission.

Estimated time: 48 hours (4 hours par months during 12 months)

Comparative cost: 960$

Talent Follow up System (TFS)

The Talent Follow up System TFS allows to reach out to thousands of candidates specialized in over 50 industry categories and to filter them up to the point that we find sales agents who actually have access to opportunities of requests for proposals.

Costs Comparisons

Database access in North America

The recruiting process is carried on during 12 months.

There is four service options on the market to access databases reaching out talent in North America: 1 month service, 2 200$, 3 months service, 5 300$, 6 months service, 8 400$, 12 month service 13 000$;

Individually a small business could hardly afford these services for 12 months;
The equivalent monthly costs for these services for the 3,6 and 12 months are 1767$, 1 400$, 1 083$

If 5 companies were sharing costs to access database during 6 months twice during the year, it would each costs them 3 360$

With the commercial cluster the cost to access is only 650$ per member.

Comparative cost: 3 360$

Contact and filter candidates

To engage 50 sales agents, a company must typically contact 20 candidates per week during 50 weeks and select among 250 interested candidates

Estimated time: (500 hours)

Comparative cost: 10 000$

Time saved in cold calls

In front of the problem to find distributors interested to sell specialized products, services and solutions, companies often assigns technical sales agents to make cold calls on new markets, to go in trade shows and commercial missions. For example, a technical sales person could spend 20 hours per week for prospection and collect only 6 prospect per week, 15 requests for proposals and 5 contracts on new markets. With a marginal contribution of 50%, this way of prospecting would generate only 125 000$ for equipment sold at 50 000$ and cost around 32 400$ if we add participation to a trade show. The benefits of this approach are too low.

Affiliate marketing for B2B can save thousands of dollars in cold calls to companies

Estimated time: 1 000 hours

Comparative cost : 20 000$

Time and resources for Marketing and sales director

Small businesses usually promote their company through WEB sites and generally have few financial resources to:

• Hire a marketing and sales director able to compensate the inefficiencies of the traditional distribution chains on new markets;
• Implement push promotional strategies to salary paid sales representatives;
• Spend money in traditional media (such as magazines and trade shows) to build year after year, brand and recognition to large geographical markets;

As the external sales force on new markets do not create demand but respond to demand, marketing and sales directors must clearly define their product/service/technology/market strategy and provide a business environment for that will generate attention, interest, desire and action from potential clients generating opportunities of requests for proposals on new markets.

Estimated time from marketing/sales director for marketing activities without external support: 14 hours per week;

Estimated time from marketing/sales director for marketing activities with external support: 7 hours per week;

Time saved : 7 hours per week

Annual time saved: 350 hours at 30$/hrs

Comparative cost: 10 500$

Maintain relations with 250 people specialized and interested to your products

It is often recognized that 80% of the leads in commercial trade shows are not followed up.

The talent follow up system provides access to external sales force candidates of 100 millions job seekers categorized. The TFS is a filter connected on the world allowing to contact non solicited candidates who have access to opportunities of requests for proposals.

The annual license fees of the SST costs 39 000$

The management of the SST costs 58 000$

If 5 companies were sharing these 97 000$, it would costs each one of them 19 400$.

In a commercial cluster with Industrial Affiliates share these costs are shared between 20 companies: 3550$Comparative cost: 19 400$

Globally

The OMS and TFS are the foundations of an innovative organization and process reducing costs: they help to perform more sales at lower costs.

Globally, we estimate cost savings over 57 000$.

The following tables summarize costs savings described in details in his article.