too small sales force is a loss of income and a too large or incorrectly allocated one is a waste of resources. Many companies use their sales managers’ gut feelings to determine how many sales people they should have and how they should be allocated. This means that one of the most important decisions for growth and profitability is based on the hidden assumptions of a few people. A company we recently worked with discovered they were spending too much resources on segments with little potential and too little on segments with great potential – they were wasting resources in some markets while missing opportunities in others. A sizing and deployment analysis answers the questions: • H ow large should the sales organization be? • How are resources best allocated across geographies, segments and products? With the current dominance of financial management in most companies, sales executives need to learn to speak the language of finance – they need to be able to present fact-based evidence to effectively argue for and secure the resources necessary to capture the potential of their markets. That evidence has come within
easier reach as companies have much more data on markets, costs and sales force activities than they had just a few years ago. Today, most companies have a CRM system of some sort. The data in them are of varying quality but the quality gaps can usually be bridged fairly easily. We propose to use data on markets and profitability to find the best number and allocation of people, and if any assumptions have to be made, to make them explicit and clear so that they can be valued and so that any risks associated with them can be managed. Experienced sales managers’ instincts are valuable and should be used, but assumptions should be clear and used in a structured approach, as no single person can know all markets and customers and then balance that versus revenue and profit potential. Traditional approaches to sales force sizing and allocation The budget approach is based on the faulty argument that “we have as many sales people as we can afford”. This is counterproductive since sales spending should not be seen as a cost but an investment that provides a return. A sales manager in a company that uses the budget approach will likely need convincing arguments to gain support to change the sale force size, as budget levels tend to become anchored and stick over time.
“Sales executives need to learn to speak the language of finance – they need to be able to present fact-based evidence to effectively argue for and secure the resources necessary to capture the potential of their markets” 42 |