1. Salesforce Issues
Goals
Sizing
Allocation/Alignment
Organization 1

2. Salesforce Issues Goals Sizing: How many? What type? (Syntex)
Allocation:
Over products (Syntex/Detailer)
Customers/prospects (Syntex)
Territory design (Geoline)
Call planning (CALLPLAN) (Integrated models: ZS)
Organization/Control:
Compensation 2

3. Salesforce Management Decisions
Goals and Objectives
Organization Decisions
Salesforce structuring
Salesforce sizing
Territory design
Allocation Decisions
Over products, customers, prospects, segments
Timing/Call planning
Control Decisions
Compensation
Evaluation
Motivation 3

4. Salesforce Size % of sales method (back into number of people)
Breakdown method (add up sales potential)
Based on response model
Syntex 4

5. How to Estimate the Response Function?
Historical data
Available?
Sufficient variability for estimation?
Experiments
ABB (Remember?).
Difficult to execute.
Managerial Judgment
Quick.
Builds consensus.
Encourages systematic thinking. 9

6. Sizing Example: Salesforce Sizing at Syntex
Current salesforce size (1982) was 433 reps, expanding by 30–40 per year.
Salesforce allocated to:
7 Drugs Naprosyn, Anaprox, Norinyl, etc.
&
9 Physician Specialities Family practice, internal medicine
OB/GYN, etc.
by judgmental/historical norms.
Questions:
How large should the salesforce be?
How should it be allocated to drugs and to physician specialities?
Approach:
Judgmental estimation of response functions. 5

7. Syntex Model
Each management team member separately estimates a response function for each sales entry
As a group, the management team members discuss and
develop consensus estimates of response functions
Run the model
Test profit consequences of alternate scenarios
Do results make sense? Can they be implemented?
Implement resource allocation decisions
Monitor and evaluate sales performance No
Yes 6

8. Pooled Judgment Process
Reference Conditions: Assumptions about what the market would do at best guess/planned conditions. Just a reference point--not as important as CHANGES from reference conditions--your task.
What if?….Selling effort in this segment were 50% more…..what would happen to sales? Think about it this way:
How many salespeople is that?
How much additional sales per salesperson?
Capture new accounts? More sales to existing customers?
We pool your results. We report average and extremes.
You discuss and redo your assessment. We cycle once more if needed. 28

9. Opportunity Costs Identified by Syntex Model
Opportunity cost of
maintaining current
sales force size
Change in Profit after Change in Salesforce Size and Reallocation of Effort
+$5M
–$5M
Current
level 30
Optimal increase
in sales force size
Change in Salesforce Size from Current Level 7

10. Allocation Allocation to existing customers and prospects (CALLPLAN)
Allocation to products:
Rules of thumb.
Response models. 8

11. Allocation Example: CALLPLAN Model at United Airlines
Step 1
Determine expected contribution of all possible call policies for each product account.
Step 2
Allocate time to accounts. 10

12. Each Salesperson is Asked . . .
What would sales of this account be if . . .
. . . you don’t visit the account? X0
. . . you visit the account the same as last period? X1
. . . you visit the account 50% more than last period? X2
. . . you visit the account as frequently as possible? X3 11

13. This Yields— Expected Sales Number Of Calls X X X X Base 1.5 ´ Base 32
Expected Sales X 1 X
Base
1.5 ´ Base
Number Of Calls 12

14. Problem How much time to spend at each account to: Maximize Subject to
sum of account revenues ´ account margin?
Subject to
salesperson time constraint?
min./max. calling restriction?
Output
Recommended calling frequencies for each account 13

15. Optimization Procedure in CALLPLAN
Number of calls
Account
Number
The numbers in each row of the matrix correspond to the response function for that account, showing incremental contribution per call at that call level.
Indicates marginal contributions at current level of deployment
Indicates marginal contributions at the optimal level of deployment 14

16. Current Allocation vs Model Recommended Allocation8 8 7 7 6 6 5 5
Number
of Calls
Number
of Calls 4 4 3 3 2 2 1 1 1 2 3 4 1 2 3 4
Account Number
Current Allocation
Account Number
Model Recommended Allocation 15

17. Does CALLPLAN work? The United Airlines Experiment
20 sales people participated
10 West Coast
10 East Coast
10 pairs selected
5 East and 5 West matched by managerial judgment, personal characteristics, compatibility of territory size, and revenue account mix.
10 CALLPLAN participants selected
1 from each pair.
Other 10 were control group.
Control group
Told they were in an experiment.
Participated in judgmental call frequency/account response development.
Received computer feedback of their input but no CALLPLAN recommendations. 16

18. Results after 6 Months Sales Change vs Previous Year
Experimental Group – Control = Difference
+11.9% +3.8% +8.1%
(Probability that this result is due to chance < ) 17

19. Profit Impact Time Needed Change in Sales ~ 1/2 day per salesperson
(~ 95% profit in airline business) > $1,000,000 (for the 10 sales people) in 6 months. 18

20. Territory Design Example: Geoline
Objective—To design territories that are:
1. Of equal workload*.
2. Contiguous.
3. Compact.
Model—Maximize compactness:
S.T. G Workloads are equal.
G Contiguous.
G Sales people are assigned to one or more geographical units.
(Uses legislative redistricting software.)
* Workload is measured using variables such as customer count, number of calls, sales potential, or some weighted combination of these variables. 19

21. Sales Territory Design Output
Optimal boundaries and resident locations for three sales territories. 10 8 6
Miles 4 2 2 4 6 8 10 12 14 16 18 20
Miles 20

22. Sales Force Alignment/Allocation Influences
Environmental Changes
Competitor activity
Shifts in buyer behavior
Demographic shifts
Government regulations
Organizational Changes
New products
Maturing product lines
Restructuring
Mergers and acquisitions
New data sources 21

23. What Can Realignment Accomplish?
G Better coverage of clients and prospects
G Better market penetration
Higher Sales and Profits
Workload Balance
Sales Potential Balance
G Fairer evaluation of sales people
G Improved morale
Travel Efficiency
G More face-to-face selling time
G Reduced costs
Minimized Disruption
G Acceptance by sales people
G Acceptance by customers
G Lower “transition costs” 22

24. Territory Design Objectives and Criteria
Sales Workload Potential Minimum Territory Balance Balance Disruption Compactness
Customers Responsiveness ´ ´ Relationships ´
Reps Earnings opportunity ´ Reduced uncertainty ´ Control of overnights ´
Firm Sales results ´ ´ ? Effort control ´ Travel cost control ´
Conflicts?
Tradeoffs?
Priorities? (How to set?) 23

25. Compensation (Indirect Control):
1. Level
2. Form:
Salary
Commission (on sales? on profit? short/long term?)
3. Other:
Contests
Bonuses 24