A Note on Sizing the Sales Force

11 Pages Posted: 21 Oct 2008

See all articles by Robert E. Spekman

Robert E. Spekman

University of Virginia - Darden School of Business

Arya Kalla

Capital One Bank

Abstract

This note describes several approaches one could employ to size a sales force. It addresses the advantages of each approach as well as the weaknesses. The case entitled "Z Associates: Sizing the Sales Force" (UVA-M-0745) provides a real-world example of one company's attempt to select the correct approach, and includes a supplemental Excel file for students.

Excerpt

UVA-M-0746

A NOTE ON SIZING THE SALES FORCE

Within the business-to-business marketplace, the importance of the role of the sales force cannot be emphasized enough. Those firms that can achieve greater efficiency and effectiveness in the way they employ, deploy, and allocate resources to their sales forces will emerge as competitive winners. Among the key decisions that a firm must make lies the question of how many salespeople are enough. The question of sales force size poses a number of challenges given that the size of a sales force often needs to change as companies evolve their products and adapt themselves to different market conditions. Companies use many different rules and approaches to determine the size of their sales force. The effort allocated to managing a company's sales force is critically important because it can immediately affect customer coverage, product effort, costs and profits. This note discusses those factors that can cause a change in the size of a sales force, illustrates a few methods of sizing the sales force along with their pros and cons, and describes some of the usual mistakes companies make in sizing thesales force.

Data appear to reveal a very strong and positive correlation between sales effort and revenue, as is illustrated in Figure 1. One industry maxim is “feet on the street equal market share.” Despite the growth of managed care, this relationship does appear to hold true.

Figure 1. Link between sales effort and revenue.

A good sales force (appropriate structure with correct number of salespeople) can help a company achieve its strategic objectives. But factors both internal and external to the firm influence sales force size and at times, companies find that their sales forces have become too large or too small.

. . .

Keywords: sales management, sales force design, marketing strategy

Suggested Citation

Spekman, Robert E. and Kalla, Arya, A Note on Sizing the Sales Force. Darden Case No. UVA-M-0746, Available at SSRN: https://ssrn.com/abstract=1280637

Robert E. Spekman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/spekman.htm

Arya Kalla

Capital One Bank

6890 Elm Street
McLean, VA 22101
United States

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