Vaguely right approach to

Sales force allocations

Introduction
• Three important sales force allocation
decisions
– Call frequency for each prospect
– Boundaries of territories – decisions
– Addition or deletion of men in sales force
• Dependency on Corporate information
systems – historical sales data – precisely
wrong approach
• Input – managerial judgment necessary for
profitability - vaguely right approach
Precisely wrong approaches
Allocating calls in proportion to sales or
potential
Rigidness in call frequency
Concentrating on travel time
 higher travel time may be fruitful
Precisely wrong approaches
Defining territories by call frequencies
proportion to sales or potential
Depends on call frequencies which may be
precisely wrong
Adding salesmen when they can be
afforded
Salesmen should be selected based on ROI –
capital investment
Vaguely right approach

Yes : No : B
A
Vaguely right approach

Yes :
A

Yes No
No : B
Vaguely right approach
• Interrelationship of three decisions
• Input
– Soft and hard data
• HARD
– Geographic areas
– Time and cost involved in reaching the account
– Average time per call on each account
– Planned number of calls to each account
– Average profit contribution per sales
– Average amount of time the salesman has for
selling and travelling
 Vaguely right approach
Soft
Amount of sale that could be anticipated from
certain accounts
Different number of calls are made than
planned
Easily supplied by manager and sales man
Odds for converting prospects are estimated -
vaguely right
Discussion of explicit alternatives
Improved communication
Vaguely right approach
Computer system
Terminal and conversational manner
Allocate 600 hours of available time in a
territory
Find the most productive account – allocate 5
to 10 hours
Allocate next most productive account and
so on
Allocation in small incremental doses
Application of marginal analysis principles
Vaguely right approach
Part A : optimal number of calls to be made
on each account in each sales territory
Part B : Add or delete time from each
territory till marginal profit value of time is
equal
E.g. 10 to 15 times in some cases
Part C : check marginal profit value of
territories are equal – Realign
Vaguely right approach
• Consider this example – marginal values
– Able 65.96 $
– Baker 144.44 $
– Charlie 273.12 $
– Donald 128.77 $
• Results : if 220 hrs are subtracted from able’s
territory and added to Charlie's territory
marginal values will be more equal
• Net profit increase is $ 16549
• Add or delete men – marginal profit per hour
per man is less than cost per hour in keeping
the man in the field then sales force has too
many men
• Marginal profit value is enough to make
minimum ROI
Vaguely right approach
Problems and opportunities
Day or night
Element of risk in evaluating response of
accounts to call efforts
Bottom up approach
Output of their own input
Avoiding spending too much time with
customers they like
Uncomfortable in putting in objective
estimates
Thank you