SALES FORCE SIZING & PORTFOLIO OPTIMIZATION SALES FORCE SIZING & PORTFOLIO OPTIMIZATION...

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  • SALES FORCE SIZING & PORTFOLIO OPTIMIZATION

    David Wood, PhD, Senior Principal Rajnish Kumar, Senior Manager

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    2

    Today’s Webinar as part of a series

    All PMSA Webinars available via http://www.pmsa.net/conferences/webinar

    • Promotion Response Modeling 9/16/2015

    • SALES FORCE SIZING & PORTFOLIO OPTIMIZATION Today

    • Territory Alignments & People Placement 10/14/2015

    • Targeting & Call Planning 10/28/2015

    • Incentive Compensation 11/11/2015

    All Webinars at 12:00 noon Eastern time

    http://www.pmsa.net/conferences/webinar

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    3

    Natural annual rhythms in sales planning “seasons”

    Slide 3

    Sales Management / Sales Operations Workload

    Assumes annual size, alignment, goal processes

    Today’s Webinar focuses on this

    dimension

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    4

    Today’s discussion has the following objectives:

    Slide 4

     Present classic approaches to sales force sizing

    o What are the advantages and limitations ?

    o When appropriate to use ?

     Share illustrative case studies

     Answer your questions

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    5

    Sales force sizing – typical questions

    Slide 5

     How many sales people do we need ?

     …by type of sales resource ?

     What will sales and profits be, given various sales force options ?

     How do we allocate reps ? … across product lines ? … geography ?

     What is the incremental ROI of additional (or fewer) reps?

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    6

    Go-to-market strategy – key questions

    Customer Universe

    Customer Segmentation

    Targeting / Reach

    Sales Force Sizing

    Activities by Segment

    Go-to-Market Strategy

    What Customers? What Work?How Approach Market?

    Staff by Whom? Deploy Where?

    Resourcing Options

    Resource Deployment

    Workload by Segment

    Role Definitions • Direct / indirect / hybrid • Inside / outside • Hunter / skinner / farmer

    Workload Capacity

    Tactical Call Plan

    Slide 6

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    7

    Important Criteria

    Slide 7

     Time: how long does it take to conduct the analysis ?

     Data: are the underlying data readily available ? … are the inputs / assumptions easy to get ?

     Complexity: how difficult is the ‘math’ ?

     Defensible: can this go to the CFO / CEO ?

     Forecast: does it generate estimates of sales and profits ?

     Implementable: can outputs be used to deploy, align, guide, and incent the sales force ?

     Cost: how costly is the approach ?

     Long term impact: does the organization learn / get better ?

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    8

    Same as Last Year

    Cost of Sales

    Share of Voice

    Workload Build-up

    Affordable Coverage

    Sales Response

    Classic approaches to sales force sizing

    Slide 8

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    9

    Same as Last Year

    Cost of Sales

    Most common approaches – internally focused

    Slide 9

    100

    150

    200

    50 50 50

    Last Year This Year Next Year

    Sales (in $mn) Sales Rep (in nos.)

    100

    150

    200

    50 75

    100

    Last Year This Year Next Year

    # Sales

    (in $mn)

    vs # Sales Rep

    Sales (in $mn)

    Sales Rep (in nos.)

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    10

    Summary & Comparison

    Slide 10

    Criteria

    Approach Time Data Complexity Cost Forecast Defensible Implement

    able L-T Impact

    Same as Last Year

    Cost of Sales

       Less is good      More is good   

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    11

    Summary & Comparison

    Criteria

    Approach Time Data Complexity Cost Forecast Defensible Implement

    able L-T Impact

    Same as Last Year

    Cost of Sales

    Slide 11

    Good So-So Bad

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    12

    Share of Voice – Example from Insurance (P&C Commercial Lines)

    Slide 12

    Agency presence by P&C carrier in

    different markets

    G e

    o 1

    G e

    o 2

    G e

    o 3

    G e

    o 4

    G e

    o 5

    G e

    o 6

    G e

    o 7

    G e

    o 8

    G e

    o 9

    Source: P&C LOB, Axtria Agency Intelligence database

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    13

    Workload Build-up Approach

    Slide 13

    Assumptions

    # Days / Year 220

    # Calls / Day 6

    # Calls / Year 1,320

    Customer Total #

    Segment Prospects % # 5 4 3 2 1 # Calls # FTEs

    A 1,000 80% 800 24 12 12 4 8,320 6.3

    B 5,000 60% 3,000 12 8 4 14,400 10.9

    C 12,000 60% 7,200 12 4 23,040 17.5

    D 45,000 40% 18,000 4 2 21,600 16.4

    Totals 63,000 46% 29,000 42,720 19,680 4,320 640 0 67,360 51.0

    63% 29% 6% 1% 0%

    # Calls to Customer QuintileReach

    Rep Capacity 1

    2

    3 4

    5 Quintile 5 = largest accounts; Quintile 1 = smallest

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    14

    Summary & Comparison

    Slide 14

    Criteria

    Approach Time Data Complexity Cost Forecast Defensible Implement

    able L-T Impact

    Same as Last Year

    Cost of Sales

    Share of Voice

    Workload Build-up

       Less is good      More is good   

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    15

    Summary & Comparison

    Slide 15

    Criteria

    Approach Time Data Complexity Cost Forecast Defensible Implement

    able L-T Impact

    Same as Last Year

    Cost of Sales

    Share of Voice

    Workload Build-up

    Good So-So Bad

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    16

    Sales Force Sizing: Micro-economics 101

    Slide 16

    What happens when a territory goes

    vacant ?

    T T + 1

    Sales do not drop to $0, due to “carryover”, brand equity, advertising, etc.

    What happens when a territory goes vacant ?

    Sales generated from effort this period have a lingering effect into future periods, referred to as “carryover”

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    17

    Are all sales ‘attributable’ to sales force effort in the same time period ?

    No. Sales due to sales force effort vary by industry, market, product, marketing spend, etc.

    Sales Force Sizing: Micro-economics 101

    Slide 17

    T

    Brand Equity

    Prior Carryover

    Sales Due to

    Effort (T)

    T+1

    Brand Equity

    Prior Carryover

    Sales Due to Effort

    (T+1)

    T+2 …

    Carryover from T

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    18

    Affordable Coverage Approach

    Slide 18

    Assumptions

    # Days / Year 220 50,000,000

    # Calls / Day 6 50%

    # Calls / Year 1,320 25%

    $ / Rep $100,000 75%

    Cost / Call $76 10%

    Customer Total #

    Segment Prospects 5 4 3 2 1

    A 1,000 20% 60% 20% 10% 7% 3% 100%

    B 5,000 15% 60% 20% 10% 7% 3% 100%

    C 12,000 20% 60% 20% 10% 7% 3% 100%

    D 45,000 45% 60% 20% 10% 7% 3% 100%

    Totals 63,000 100%

    Customer Total #

    Segment Prospects 5 4 3 2 1

    A 1,000 6,000$ 2,000$ 1,000$ 700$ 300$

    B 5,000 900$ 300$ 150$ 105$ 45$

    C 12,000 500$ 167$ 83$ 58$ 25$

    D 45,000 300$ 100$ 50$ 35$ 15$

    Financial Assumptions

    Sales Forecast

    % Margin

    % Sales due to Effort

    % Carryover

    Discount Rate

    Rep Capacity

    % Revenues in Quintile

    Estimated $ Sales Per Customer

    Segment

    % Sales

    1

    2

    3

    4

    5

    Quintile 5 = largest accounts; Quintile 1 = smallest

  • Copyright © 2015 Axtria, Inc. All Rights Reserved.

    19

    Affordable Coverage Approach

    Slide 19

    6 Customer Segment 5 4 3 2 1

    A 1,610$ 537$ 268$ 188$ 81$

    B 242$ 81$ 40$ 28$ 12$

    C 134$ 45$ 22$