Next Issue: Intelligent
Previous Issue: Solutions
Inspired by Biology
The sales force is the major driver of revenue
in most organizations. Yet, historically, it has been among the most
neglected areas when it comes to using objective
analysis and modeling solutions
for improving its effectiveness. But all
this is changing. Over the last few years, progressive companies have
accrued tremendous benefits through the use of sales
force planning solutions.
Some of the areas where modeling solutions are
being used to increase sales force effectiveness are:
- Sales force sizing: Determine the optimal size of the sales
force based on the market/product segments, current/potential demand,
carryover and multiyear contribution effects, territory size, etc.
- Sales force effort/resource allocation: Allocate sales force
effort to market segments and products.
- Sales force routing: Determine the lowest cost route/travel
plan for sales personnel based on their travel plan and travel cost/allowance
- Sales territory design/redesign: Assign accounts/geographic
units (territories) to sales people.
- Compensation structure of sales personnel: Design the best
compensation structure with fixed and variable pay components.
Sales force models can provide deep insights
into the impact of various decisions on revenue and profitability
- How much is sales of a product/category likely to increase by
increasing the sales force effort by x%?
- How strong are the carryover effects
for this a category? How much will last years' sales effort contribute
to current sales in a territory?
- What are the risks associated with
increasing or decreasing the size of the sales force? What are the
likely short term/long term effects?
- How should sales territories be realigned
to ensure maximum coverage and sales?
- How many products/categories should a sales person handle? What
is the optimal territory size a sales
person should cover?
- How should a sales person design his travel or tour plan to
minimize costs and maximize coverage?
- How much time should he spend at each location? How often should
he visit a particular location?
- How should the compensation of a sales person
be structured? For a new product? For a mature product? For
fast and slow moving products?
Most sales force modeling exercises include both descriptive and normative
models. Descriptive models characterize how markets react to
various sales force decisions while normative models are optimizers
that search the solution space to find the best sales force decision.
A typical sales force modeling project
consists of the following steps:
- Finalize scope and objectives
- Build initial model based on content
insights, domain expertise and interaction with sales personnel
- Identify, collect
and refine required data
- Execute model on historical data and
validate results with users
- Fine-tune model
- Implement model and
End-users need to be involved along each step of the model-building
and implementation process. Models can provide the insights, but
it is people who make the decisions.
2000-10 DecisionCraft Inc.