Economy Forces Reduction in Sales Forces 0
The sluggish economy has had its toll, even on Google where it has recently reduced the size of its sales force. Other companies such as GlaxoSmithKline, Apple and Sun Microsytems have also reduced their sales forces. Re-sizing the sales force creates a cascading impact on the sales force and their customers. My experience shows that when this type of change occurs in the field, top line revenue and sales force morale are at risk because of the broken relationships between sales professionals and their customers.
Three critical questions need to be addressed when re-sizing the sales force:
1. Do you have the right number of sales professionals?
2. Are sales professionals covering the right accounts?
3. Are sales professionals located in the right locations?
The following proven, real-world process can be used to answer those questions:
1. Create database
The process starts with a data template with elements including account characteristics, sales representative assignment, revenue, margin, volume, potential, account profile and sales visits.
The next step is to populate the template with customer and prospect data. Next, the database needs to be segmented. There are a wide range of methods for determining segments based on account characteristics, e.g., industry definition, products, services and buying behavior. The foundation of segments will have an impact on the following steps of the sales deployment process.
Once the database has been cleansed and segmented, estimating potential is the next step. Most companies can collect actual revenue or margin at the account level, but potential is usually not readily available. You could engage the sales force to estimate potential at the account level, or you could use a “mechanical” process. One route is to estimate specific spending at the national level, at the industry segment and at the company size level (either number of employees or annual sales). Then you can estimate potential at the account level. Another means of achieving account potential is more specific by using spending at a geographic level, i.e. spending in Atlanta which may be different than San Francisco. In some industries like pharmaceuticals, data exists that can pinpoint exact spending at the account level. Another option involves leveraging the customer database. Customer characteristics need to be included in the database such as industry segment, number of employees and annual sales at the account level. Based on these customer characteristics, estimators are created based on high share accounts by segment. This estimator is then used as a proxy for potential for all customers and prospects with the same characteristics. Read the rest of this entry →