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October 19, 2011
Our research shows that most sales leaders fail to consider the interplay between selling capacity and market demand when determining headcount. And as a result, they sacrifice market-share and new logos. Instead of sizing and deploying their sales force using market-based best practices, they settle for easy fixes that ignore market dynamics and focus exclusively on cost and affordability (See my previous blog on the subject – Sizing Your Sales Force: Are You Focused on the Wrong Things?).
So how do you pair market opportunity with selling capacity to determine the optimal size of your sales force? World-class organizations employ three market-based sizing methodologies to establish the number of sales heads needed to execute their sales strategy:
- Activity Method
- Pipeline Method
- Return per Call Method
The Activity Method
An activity-based sizing model follows three steps:
- Developing a list of sales force activities required to cover the accounts in each customer segment
- Estimating the time it takes for a salesperson to complete these activities
- Calculating the number of sales reps required to do the work
The table below illustrates how a chemical company used the Activity Method to estimate their staffing requirements to cover six market segments.
There are several ways to capture the necessary data for developing activity-based sizing recommendations. Best practices include interviews, surveys and time-studies. When is the last time you surveyed your sales force to understand how much time they are spending on selling and non-selling activities? The sheer insight on productivity is worth the effort.
Customers also provide a unique perspective on what they require and expect from the selling organization. Have you considered surveying your top customers?
Key Takeaway: Best practices for Sales Force Sizing always begin with a focus on the customer. By matching selling capacity to market demand, world-class organizations properly size and deploy their sales force to capture market opportunities and push topline revenue. The Activity Methodology is one approach to determine the required optimal headcount. You should consider surveying your sales reps and managers, as well as your customers, to start collecting valuable data.
Used any of the Sizing Models mentioned? Please share your experience and most importantly the results.
For those of you in the midst of 2012 planning, make sure you don’t miss out on the no cost event: Designing Your Sales Strategy for 2012 that ends this month:
