Perhaps the most straightforward, yet often overlooked method of validating sales force sizing questions is through the tried and true activity-based method.
Definition of the Activity Method – Calculate the number of reps needed to perform the necessary selling activities against the prospect/customer universe the company wants to pursue.
Steps to calculate the Activity Based Method:
- Identify account segments
- Quantify the number of calls expected per account, by segment
- List the selling activities and estimate the average hours required by activity and per account
- Identify the average number of selling hours per rep (note: many sales forces find non-selling activities to require up to 40%+ of their reps time resulting in approximately 1,200 selling hours per rep)
- Calculate the total number of reps needed by dividing the total number of hours required to make all the calls by the average annual selling hours of your average rep. This provides your total number of reps required to execute the planned number of calls.
Below is an example Activity Based Method to provide you a scenario to visualize the method. In addition, you can download a PDF of this example.
Insights by Segment
A key insight to the activity model is when you have included account segments and you can see clearly how your expectations for account calls match up with resource allocation. The value of the activity method is to give you the insights to prioritized assignments of existing sales reps by segment and/or make the case for adding additional reps.
The Activity Method embraces common sense and allows financial views of sales force sizing to be vetted against conventional facts of what it takes logistically in man power to provide proper coverage. When combined with the financial test that includes contribution rates and break-even points, you have both a robust financial and logistical view of your sales force that serve as bookends for answering sales force sizing questions.