Examine key decision criteria regaring the sizing of your sales force to review the 6 common mistakes in sales force sizing:
- Maintain the cost of the sales force as a constant percentage of sales. While this metric is important to track, this logic as a decision making driver is invalid because it assumes that revenue is a static amount. Sales force effort = revenue growth. A smaller sales force will produce fewer sales activities and a smaller sales result.
- Split a territory as soon as it hits a threshold. This practice provides sales representatives who have a territory with good performance numbers an incentive to stop selling in order to keep their territory intact. Instead offer a program and career path that rewards maximum effort.
- Add heads only when results generated are enough to increase short-term investment.This ‘low risk’ approach causes well-financed companies to under size their sales force and misses growth opportunities. See the blog article Leaving Money on the Table for additional insights on this common mistake.
- Do not add new headcount to pursue new opportunities. This ignores the fact that new products consume valuable selling time, reducing sales effort expended on existing product.
- Reduce headcount to ‘pay’ for investments in sales force productivity. For example, after a successful CRM implementation, selling costs can be lower and/or the average sales price can increase. This would enable a company to call on more accounts profitability, not less. Prospects too expensive to call on before can now be profitable to visit. Expanding the sales force after implementation of a sales force effectiveness initiative may actually increase profitability.
- Remain the same size year-over-year after hitting goal. If the current size worked last year, keep it the same this year. Business conditions change year to year (economy, company canceled product or launched new ones, a competitor cut sales force by 30%, etc.), so keeping the sales force the same based on past history alone can be a mistake.
If any of these six points are true for your company, then take a serious look at this Sales Force Effectiveness issue and understand the impact on sales force sizing.