MARKETING 400 LEVEL CASE STUDY
azanah
chapter_6.pptxChapter 6: Sales Force Analytics
Will cover
Sales force type (independent vs. company)
Sales force budget allocation
Sales force type
Independent vs. company reps
Independent = variable costs (% sales)
Company = fixed + variable costs
(salary/overhead + % sales)
Formula
Where CS = company % sales; IS = independent rep % sales, x = breakeven
CS(x) + FC = IS(x)
Sales force type
Text example
CS = 3%
FC = $500,000
IS = 5%
Formula: CS(x) + FC = IS(x)
.03(x) + 500,000 = .05(x)
.03(x) - .03(x) + 500,000 = .05(x) - .03(x)
500,000 = .02(x)
500,000 = .02(x)
.02 .02
x = 25,000,000
x = sales breakeven point
x < $25mm, use
independents
x > $25mm, use company
reps
Sales force budget allocation
Independent vs. company reps
Independent = variable costs (% sales)
Company = fixed + variable costs
(salary/overhead + % sales)
Formula
Where CS = company % sales; IS = independent rep % sales
CS(x) + FC = IS(x)
Other considerations
Sales force budget allocation
Sales force size
=
NS
Number of sales reps
=
Number of customers (actual or potential)
LC
NC
FC
TA
=
Necessary frequency of customer calls
=
Length of average customer call; includes travel time
=
Average available selling time per sales rep
×
=
NS
×
TA
LC
NC
FC
Note: The time period is normally one business year.
Sales force budget allocation
Text example
=
NS
Number of sales reps
=
2,500 potential customers
LC
NC
FC
TA
=
4 customer calls per year
=
2 hours average customer call; includes travel time
=
1,340 average available selling time per sales rep
=
NS
TA
LC
NC
FC
×
×
=
NS
×
2,500
×
4
2
1,340
NS
=
20,000
1,340
=
14.9
=
15 reps
Sales force budget allocation
Sensitivity analysis
Increase # customers to 2,800
Decrease in call time to 1¾ hours/call
=
NS
×
2,800
×
4
2
1,340
NS
=
22,400
1,340
=
16.7
=
17 reps
=
NS
×
2,800
×
4
1.75
1,340
NS
=
19,600
1,340
=
14.6
=
15 reps
