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What is the right size of a sales force?

# 30 – November 2012

Although it is always beneficiary to review the sales force size, this question is extra relevant
in a tougher economic climate. The question you should ask yourself is how you ended up
the current sales force. What was the mechanism behind deciding the number of sales people?

We see three main strategies when sizing the sales force, but only one of them is a good one
in our opinion:

Based on cost of sales

You create the sales force you can afford. As long as it sells for more than it costs, you can
justify the size. At a quick glance this might sound reasonable. The problem is that the strategy
lacks any form of productivity aspect, and you risk ending up with a sales force running at half
speed but which at least is covering its costs.

We usually find this in companies with a long history of high profitability and where the cost
awareness, as a consequence, has been low – sizing of the sales force included. When sales
and profits start to decline, you still tend to leave the sales force alone since you are afraid it will
affect revenues.

Based on competition

You size your sales force based on how the competition is geared, or by some ”industry standard”.
The problem with this approach is that it lacks in analysis, which can lead to both over- as well as
under dimensioning of the sales force.

We’ve seen examples of companies, blinded by what the competitors are doing, having ramped up
their sales force without reflecting over the purpose of the extra manpower. And on the other side of the scale, we have seen companies unwilling to commit any resources at all (“because that’s not the way we do it in our industry”), without considering the effect this would have on market dominance.

Based on the effort needed

You base the sales force size on the effort needed for it to do what it is assigned to do, namely to
work the customer base and generate the necessary business volume. This model also gets the
management a bit more involved in the sales area:

Only when you have the answers to these questions, can you decide on the resources needed – and the size of the sales force.

According to Sahlgren & Skog, the last model is the preferred one. Working continuously with this model, you will always be “right sized” – irrespective of the economic situation.

If you want to discuss the topic, or support in getting started, give us a call. We’re happy to help you.