Sales Force Effectiveness: A Framework for Researchers and Practitioners

Zoltners, Andris A.; Sinha, Prabhakant; Lorimer, Sally E.

doi:10.2753/pss0885-3134280201

Cited by 140 publications

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“…In a review of sales-force practice, Albers and Mantrala (2008) note,"Dartnell's 30 th Sales-force Compensation Survey: 1998-1999 reports the average company spends 10% and some industries spend as much as 40% of their total sales revenues on sales-force costs. In total, the US economy is estimated to spend $800 billion on sales-forces, almost three times the amount spent on advertising in 2006 (Zoltners et al 2008)". The academic literature has recognized this practitioner interest, and the design of plans to compensate sales-force is now one of the most visible and successful applications of agency theory in real-world business settings (Mantrala, Sinha and Zoltners 1994).…”

Section: Introductionmentioning

confidence: 99%

A structural model of sales-force compensation dynamics: Estimation and field implementation

2011

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We present an empirical framework to analyze real-world sales-force compensation schemes, and report on a multi-million dollar, multi-year project involving a large contact lens manufacturer at the US, where the model was used to improve sales-force contracts. The model is built on agency theory, and solved using numerical dynamic programming techniques. The model is ‡exi-ble enough to handle quotas and bonuses, output-based commission schemes, as well as "ratcheting" of compensation based on past performance, all of which are ubiquitous in actual contracts. The model explicitly incorporates the dynamics induced by these aspects in agent behavior. We apply the model to a rich dataset that comprises the complete details of sales and compensation plans for the …rm's US sales-force. We use the model to evaluate pro…t-improving, theoretically-preferred changes to the extant compensation scheme. These recommendations were then implemented at the focal …rm. Agent behavior and output under the new compensation plan is found to change as predicted. The new plan resulted in a 9% improvement in overall revenues, which translates to about $12 million incremental revenues annually, indicating the success of the …eld-implementation. The results bear out the face validity of dynamic agency theory for real-world compensation design. More generally, our results …t into a growing literature that illustrates that dynamic programming-based solutions, when combined with structural empirical speci…cations of behavior, can help signi…cantly improve marketing decision-making, and …rms'pro…tability.

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Section: Introductionmentioning

confidence: 99%

A structural model of sales-force compensation dynamics: Estimation and field implementation

2011

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“…Unless the salespersons can truly perform, otherwise maintaining and managing salespersons becomes a cost burden to businesses. The budgets to maintain a sales force can be as high as 20% of the firm's sales revenue (Zoltners et al, 2008). In revealing the truth, performance of salesperson has been generally far from satisfactory.…”

Section: Introductionmentioning

confidence: 99%

“…First and foremost, salespersons are the financial contributors of the firms as they are entrusted to bring in revenue and profit for firms' long-term sustainability. They are also responsible to foster and grow the business relationships with the customers (Zoltners et al, 2009). Second, salespersons are seen as the change agent of businesses as they use their salesmanship skills to trigger the buying decision in the selling process.…”

Section: Introductionmentioning

confidence: 99%

“…Second, salespersons are seen as the change agent of businesses as they use their salesmanship skills to trigger the buying decision in the selling process. While other marketing efforts aim to create the 'pull' effects, salespersons are responsible to 'push' the products to the target customers (Zoltners et al, 2008). Third, salespersons are the boundary spanner of the selling and buying firms by matching the supply and demand of both parties (Stan, Evans, Arnold, & McAmis, 2012).…”

Section: Introductionmentioning

confidence: 99%

“…Salespersons are key in the promotion of products and services, as well as building relationships with customers. It has been reckoned that the single most effective way to promote products and services to the prospective customers is the use of salespersons (Zoltners, Sinha, & Lorimer, 2008). Being at the forefront of any firms, salespersons play several important roles.…”

Section: Introductionmentioning

confidence: 99%

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Influence of Supervisory Control on Salesperson Performance: Examining the Role of Adaptive Selling Behaviour as a Mediator

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Sales Optimization Models—Sales Force Territory Planning

Albers

Mantrala

2011

Wiley Encyclopedia of Operations Research and Management Science

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There have been a number of important developments and applications of operations research‐based models in the domain of sales management that have contributed significantly to enhancing sales force productivity. In this article, the authors provide an overview of the key sales resource allocation and deployment decision problems faced by firms and extant model‐based solution approaches. Understanding and estimating relationships between selling efforts and sales outputs, that is “sales response functions,” lies at the heart of models for planning the sales force size, territories, and allocating selling efforts within territories. The authors briefly review the main challenges and proposed methods for such estimations, and a well‐known example of an optimization model (CALLPLAN) that utilizes such measurements for allocating selling efforts between customers and prospects in a salesperson's territory. This is followed by a description of models that have been proposed for the design of sales territories; that is, the assignment of sets of customers to salespeople, and sales force sizing, as well as integrated sizing, territory design, and allocation models. Throughout, the article notes outstanding issues for further investigation and closes with directions for future research.

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Sales Force Effectiveness: A Framework for Researchers and Practitioners

Cited by 140 publications

References 1 publication

A structural model of sales-force compensation dynamics: Estimation and field implementation

A structural model of sales-force compensation dynamics: Estimation and field implementation

Influence of Supervisory Control on Salesperson Performance: Examining the Role of Adaptive Selling Behaviour as a Mediator

Sales Optimization Models—Sales Force Territory Planning

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