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Sales Force Sizing and Structuring
A properly sized Sales force assures that customers and prospects receive appropriate coverage, products get proper representation, sales force is not overworked / underworked and the company makes and appropriate investment in selling.
The Challenge:
Sales managers are always wanted to know what the right time for resizing is. Value Edge believes following are the key indications for resizing
- Key targets / account are either not covered or covered with high frequency
- Sales persons feel overworked and constantly missing targets
- Attrition is higher that the industry average
- Cost of sales is higher than the industry average
We propose two different methodologies to determine the right amount of promotional effort and size of the sales team.
Promotion Response Modelling:
- Value Edge models the historical prescribing pattern with historical promotion made to the physician in order to build a response curve and the optimal point of detailing
- We suggest breaking of physician prescribing pattern into 3 broad categories: Direct Detailing effect, Short-term Trends and Long-term Trends
- The functional form of Value Edge's promotional response model is based on these core elements
Rx(Total) = f (Short) + f (Detail) + f (Long)
Rx in monthi = A x Rx in Monthi-1 + B x f (Detailing) in monthi + Constant
A point on the curve where the incremental cost of providing an additional detail equals the total future value generated from that detail is determined as Optimal point
- Response modeling of different segment of physicians gives the optimal detailing point for each segment on respective response curve
- Total PDE requirements for a product is calculated by multiplying number of physicians in a segment with respective optimal point
- This total PDE requirement is then divided by the reps capacity in a year to come up with the optimal number of Reps
Workload Build-up Method
- Value Edge suggests using workload build up method in the cases where data is available at either country level or at max specialty, segment or brick level but not at physician level
- It is used to gauge the size of the sales force to achieve certain level of forecasted sales based on historical sales and promotional data
- This method is more assumption and experience driven. It assumes that current targeting is absolutely correct and will continue in future. Other assumptions required are
- Carryover: % of sales that will happen without promotion
- Diminishing Return: % of impact each additional call will have from the previous one
- Sales Distribution: Sales coming from various specialty and segment as a % of total sales
The following diagram shows the workflow of the workload buildup method. Required PDEs to achieve certain forecasted sales are calculated based on the historical sales and promotional data. Total number of PDEs required will then be converted into number of Reps required.
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