About AMA

Sales Force Design for Strategic Advantage by Andris A. Zoltners, Prabhakant Sinha, and Sally E. Lorimer (London: Palgrave Macmillan, 2004, 380 pp., $31.35)

The field of selling and sales management is evolving through a period of rapid change. Recently, several articles constituting the 25th anniversary special issue of Journal of Personal Selling and Sales Management noted the importance of researching sales force productivity issues, including models, metrics, and methodologies, to assist sales management decisions (Brown and Jones 2005). The focus on sales force productivity seems appropriate and timely. Marketing productivity is a hotly debated topic in industry discussions today. Marketing practitioners are increasingly being held accountable not only to measure but also to increase the return on investment of their marketing investments (Booz Allen Hamilton 2002). Marketing academics are quick to point out the need for appropriate metrics and measurements to assess marketing productivity, the absence of which undermines the credibility of the marketing function within the firm and thus threatens its existence as a distinct capability (Rust et al. 2004). At the same time, analytical approaches are becoming more popular in the execution of various business processes (Davenport 2006).

Firms offer similar products and use comparable technologies in many industries. In several instances, the only element of differentiation resides in how the business process is designed and executed. As such, the new frontier of competition involves wringing every last drop of value from these processes. Against this backdrop, several features of U.S. sales forces are noteworthy:

• The sales force remains an important yet expensive marketing investment for many firms.
• The typical firm spends 10% and, in some industries, over 20% of its total revenue on sales force expenses (Zoltners, Sinha, and Lorimar 2007).
• The sales organization dwarfs the marketing organization in many firms.

A similar situation exists in many international markets in which sales force efforts are a critical element of the go-to-market strategy. With reduced differentiation in products and services, firms need to compete through optimizing their selling function. In short, the strident and persistent calls to enhance marketing productivity and compete through the use of analytical approaches to solve complex problems can be answered in good measure by focusing attention on the selling function.

In this context, I believe that The Complete Guide to Accelerating Sales Force Performance, by Zoltners, Sinha, and Zoltners (hereinafter, the 2001 book), has a unique place within the broad array of sales management textbooks. As the authors note, the book not only provides education but also offers valuable practical guidance. In contrast, Sales Force Design for Strategic Advantage, Zoltners, Sinha, and Lorimer (hereinafter, the 2004 book) is best viewed as a supplement; it offers a more detailed examination of several sales force topics and permits the reader to dig deeper into understanding sales strategy, go-to-market strategy, sales force structure and roles, sales force size, sales territory alignment, and sales force assessment and implementation. Collectively, the two books assemble a vast base of knowledge gathered from the authors’ rich academic, business, and consulting experiences and are mainly intended for two categories of readers: business professionals (sales managers, top management) and MBA students. The 2001 book is organized into 15 chapters and offers numerous useful tips and suggestions for the sales professional to understand the drivers of sales force productivity. At the same time, the treatment of the subject matter within the various subdomains of sales force management provides an intellectually stimulating perspective for graduate students. In what follows, the 2001 book will be the primary focus of this discussion, with observations on the 2004 book interspersed at appropriate junctures.

Chapters 1 and 2 in the 2001 book deal with the strategic role of the sales force and discuss many relevant issues in market segmentation and the go-to-market strategy. The discussion is structured around practical management questions as opposed to a mere conceptual overview of sales strategy. Included here is a valuable section on the drivers of sales force productivity and the metrics/benchmarks that are appropriate to measure those drivers and assess their impact. More details on the strategic view of the sales force design process involving three steps are offered in the 2004 book including good industry examples and insights into the aspects of sales force design (Chapter 2), three types of customer segmentation criteria including examples and several sales strategy insights (Chapter 3), and similar insights regarding go-to-market strategies (Chapter 4).

Chapters 3 and 4 of the 2001 book address issues pertaining to sales force size and structure . Again, the authors provide several industry-specific examples that illustrate the intricate connection between the sales force sizing decision and company profitability/productivity. The authors use tables, figures, and numerical examples to explain aspects of downsizing and increasing the sales force; allocating the resources across markets, products, and customer accounts, and the various approaches to finding the optimal sales force size. They also present the sales force structure issues in terms of the trade-off between efficiency and effectiveness. The 2004 book goes into greater depth on these aspects, including a description of a five-step process for determining sales force structure (Chapter 5); an illustration of five separate approaches to determine market coverage, the value of each customer segment, and the implied sales force size; and a discussion of the conditions under which each approach is most appropriate (Chapter 7).

Sales territory design and alignment is a complex topic, but the material is organized and presented as a systematic and logical sequence of steps in Chapter 5. The authors discuss what territory alignment is, why it is important, and how to do it effectively by means of a step-by-step procedure. They offer key insights based on their extensive business and consulting experience. However, there is a somewhat limited discussion of available territory design software that can help in the execution of this task. In the area of hiring and training salespeople, Chapters 6 and 7 offer some general insights into improving these processes. An area that receives little attention here is the evaluation of the effectiveness of hiring and training practices.

In Chapter 9, the authors use a series of tables to illustrate different strategies to motivate salespeople who face different characteristics of the sales job. Chapter 10, which discusses compensation of the sales force, is the best chapter in the book and offers the most comprehensive treatment of any subdomain. The authors do an outstanding job of establishing a comprehensive framework that covers firm, salesperson, and customer decisions. Under the umbrella of four key decision areas—the level of compensation, the mix (salary versus incentive), performance measures to decide the incentive component, and the performance–payout relationship—the authors pose and address a wide variety of questions related to practical matters of sales force compensation. They lay out alternative commission structures in several figures, and they discuss the appropriateness of each plan for different sales management objectives.

Sales force automation has assumed an important role in today’s business processes that have become technology intensive. Customer relationship management systems and their interface with sales force operations have become critical in driving productivity. The book outlines several steps for successful customer relationship management design and implementation to meet the needs of the three central constituents: the customer, the salesperson, and the company (Chapter 13). Finally, in Chapter 15, the authors discuss the elements of creating and maintaining a successful sales force culture in a firm, which is shaped continuously by the decisions that sales management makes. It encompasses decisions in a multitude of areas noted previously, such as hiring, training, reward systems, territory assignments, and structure.

These books were stimulating reading. In particular, the 2001 book is an invaluable resource for managers because it can serve as a ready reference to guide their strategic thinking in the sales force area, and graduate business school students will find the treatment of the subject insightful and rewarding because of the strong “applications” focus. Together, the two books provide great insights and value for the thoughtful practitioners among the audience. Academic researchers interested in the sales force area would find these books useful.

—Srinath Gopalakrishna, University of Missouri

References

Booz Allen Hamilton (2002), “When Art Meets Science: The Challenge of ROI Marketing,” white paper, Booz Allen Hamilton.

Davenport, Thomas H. (2006), “Competing on Analytics,” Harvard Business Review, 84 (January), 98–107.

Jones, Eli and Steven P. Brown (2005), “The Changing Environment of Selling and Sales Management,” Journal of Personal Selling & Sales Management, 25 (2), 105–111.

Rust, Ronald T., Tim Ambler, Gregory S. Carpenter, V. Kumar, and Rajendra K. Srivastava (2004), “Measuring Marketing Productivity: Current Knowledge and Future Directions,” Journal of Marketing, 68 (October), 76–89.

Zoltners, Andris A. and Sally E. Lorimar (2007), “Sales Territory Alignment: An Overlooked Productivity Tool,” Journal of Personal Selling & Sales Management, 20 (3), 139–50.