GB533 Unit 10 Sales Management Report Example

Fifteen Territories, Twenty Sellers, One Pay Plan: A Unit 10 Sales Management Report for a Dental Distributor

[Student Name]

Purdue University Global

GB533: Salesforce Management

Unit 10 Sales Management Report

[Instructor Name]

[Date]

The distributor and every figure are composite and illustrative, carried forward from the earlier units; the sources cited are real.

Executive Summary

Decision requested: approve a twenty-person sales organization and its pay plan, phased in over eighteen months.

Cost: about $2.45 million a year in target compensation at full staffing, about $1.07 million more than the current twelve representatives.

Expected effect: about $1.6 million a year of added gross margin by the third year, from restored coverage of mid-sized practices, more equipment and imaging sales, and retention of business with dental service organizations.

Main risk: the first year costs more than it returns while new representatives ramp up and territories change hands.

1. Structure

The structure analysis compared organizing by territory, by product line and by account type, and found that each solved one pressure while worsening another. The recommended hybrid has fifteen territory generalists who own every independent practice, three equipment and imaging specialists who support qualified opportunities without owning accounts, and two key account managers for the nine dental service organizations that buy centrally for about 240 offices. Zoltners et al. (2004) argue that structure should follow how customers buy, and Palmetto's customers buy in three different ways.

2. Sizing

The workload model classed every account, assigned call frequencies and found that the accounts require about 16,380 calls a year. At about 1,092 calls per representative, that is fifteen territory representatives. Sensitivity tests kept the answer between fourteen and seventeen.

3. Territories

The current twelve territories range from $5.3 million to $15.8 million of potential. Fifteen new territories, built from county dentist counts, range from about $6.9 million to $8.6 million and balance workload within about 10 percent. A phased transition with joint calls and holdover credit protects customers and representatives.

4. Compensation

Territory representatives earn $118,000 at target, 65 percent salary and 35 percent incentive paid quarterly on gross margin, weighted 70 percent consumables and 30 percent equipment. Quotas are set as a share of potential. An annual equipment true-up removes the incentive to time installations around quarter ends. Specialists and representatives both receive credit on shared equipment deals. Zoltners et al. (2006) recommend aligning each role's pay with the behaviors the structure requires, and the plan does so for all three roles.

Every component of the redesign depends on another: fair quotas need balanced territories, balanced territories need fifteen representatives, and the overlay works only if pay rewards bringing in a specialist.

5. Training

Seventy percent of equipment demonstrations start with a practice calling in. A two-day workshop on discovery questions and twelve weeks of field coaching aim to raise representative-originated demonstrations from 30 to 50 percent within two quarters, evaluated at the levels of reaction, learning, behavior and results.

6. Evaluation

Revenue rankings reward large territories. A scorecard weighted 60 percent on results against potential-based quotas and 40 percent on activity ranks the Florence representative above Raleigh, reversing the revenue ranking, and feeds merit, promotion and coaching decisions.

7. Forecasting

Stage-by-stage conversion rates replace representatives' judgment calls for equipment forecasts. Tested on last quarter, the new method missed by about 12 percent; the representatives' call had missed by 57. Forecasts are reported as a range, currently about $1.35 million to $1.90 million for next quarter's equipment sales.

8. Cost and Return

Target compensation: fifteen territory representatives at $118,000, about $1.77 million; three specialists at about $135,000, about $0.41 million; two key account managers at about $137,500, about $0.28 million; total about $2.45 million.

Added gross margin by year three: about $0.34 million from restored consumables coverage, about $0.34 million from higher equipment and imaging sales, and about $0.9 million of dental organization margin that would otherwise be at risk to competitors offering central contracts.

Payback: the added cost is covered in the second year if dental organization business is retained, and in the third year if it is not fully at risk.

Johnston and Marshall (2016) caution that sales force investments are often judged too quickly, before new territories and representatives reach full productivity, and the report sets expectations accordingly.

Implementation Timeline

Months 1 to 3: approve the plan; hire the two key account managers and the first equipment specialist; announce territories.

Months 4 to 6: transition territories with joint calls; hire two territory representatives; launch the pay plan and scorecard in parallel with the old ranking.

Months 7 to 9: training workshop and field coaching; hire the second and third specialists.

Months 10 to 18: hire the fifteenth territory representative; first annual equipment true-up; review all measures.

What the Owner Should Watch in Year One

Three figures will show early whether the redesign is working. First, planned-call coverage of mid-sized practices in the two largest old territories should rise from about 60 percent of planned calls toward 95 percent within two quarters of the transition. Second, the share of equipment demonstrations originated by representatives should rise after the training, from 30 percent toward 50. Third, renewal of the nine dental organization contracts, several of which come up in the second half of the year, will show whether the key account managers are protecting that business. If all three move as planned, the financial return should follow even if first-year gross margin is flat.

What Was Considered and Rejected

The report rejected keeping twelve representatives and adding inside sales staff, because inside sales could handle routine orders but not the equipment and organization selling that drives growth. It rejected a full product-line structure because the Upstate pilot showed customers dislike coordinating several sellers. And it rejected paying on revenue, which would encourage discounting at a time when dental organizations are already pressing on price.

Risks

Customer disruption during the territory transition; slower hiring than planned in a tight labor market; key account contracts that frustrate territory representatives; and a weaker equipment market. Each has a mitigation in the relevant unit, and the scorecard and forecast give early warning. The most serious is customer disruption, because a practice that loses a trusted representative may test a competitor; the joint calls and introduction letters are the main defense.

Decision

Approve the twenty-person organization, the pay plan and the eighteen-month timeline, with a review at month twelve against the forecast, the scorecard and gross margin by account type. The review should be held whether results are good or poor, so that the system is adjusted on evidence rather than on the first quarter's impressions.

References

Johnston, M. W., & Marshall, G. W. (2016). Sales force management: Leadership, innovation, technology (12th ed.). Routledge.

Zoltners, A. A., Sinha, P., & Lorimer, S. E. (2004). Sales force design for strategic advantage. Palgrave Macmillan.

Zoltners, A. A., Sinha, P., & Lorimer, S. E. (2006). The complete guide to sales force incentive compensation: How to design and implement plans that work. AMACOM.