Every month I receive a variety of questions from salespeople and their managers. These come from a variety of sources - my live seminars, the monthly phone seminars, questions that are sent into my newsletter, and issues that arise in the course of my consulting work. Out of all of these, I select those that I think have the most universal application, and respond to them here.
What is the ideal number of sales representatives that a sales manager should manage?
Good question. As is commonly the case, my answer begins with "it depends..."
It depends, first, on the type of compensation plan that is used to pay the sales force. I often confront this issue in our work with sales compensation plans. One of my rules is this, "The nature and type of compensation plan directly impacts the quantity of sales management." For example, if you have a 100 percent variable plan, where the salespeople are paid purely on some formula for their results, then you can go with less extensive sales management. The idea is that a well-crafted, 100 percent variable plan will, to some degree, step into the gap and influence the salespeople to manage themselves. In such a case, I can see one sales manager for every 15 - 20 salespeople.
But that's only one variable. There are others that impact this ratio. The "touch" component of the situation is another important variable. The "touch" component refers to the degree to which the salesperson and sales manager actually see one another and work together. The lower the "touch" ratio, the lower the ratio of sales manager to salespeople.
Take for example, an inside sales situation with a group of people on the phone, supervised by someone there with them, and contrast that to the same number of salespeople, spread geographically around the country. The inside situation is relatively "high touch," and the outside relatively "low touch." With everything else being equal, the high touch manager could supervise 12 - 16 salespeople, while with the low touch manager, the ratio would be half of that.
Here's another variable: The degree to which the company is able to measure the salesperson's activity and performance. The greater and more detailed is the measurement, the more salespeople to sales manager. The less measurement, the more salespeople to sales manager. For example, let's contrast two situations. In one, the salespeople are only measured by the total dollars of gross sales coming out of their territories on a monthly basis. In the other situation, the company uses an Internet-enabled, PDA managed ERP solution which requires every salesperson to load notes following every sales call. The company, therefore, has the ability to examine every call, every account, every opportunity, etc.
With the low-tech, no-tech first situation, the sales manager should handle fewer salespeople. With the high-tech situation, the sales manager can handle relatively more salespeople.
The variables that influence this number go on and on. Some other things to take into account include:
Anyone who gives you an off-the-cuff answer is coming from a perspective that lacks a depth of experience. Your answer is going to come from a detailed understanding of the variables listed above, and the way that they impact your selling situation.
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If you have any comments or questions, email them to me. I do, of course, reserve the right to edit
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