Sales Management: Starting from Zero

Sales force productivity is best captured in increments—not quotas.
Mar 01, 2005


S. Kent Stephan
Is it possible for an entire industry to be wrong about an issue as crucial as the productivity of its sales forces? A strong case can be made to say that it is, and nothing less than a high level of unrealized profits is at stake.

Ensuring sales force productivity should be extremely high on every CEO's agenda. Unfortunately, within many companies, CEOs look at the issue as one that has no CEO-level solutions, in comparison, say, to R&D productivity. They incorrectly believe that the opportunities for sales force productivity gains are marginal.

A typical rep has myriad choices to make each day: Which doctors to see from among those who can be seen, which brands to present from among those being promoted, and the sequence in which brands should be presented on each sales call. How the rep makes these choices before investing calls will determine his/her productivity.

Unfortunately, current methods for helping reps make these choices leave considerable money on the table—so much potential profit that it should catch the eye of any CEO. Here are the basics for capturing this revenue.

Zero Detail Base-Line In assessing sales rep productivity, the number of incremental prescriptions generated per sales call must be a key measurement. A typical rep gets a handful of opportunities to talk to doctors each day and these opportunities are, in effect, the bullets in each rep's six-shooter. The way they are used determines the rep's contribution to the company.

Princeton Brand Econometrics system for evaluating and improving sales call productivity is based on an accurate estimate of how many prescriptions a doctor would have written or will write for a given brand, assuming that he/she receives no sales calls at all and, thus, no details. This figure, the zero detail base- line, is calculated for each individual doctor and every brand of interest. It is the first of two crucial steps leading to increased sales rep productivity. The second step is to quantify the incremental prescriptions generated (either looking forward or looking back) from a first call, a second call, a third call, and so forth.

Pharmaceutical companies generally target sales calls based on audit data of the physician's history of prescribing volume. If only one company had this prescribing data, it would have a tremendous advantage over its competitors. However, every company has the information, so doctor targeting based on historic prescribing alone gives no company any noticeable competitive advantage.

By establishing the zero detail base line and accurately quantifying the incremental value of each potential sales call, we account for both the doctor's volume of prescribing and his/her unique responsiveness to future promotion. This method, based on complex mathematical models, will result in an appropriate allocation of sales calls and will generate significant incremental dollars. It can factor in any number of variables, including sales force size, doctor samples, advertising support, or any other relevant sales/promotional tactic.

Validating the Calls It is possible to accurately quantify zero detail base lines and to quantify the unique expected value of each potential sales call on each doctor. Client-sponsored blind validation tests have verified that this method of working at the individual sales call level will produce forecasts of national total prescriptions (new Rx's and refills) that fall within two percent—plus or minus—of actual totals. This can even be done for new products with an error margin only about one point higher.

After quantifying the value of each potential call, doctor-by-doctor and brand-by-brand, and validating the forecasting accuracy of the work, it becomes possible to do several important things:

  • Determine which calls are worth making and work back to an optimal field force size.
  • Reduce the time and complexity of reps' plans for call activities. They simply have to check which doctors represent the most profitable call opportunities in an area and call on them.
  • Configure sales territories based on the volume of profitable call opportunities area by area, opposed to the volume of past prescription writing.
  • Tie sales rep compensation and quotas much more closely to the reps' true contributions. This results in increased call averages and overall improved sales force productivity, leading to higher sales—and enhanced profits.