Determining How Many Salespersons Are Needed A common problem faced by sales managers is that of determining how many sales representatives are required to effectively service their customers. A commonly employed formula for estimating the required number of sales reps is: NReps=ATimeNCustzRVisitsLCall Where, NReps = The required number of sales representations (salespersons) NCust = Number of customers to be serviced NVisits = Average number of required visits per customer per period LCall = Average length of each sales call in hours ATime = Average available selling time in hours per sales person per period Making this determination first requires determining the number of actual or potential customers (NCust) that must be served and the frequency and duration of each service call. Estimating the frequency (NVisits) and duration (LCall) of service calls is an essential step since these variables define the level of service that should be afforded each customer. In the simplest case the assumption is that most customers require similar levels of service and, therefore, only a single estimate is required. However, it is a simple extension to use different estimates for different categories of customer. The final input is the amount of available selling time in hours per sales rep per period (ATime). Sales persons do not spend 100 percent of their time selling. Competing demands on a sales reps available selling time include: - Travel to and from a client's location; - Research and preparation for presentations; and, - General administration that includes such things as writing and filing sales and research reports, submitting expense reports, handling complaints, tracking and expediting orders, budgeting, etc. Determining the average time required for these tasks must be subtracted from the amount to time avallable in a given time period to determine the actual available selling time for sales reps. As an example application, assume that a manufacturer (Digital Controls, Inc.) of specialized computer sstems designed to control sensitive production processes in a number of industries needs to hire additional sales persons. Currently, the firm employs 50 sales persons nationally, but wants to expand sales coverage to the Southeast United States. The firm currently does not have any sales presence in that area of the country. Research has identified 500 potential customer firms in the Southeast US that currently use similar computer systems from competing producers. Based on past sales data, Digital Controls knows that sales persons are able to spend no more than 65 percent of their available time making actual sales calls. The remaining 35 percent is consumed by travel, preparation, and administration. Since most sales reps work eight-hour days five days per week, there are 40 hours available to reps per week. This means that 40.65=26 hours of actual selling time are available per week to each rep. Assuming a 50 -week year (two weeks for vacation), each sales rep has 1,300 hours of available selling time per year. Data also shows that 10 visits per year averaging 1.5 hours each are required to effectively service each customer. The number of required reps, therefore, is: NReps=1,300500101.5=5.77or6reps Note that the number of required reps is rounded up to six since it is not possible to hire a partial rep (assuming no parttime employees are desired). Now it's your turn. Show us what you have learned. Shannon's Brewery in Keller, Texas is expanding distribution to a number of cities along the I-35 corridor south from Dallas to the Gulf Coast. Shannon's typically distributes through large distributors such as Ben E. Keith located in Denton, Texas. However, Shannon Carter, CEO of Shannon's Brewery, wants to employ a series of missionary sales persons to service restaurants, bars, supermarkets, and liquor stores. Their job will be to promote Shannon's craft beers to these retailers and encourage them to place orders with Shannon's normal distributor in that area. Based on research, Shannon Carter has identified an initial 684 retailers that are potential adopters of his beers. He estimates that it will take ten visits per year to acquire and then service each account. Each sales call is expected to take 34 minutes. Assume a 40-hour work week for sales reps and that 50% of each rep's time will be consumed by non-selling tasks and travel time. How many missionary sales reps will Shannon need to hire? (Note: you must convert the time allotted for each sales call from minutes to hours.) Round your answer up to the nearest 1/10 of a rep (in reality, as noted above, you would round to the next whole rep)