Estimate Channel Resources

Your new revenue forecast will impact the number of resources needed by various channels, as well as the overall allocation of resources across channels. People will need to be hired or fired or shifted between channels to support the revenue plan. Resource analysis involves figuring out where people need to be added, subtracted, or shifted to optimize their allocation in pursuit of a revenue target. Unless you determine how many people will be needed to achieve the channel’s revenue target, you can’t determine how much a channel will cost.

Luckily, there is a straightforward relationship between the channel’s revenue target and the resources it needs to reach that target. It is:

Number of resources required = channel revenue forecast ÷ contribution per resource

Example:
The channel revenue forecast for field sale force is $20 million, and each rep brings in, on average, $1 million in sales (based on industry or historic data) . Thus, the number of resources required = 20

Although the calculation is simple, you have to find out the channel productivity. You can get this number from your history data. For example, if you have fifteen salespeople who brought in $15 million in sales last year, your field sales force channel’s productivity is $1 million per sales rep. Of course, not every sales rep in your sales force is superstar. Therefore, to calculate real productivity, you can apply Pareto’s rule i.e., calculate the productivity for the top 20 percent of your sales force.

You can also get the industry benchmark information from leading industry journals. The problem with that is twofold. First, it is averaged. Second, it is a tactic, well suited for organizations that already have well-established channels. If you are building it from scratch, you cannot assume the same level of productivity for your sales channel. 

Estimate Channel Resources

The table above provides an example of how this calculation will play out in the real world. Here is an organization that achieved $23 million in sales last year; this year it is forecasting $28 million in revenue, an almost 20 percent increase. The table shows that the top 20 percent of the company's sales force has a productivity of $1.25 million. On the same productivity level, its sales force channel has a capacity of $50 million but achieved only $19 million.

This year, they opted for an integrated multichannel strategy and re-categorized their revenue projections, as shown in column 3 (Revenue Targets $m).

Once the new projections are made, it is clear that resources need to be moved around. As the table shows, the field force need to be downsized by twenty-eight people, whereas the company needs to recruit five more partners to meet projections. Telesales also needs two more reps. Internet, on the other hand, is a little different. Our sample company will need multiple talents to implement Internet sales channels. Based on the current benchmark, the company will need to increase its investment by five times to meet its projection of a 500 percent increase in revenue from this channel.

Why not keep the existing sales force? Why downsize them? Well, first, a company cannot have unlimited resources. Second, by downsizing company will be able to reduce its cost of sales, hence increasing profitability while increasing the top line.

The output of this step offers a clear picture of resource requirements, as well as the resource gap—the surplus or deficit of resources—that currently exist in each channel. This information will determine who needs to be hired, let go or reassigned. It will also establish the foundation for building the cost model to determine how much money needs to be invested in each channel, as described in the next step.

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Related:

• Table of Content
• Red Queen Effect – An Introduction
  
• The Billionaire Code
  • Secret of World Class Companies
    
  • Impact of Using Secrets of World Class Companies
    
• Cracking the Code
  
  • Customer Experience
    
  • Customer Engagement Channels
    
  • From Multiple Channels to Integrated Multichannel Selling
    
  • Benefits of Integrated Multichannel Selling Models
    
  • Customer Relationship Lifecycle
  • Integrated Multichannel Selling Models
    
    • Reduced Costs
      
    • Improved margins
      
    • Broader market coverage
    • Rapid revenue growth
      
  • In Conclusion
    
• Implementation Plan
  • Renovation or Innovation?
    
  • Implementation Process
  • Baseline Current Go-To-Market Activities
    
  • Protect & Renew
    
    • You've Got Customers. Now What?
      
    • Net Promoter Score
      
    • Customer Profitability – A look from inside
      
    • Finding Treasures
      
    • Customer Life Time Value
      
    • Calculating Customer Life Time Value
      
    • Unearthing the Treasure
      
    • In Conclusion
      
  • Plan for New Sales
    
    • Targeting the Right Market
      
    • Market Segmentation
      
    • Prioritizing Target Markets
    • Align with Your Customers
      
    • Example of Customer Experience Mapping
      
    • Mapping Customer Experience
      
    • Drawing Customer Persona
      
    • Customer's Moments of Truth
      
    • Identifying Appropriate Levers to WOW Customers
      
    • Establish Channels to Deliver the WOW Experience
      
      • Applying Customer Filters
      • Channelizing a Product
      • Prioritize Channels
        
    • Market Coverage Maps
      • Channel Mix
        
      • Channel Integration
        
    • Economic / Revenue Modeling
      • Define revenue opportunities by channel

Reference:

• Go-To-Market Strategies by Lawrence Friedman