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• Article | Harvard Business Review (website) | July 9, 2019

  Setting Better Sales Goals with Analytics

  Doug J. Chung, Isabel Huber, Vinay Murthy, Varun Sunku and Marije Weber

  Sales compensation is a critical lever in motivating a salesforce and driving growth in the business-to-business sector: Studies show that revising compensation in line with market trends can have a 50% greater impact on sales than advertisements have, for instance. A vital part of getting compensation right is setting the proper sales targets. Poorly set targets often misfire, failing to deliver the expected benefits and demoralizing the sales force in the process. We see businesses in many sectors struggling to set ambitious but fair targets that will motivate salespeople to deliver organic growth. A few companies are finding solutions: They are using advanced analytics to identify the true drivers of business outcomes and are applying big data and machine learning to understand customer demand at an unprecedented level of accuracy and granularity. Armed with more reliable projections, they can establish more meaningful targets.

  Keywords: analytics; Salesforce Management; Compensation and Benefits; Motivation and Incentives; Goals and Objectives;

  Citation:

  Chung, Doug J., Isabel Huber, Vinay Murthy, Varun Sunku, and Marije Weber. "Setting Better Sales Goals with Analytics." Harvard Business Review (website) (July 9, 2019).  View Details

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• Case | HBS Case Collection | February 2019 (Revised July 2019)

  Sales Force Management at Nobel Ilac

  Doug J. Chung and Gamze Yucaoglu

  The case opens in 2017 as Hakan Sahin, CEO of Nobel, the Turkish pharmaceuticals company, reviews Nobel’s year-to-date performance. The case describes the pharmaceutical market and sales channels in Turkey and provides a background on Nobel. The case also provides details regarding a transformation strategy; particularly, a customer segmentation plan, whereby the sales force began to use a scientific matrix when determining their call plans. As a result, between 2014 and 2017, Nobel increased its sales significantly, and its previously negative EBITDA reached double-digit positive numbers. In 2017, two key issues still remained: growth was not as high as desired, and the voluntary turnover rate for the sales force was very high. Given that the sales force was the only go-to-market channel for Nobel, Sahin needed to do something to reduce the sales force turnover without affecting the positive trend in sales and profits. He contemplated the options with his executive team where many proposed a change in sales force compensation. Should he increase the fixed base salary, increase the performance-based variable pay, or change the fundamental structure of compensation? Or should Sahin keep compensation the same and adjust other factors such as the recruitment criteria, mentoring, and (or) training?

  Keywords: Sales strategy; compensation; Employee Retention; recruiting; Pharmaceuticals; Salesforce Management; Strategy; Organizational Design; Human Resources; Compensation and Benefits; Employees; Retention; Recruitment; Training; Emerging Markets; Private Sector; For-Profit Firms; Pharmaceutical Industry; Turkey;

  Citation:

  Chung, Doug J., and Gamze Yucaoglu. "Sales Force Management at Nobel Ilac." Harvard Business School Case 519-067, February 2019. (Revised July 2019.)  View Details

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• Working Paper | HBS Working Paper Series | 2019

  The Comprehensive Effects of Sales Force Management: A Dynamic Structural Analysis of Selection, Compensation, and Training

  Doug J. Chung, Byungyeon Kim and Byoung G. Park

  This paper provides a comprehensive model of an agent’s behavior in response to multiple sales management instruments, including compensation, recruiting/termination, and training. The model takes into account many of the key elements that constitute a realistic sales force setting: allocation of continuous effort, forward-looking behavior, present bias, effectiveness of training, and employee selection and attrition. The paper provides insights into the way that employee training, recruiting policies, and various compensation components affect both the selection and performance of heterogeneous sales agents. In addition, the paper provides two key methodological contributions. First, we provide identification results for dynamic models with continuous and unobserved choice variables, which arise in many empirical applications but are often ruled out due to theoretical intractability. Second, we consider a hyperbolic discounting model as well as an exponential discounting model and provide conditions under which each model is identified. The key to identification is that, under a multi-period nonlinear incentive scheme, an agent’s proximity to a goal affects only future payoffs in non-pecuniary periods, providing exclusion restrictions on the current payoff.

  Keywords: Salesforce Management; Recruitment; Selection and Staffing; Compensation and Benefits; Training; Resignation and Termination; Analysis;

  Citation:

  Chung, Doug J., Byungyeon Kim, and Byoung G. Park. "The Comprehensive Effects of Sales Force Management: A Dynamic Structural Analysis of Selection, Compensation, and Training." Harvard Business School Working Paper, No. 19-122, June 2019.  View Details

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