The Marketing Book 5th Edition

Controlling marketing and the measurement of marketing effectiveness 517

consequently focus on justifying the number of
salespeople by considering the relative finan-
cial contributions from different sized sales-
forces, and on validating the engineered cost
relationship being used by the salesforce (this
relationship is itself slightly dynamic as the
costs per employee will change if the size of the
salesforce changes significantly).
The other performance measure issue for
this field salesforce is how the performance of
an individual salesperson should be assessed.
In many companies this is done by setting sales
revenue targets or sales volume targets against
which each salesperson is measured. The prob-
lem is that an exclusive focus on short-term
sales revenues or volumes may be counter-
productive to the long-term strategy of the
business. For example, many branded fast-
moving consumer goods companies consider
improving the quality of the product received
by the consumer as being very important to
their long-term success. For many of these

companies, the freshness of the product is a

significant factor in its overall quality, while

they incentivize their salesforce to sell as many

goods as possible. The potential problem is that

the salesforce do not sell direct to the consumer,

but to the channel of distribution (e.g. the

retailer) which supplies to the consumer. More

sales into the channel pipeline do not automati-

cally lead to more purchases out of the channel

by these consumers; if this does not occur there

is a risk of more retail stocks and consequently

less fresh, poorer quality ultimate purchases by

the consumers. However, no blame should be

allocated to the salesforce, they merely ach-

ieved their objective of higher sales! What is

needed are performance measures which are

completely in line with the long-term objectives

of the business.

Thus, the third level of performance meas-

ures is very specific to the particular business

and its long-term objectives. These measures

must be appropriately tailored to the business

and the level within the business at which they

are being applied. It has already been estab-

lished that there is a vast range of potentially

successful competitive strategies, which are

based on a specific mix of sustainable com-

petitive advantages. Several of these different

strategies may be being implemented in vari-

ous segments of the same industry at the same

time. The performance measures used should

be appropriate to the specific requirements of

the competitive strategy, which clearly means

that different companies in the same industry

may be using very different performance meas-

ures. Indeed, the focus of their financial plan-

ning and control system should probably have

far more in common with a company in a

completely different industry but which is

implementing a very similar strategy, than with

a company in its own industry which is

implementing a completely different strategy.

A key issue for a really good financial

planning and control system is that it is tailored

to the needs of the business. This means that, if

the needs of the business change because the

strategy has changed, the control system and

Table 20.2 Field salesforce cost

structure

Salaries X

Other employment costs X

Commission X

Recruitment X

Car expenses X

Telephones X

Petrol X

Accommodation X

Subsistence X

Entertaining X

Samples X

Consumables X

Training X

Support costs X

£10 million

At present, 100 salespeople are employed by

the company