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Growth strategy case - how to "quantify" the growth initiative impact?

growth strategy
New answer on Mar 17, 2022
4 Answers
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Anonymous A asked on Mar 16, 2022

I got a growth strategy case in an interview and I'm not clear what is the best way to quantify the impact. The prompt is to grow an insurance company by 5 times. After drilling down the case, the interviewer agreed that we can expand the sales force by 2 times.

To assess the impact of growing the sales force 2 times, should I directly assume that the productivity per sales can stay the same as the existing sales force, and conclude that we could grow the total revenue by 2 times due to this initiative? What would be a practical way to assess the impact while not “oversimplifying” assumptions?

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Pedro
Expert
replied on Mar 17, 2022
30% off in March 2024 | Bain | EY-Parthenon | Roland Berger | Market Sizing | DARDEN MBA

"should I directly assume that the productivity per sales can stay the same as the existing sales force"

No, you should never assume. You should consider “what are the criteria for that to be true” and then confirm it with the interviewer. 

In other words, productivity can stay the same if the “bottleneck” is the number of salespeople, but everything else will remain similar, more specifically:

  • The effort to reach those targets is similar 
  • Targets have the same probability to buy 
  • Targets are likely to buy the same quantity 

I.e.: Salesforce productivity = # of commercial visits per worker * % of success * average $ sale per client

In many cases, salespeople focus on “high grade” quality targets: easy to visit, high propensity to buy, large purchases. As you increase your salesforce, the quality of the targets starts going down (further away, less interested, smaller, …).

One can assess this either by evaluation productivity of recent new salespeople, or by understanding the segmentation and your penetration / market share / reach within each segment. This of course probably depends on the information you have at this point.

Of course, you don't need to state all of this (unless asked). But you need to state: “if we expand the salesforce will the quality of the target clients remain the same, or is it likely to be lower?”

The interviewer may then just answer for you and say it's safe to assume that, or may prompt you to explain your thoughts.

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Lucie
Expert
Content Creator
replied on Mar 16, 2022
10+yrs recruiting & BCG Project leader

Hi there,

if you hire 2 more salespeople, their impact on revenue will be delayed, you will have cost to get them in first and then you will see the revenue impact. How much sales these 2 sales can generate will depend on your assumptions (seniority of the new staff, the market they will cater to, how well the product is established, market, etc.). You should then consider (beyond the delay in revenue), a sort of progress revenue growth over time (they won't go from 0 to 100% in one month).

Good luck

Lucie

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Ian
Expert
Content Creator
replied on Mar 17, 2022
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

I would always be careful with the word “assume”!

In general, you want to confirm instead of just assuming. A simple question such as “is it safe to say that the productivity of the sales teams would be the same or should we assume diminishing returns?" 

You need to confirm:

1) Productivity change (how many sales they make)

2) Additional cost (cost to hire, back office, training, etc.)

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Gaelle
Expert
Content Creator
replied on Mar 16, 2022
Techie, Consultant, Computer Engineer, Yoga Teacher

Growing the sales force 2 times will come up with higher costs (payrolls, office space, and directors to manage the bigger organization) - you can assume that the productivity per sales can stay the same but that does not mean that total revenue will also grow by 2 times. 

You can increase productivity of this sales force by investing (long term) in better platforms (digital services). You will also need to change some of the roles to also increase customer base and develop a strategy to acquire bigger customer accounts.

See: https://justcall.io/blog/cloud-telephony-insurance-utah-case-study.html 

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