Writing the Books on Sales Forces

In his thirty-four years as a member of the Kellogg School of Management faculty, Andris Zoltners has led a revolution in understanding how sales forces operate. He asserts that companies entrust salespeople with their most important assets – their relationships with their customers. And yet, until he and his colleagues began their investigations, research literature on sales force design and optimization was strikingly thin. With a background in mathematics, Zoltners approached his intellectual pursuits with a technical rigor and practical mentality that set his work apart, inspiring a paradigm shift in the way companies organize, lead and manage their sales teams.

Zoltners has a gift for blending the abstract and the concrete. The idea that a sales force can be sized, structured, and compensated in ways that not only enhance performance but also further a company’s larger goals and strategies changed the face of business forever and became crucial to corporate success. In his hands, ivory tower ideas can be expressed in mathematical models and scatter plots, nebulous concepts can be measured and evaluated.

Perhaps nowhere is his ability to bridge academic theory and business practice more evident than in ZS Associates, the consulting firm that he and former Kellogg colleague Prabhakant Sinha founded in 1983 to serve corporate clients attracted by their academic research. Through this firm, Zoltners and his colleagues have helped countless companies to apply the insights they have acquired to sales forces. At the same time, the experiences of the company’s clients have inspired and driven new academic research.

His research combines model building, systems development, process construction, and institutional wisdom to develop solutions to issues, concerns, and opportunities faced by sales leaders in the corporate world. These efforts have produced more than forty academic papers, over seventy presentations at professional conferences, book chapters, numerous articles for business-related publications, five books, and two prominent awards. Zoltners and Sinha won the 2004 Marketing Science Practice Prize of the Institute for Operations Research and the Management Sciences, and the Marvin Jolsen Award for the Best Contribution to Selling and Sales Management Practice for their paper “Sales Territory Design: 30 Years of Modeling and Implementation.”

His emphasis on research and practice has not detracted from Zoltners’s dedication to teaching. Each year he teaches two sessions of an MBA class on how to design and lead a selling organization. In addition, more than a thousand executives annually attend classes that he presents globally on the effectiveness of sales forces and related topics.

Zoltners recently reflected on his career as an academic researcher, teacher, and business consultant in an interview with Kellogg Insight. Here are excerpts from the conversation:

KI: How do you characterize the focus of your research?

Zoltners: The space that I’m in is the sales force space. This has not received a whole lot of attention in the marketing arena, because it’s hard to do research on sales forces. It involves working with sales forces, on which companies spend a lot of money. It’s very hard for academics to get good access to sales forces, because companies just don’t want academics fooling around with them. ZS Associates has been able to help academic research by providing access to selling organizations since consulting firms are viewed as practical problem solvers. This is the intersection between academics and practice.

KI: Why is it so important to understand sales forces?

Zoltners: In the United States, companies spend much more than $800 billion per year on their sales forces – at least three and a half times what they spend on all media and 35 times what’s spent on Internet advertising. Over 20 million people are involved full time in this career. So this is a really big problem for companies – a really big investment. Large companies have several thousand members of their sales forces in the US alone. GE has 25,000 salespeople globally. Some big insurance companies have over 100,000 salespeople in the US.

KI: What do you regard as your main contributions to the field?

Zoltners: Some of the books we have written, which are like very long research papers. We have a book on how you design sales force, a book on how you compensate salespeople, and a book on how you would run a sales force. Also, articles or ours have won awards. One important paper provides an overview of sales force decision making.

KI: What contribution has made you most proud?

Zoltners: I’m proud of everything. It’s a whole body of work that all hangs together. It’s looking at decisions and wrestling them to the ground – applying all the modeling techniques and broadening the research to give us a complete perspective on how to run a sales force.

KI: How has your research in the sales force space developed over the years?

Zoltners: The entire stream of research has gone from myopically looking at a couple of issues –territorial alignment, and sizing and structuring – to viewing the entire sales force as a system and determining how you hire, train, choose sales managers, evaluate performance, allocate time, compensate and set goals. It started out small and has evolved.

KI: How effectively has the research community treated the field?

Zoltners: If you add up all the marketing course equivalents that the most recent Kellogg graduating class took, it’s over four thousand; marketing is an area we know well. But when you look at people who take a single sales force class, it’s one hundred. In the US over 20 million people are involved full-time in sales. So it’s under-researched. That’s an opportunity. But probably the only way we could have done this research is through a consulting firm.

Collaboration and a Consulting Firm

KI: You cofounded the consulting firm ZS Associates with your Kellogg colleague Prabhakant Sinha. What role has your collaboration with him played in your life’s work?

Zoltners: We have very similar training, very similar values. Our collaboration is very definitely a win. In some of our later work we’ve also incorporated Sally Lorimer, one of our former students and ZS Associates Principal, who has collaborated with us on recent books and articles. Recently we’ve taken over 25 years of practice, and we’re writing it all up. The biggest impact of the collaboration has been in recent years – four books published in the last nine years and three now under way.

KI: What led the two of you to create ZS Associates?

Zoltners: My training was in operations research; I’m kind of an engineer working in a science space. To apply my craft and get recognized by my peers in Marketing, I found that I had to go out and demonstrate the impact of the approaches. The initial impetus for forming the company was to demonstrate to my academic peers that our ideas worked in practice. A couple of things in the late 1970s really led us to launch the firm. We published a paper on territorial alignment that showed how this huge combinatorial problem could be solved algorithmically. And we were the first to put mapping on a microprocessor – an Apple II. People came from all over the world to see the software we were using to solve the territorial alignment problem. Companies loved it. We solved their alignment problems in a very visual, practical way. Today the territorial alignment practice is one of the bigger ones at ZS. There have been over 1,800 applications of the model in 37 countries.

KI: How do you see yourself as differing from most of your fellow academics?

Zoltners: One of the things that’s probably unique about my career is that it’s boundary spanning. I have worked deeply in both practice and theory; it’s really hard to do both.

KI: How do your research and consulting complement each other today?

Zoltners: It’s not clear that our research would have had the same impact if we hadn’t seen the implementation provided by the company. Our research in the sales force sizing and structuring decisions faced by sales forces has seen over four thousand implementations. And in consulting we have a differential advantage; ours is the practical academic research.

KI: How do you divide your time between Kellogg and ZS Associates?

Zoltners: About 70 percent-70 percent.

Education for Interesting and Exciting Work

KI: How did you decide on your career path?

Zoltners: When I got my Master’s degree in Mathematics, I went to work in a company’s systems group. But I felt constrained in that I couldn’t do what was interesting and exciting. I discovered that the interesting things there were done by people with MBAs and practical educations. So I tried to enhance my life by going back to school to get my PhD. It promised interesting work and an interesting life. I think I’ve been able to experience that.

KI: Why did you choose a PhD rather than an MBA?

Zoltners: I got a fellowship and the PhD was paid for.

KI: What first stimulated your interest in sales force management?

Zoltners: My colleagues and I developed analytic approaches for several different sales force issues – territory alignment, sales force effort allocation, sizing a sales force, and sales force compensation. It was only natural to then explore all of the other decisions sales forces face.

KI: What roles have Northwestern University in general and Kellogg in particular played in your success?

Zoltners: They have played a really big part. Research-wise, there are very talented people – colleagues and students – at Kellogg. I’ve had a number of PhD students who have extended the field in very significant ways. On occasion they have helped ZS enhance its offering. I grow professionally when MBA and executive students ask challenging questions. In addition, Kellogg has allowed me to operate in two spaces: research and application. My deans and department chairs have been the enablers that have allowed me to succeed in these two worlds. I’ve personally grown tremendously as a result. I don’t think there have been many academics in the business world who have built a consulting firm while maintaining an academic interest at the same time. The consulting firm has a real academic feel.

KI: How do you spend your time outside the business or academic office?

Zoltners: I am on a Master’s swim team. I have cycled around the south island of New Zealand. And I have done a dozen major bike rides over the world.