Should you set up your own sales force or should you outsource it? Pitfalls in the standard analysis

Frédéric Dalsace (), William Ross and Erin Anderson
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Frédéric Dalsace: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: Should you set up your own sales force or should you outsource it? The standard analysis is cost based and assumes that the direct sales force is a fixed cost and that the outsourced sales force's cost varies with sales. The standard analysis then calculates the sales volume at which the direct sales force's costs equal the outsourced sales force's costs and suggests that for sales volume above that quantity, firms should use a direct sales force. This analysis has two problems. First, several other cost factors are not considered in the standard analysis. Second, the standard analysis considers only cost, ignoring coverage efficiency and selling effectiveness differences between the two sales forces. Both problems will be detailed and developed in this paper.

Keywords: Channel management; Sales force management; Outsourcing; Channel governance; Direct versus independent (search for similar items in EconPapers)
Date: 2005-01
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Citations: View citations in EconPapers (5)

Published in Business Horizons, 2005, Vol.48, n°1, pp.23-36. ⟨10.1016/j.bushor.2004.10.005⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00457733

DOI: 10.1016/j.bushor.2004.10.005

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