Caselet 1: Jefferson Pilot Reorganizes Its Sales Force
Bradley Peters is the National Sales Manager for Jefferson Pilot (JP) Insurance Corporation. JP offers life, hospitalization, and disability insurance to both small and large companies, primarily in the Southeast United States, through its company salespeople. Each salesperson works for commission that is paid on closed sales within a geographical territory. Over the past decade, the turnover rate for JP’s salespeople has increased from around 20 percent to over 50 percent annually. Peters has asked the firm’s accounting department to provide him with information about the total cost of hiring new salespeople, including the cost of advertising to attract applicants as well as interview, train, and license them. He’s surprised when the figure he receives amounts to over $5 million dollars per year! With a turnover rate of 50 percent, Peters knows there’s a tremendous amount of waste associated with the firm’s current sales structure. Consequently, Peters is considering partnering with independent sales agents, located in all of the company’s current sales areas, because of their marketplace knowledge, market status, similarity of goals and values, and ability to create win-win situations for all parties involved in transactions. However, JP’s sales managers would need to contact the agents operating in the company’s various sales territories and convince them of the benefits of partnering with Jefferson Pilot. Peters also understands that utilizing this new market channel would make JP’s current salespeople unhappy because the independent reps would compete at least indirectly with them. Still, as Peters thinks about all the money JP could save and how the independent reps have strong reputations and sales histories in their hometown areas, he knows partnering with them is probably the way to go.
Questions
1. What are the benefits of partnering with independent reps, as opposed to a company sales force? Can a case be made for finding a way to retain JP’s current salespeople instead of hiring sales agents to replace them?
2. Why would the turnover rate be significantly lower for JP if it hired sales agents?
3. What type of resistance might JP encounter from its current sales reps if it hired sales agents?
4. How might JP integrate an independent rep strategy with its existing company sales force?