SALES MANAGEMENT SIMULATION (SMS): Participant FAQs

Do I have to purchase a license to play SMS?
Yes. All players must purchase an individual license.

Shall I make all decisions in SMS by myself?
No. You will be part of a team.

Can I select my own team members?
Your instructor will decide how to assign participants to teams.

What preparation should I do before the start of SMS?
Study the participant manual. You will be able to read the manual online when you purchase a license for the simulation.

What sales management decisions are included in SMS?
• Recruiting and selecting salespeople

• How much and when to train salespeople
Territory management -- where to place salespeople; when to move salespeople to another territory

• Whether or not to concentrate salespeople into a few territories
Salesperson compensation -- salary, commissions, contests
Pricing -- for premium and base products
Leadership, manifest in two time-allocation policies -- time spent selling the base product versus the premium product; time spent selling to customers versus internal selling.
Market Monitoring -- competitive pricing, demand growth, comparative compensation, Net Promotor Score (NPS), company reputations

Is the industry a high growth market?
Research suggests the market could have high continuous growth; high growth but mature early; market that does not take off.
You will need to track market projections.

How many salespeople can a firm hire every quarter?
Maximum -- 5. Successful recruiting requires offering a salary such that in total compensation reaches/or is above expectations.
SMS assumes no competition among firms in hiring salespeople.

Can different salespeople within a firm be paid different salaries?
Yes, not only while recruiting, but also during SMS. Individual salespeople salaries can be altered every quarter.
Salespeople are paid the same commission rate. Total commissions may vary considerably – territory factors, salesperson motivation and ability.

Can my firm fire salespeople?
Yes – at any time. Salespeople may also resign. Factors: Whether compensation falls short of initial and updated expectations; distance from sales territory to home territory; personal factors.

How much training should a salesperson receive?
One quarter training is mandatory. Additional training is optional. You may add a quarter or two of training -- early or late. You may space training between quarters or concentrate training.

Does a home territory assignment affect performance?
Yes, positively. Salespeople more easily build client relationships.

What happens if my firm under-produces?
SMS allows your firm to fill all orders by permitting overtime, without limit. Additional production allows your firm to meet demand exactly – no additional inventory.
Overtime production cost per unit is greater than inventory cost per unit.
Extraordinary high inventory level automatically triggers a bank loan to finance the inventory.

In quarter 1, must the firm place salespeople in different territories?
No. Concentrating salespeople by territory will give you a competitive advantage in those territories, but you will forgo sales opportunities in territories with no salespeople.

How can the firm motivate salespeople?
Compensation is the principle means – salary and commissions have different effects.

What time-allocation policy decisions can the firm make?
Effort on the base (less expensive) product versus the premium product.
Time spent selling internally— service support, technical support, administration — versus externally, with customers.

What indicates success?

• Cumulative Profit, summed over quarters.
• Market Share
• Net Promoter Score
• Company Reputation

There are tradeoffs in achieving these criteria. Taking a long view, equal weighting of each is may be the best way to characterize success. Regardless, your instructor may choose to emphasize particular criteria.

The answers to these FAQs are described in greater detail in the Participant Manual.