What is a Sales Response Curve?
A Sales Response Function (also called a Sales Response Curve) shows the cause-and-effect relationship between commercial activity and sales for a particular time period. Figure 1. show an example of a Sales Response Function.
Commercial activity can be measured as call frequency, rep equivalents, full-time equivalents, and advertising spend. The measure of sales can also vary. Some examples are sales, market share, and change in market.
The response function is likely to get “flatter” to reflect the diminishing margin returns.
If a Sales Response Function is well understood it can be used to optimize the allocation of commercial resources to maximize profit contribution. Cozmix used Sales Response Function extensively to size and optimize sales force.
Figure 1. A Sales Response Function