Chapter 16
Evaluating and Controlling Salespeople
WHY EVALUATE SALESPEOPLE?
To link compensation and rewards to performance.
To identify salespeople capable of promotion
To identify salespeople to be retrenched
To identify training and counseling needs
To identify criteria for recruitment and selection
To clarify work expectations
To motivate salespeople.
To help salespeople set career goals.
PERFORMANCE EVALUATION PROCESS
1.Identify key performance measures
2.Set specific standards of performance for salespeople
3.Monitor actual performance versus preset standards
4.Provide individual performance evaluation feedback to each sales representative
Set goals and objectives forsales force, including:
RevenuesContribution profitsMarket shareExpense ratios
Design sales plan
Set product performance standards for:Organization SalespeopleRegions AccountsDistricts
Measure results against standard Take Corrective Action
QUALITIES OF A WELL-QUALITIES OF A WELL-RUN SALES FORCERUN SALES FORCE
Reputation of company Reputation of company among its customersamong its customers
Ability to hold old Ability to hold old accountsaccounts
Quality management Quality management teamteam
Ability to keep top Ability to keep top salespeoplesalespeople
InnovativenessInnovativeness
Product/technical Product/technical knowledgeknowledge
Quality of trainingQuality of training Ability to open new Ability to open new
accountsaccounts Ability to meet sales Ability to meet sales
targetstargets Communication with Communication with
clientsclients
PERFORMANCE PERFORMANCE STANDARDSSTANDARDS
Planned Planned achievement levels that the firm levels that the firm expects to reach throughout the year.expects to reach throughout the year.
PERFORMANCE PERFORMANCE STANDARDSSTANDARDS
Performance Standards should be:
equitable and reasonable varied critical to success on the job based on inputs and outputs (outcomes)
ASSESSING PERFORMANCE
Measure inputs (effort, number of sales calls, number of proposals…)
Measure outputs (sales, profitability) The outcome-based perspective looks at
outputs only The behavioral-based perspective consists
of measuring both inputs and outputs.
Input-based System
BehaviorCallsReportsComplaintsDemonstrationsDealer meetingsDisplay set upTravel/entertainment
expenses
ResultsSales revenuesSales growthSales/quotaSales/potentialNew accountsContribution marginsContribution
percentage
Output-based System
SalespersonEvaluation
BehaviorProfessionalDevelopment
Results Profitability
ASSESSING PERFORMANCE
PERFORMANCE FACTORSInputs
Number of Sales Calls
Daily call rate can be measured against
company averages/predetermined standard
PERFORMANCE FACTORSInputs
Number of Sales Calls Selling Expenses
Selling expenses may be compared to a company standard
PERFORMANCE FACTORSOutputs
Sales Sales Volume
PERFORMANCE FACTORSOutputs
Sales Volume
Must relate volume figures to predetermined standards of acceptable performance.
PERFORMANCE FACTORSOutputs
Sales Volume
Market Share
PERFORMANCE FACTORSPERFORMANCE FACTORSOutputsOutputs
Sales Volume
Market Share
Figured by:
Representative’s Sales Volume
Territorial Market Potential
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit
A salesperson’s direct contribution to profit is a logical yardstick for evaluating
performance.
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit Batting Average
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit Batting Average
Number of orders received
Number of calls made
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit Batting Average Routing Efficiency
PERFORMANCE FACTORSOutputs
Sales Volume Market Share Gross Profit Batting Average Routing Efficiency
# of miles traveled
# of calls made
PERFORMANCE FACTORSOutputs
Sales to Account == Dollar Sales _# Accounts
Average Order Size == Dollar Sales# Orders
Growth Ratio == # New AccountsTotal # Accounts
Account Success == Accounts sold_ Total # Accounts
Performance Measure%
Using Performance Measure%
Using
SalesSales volume dollarsSales /last year’s salesSales to quotaSales growthSales volume by productSales volume by customerNew account salesSales volume in unitsSales volume to potential
AccountsNumber of new accountsNumber of accounts lostNumber buying full line
797665554844423527
693327
ProfitNet profitGross margin percentageReturn on investmentNet profit as a % of salesMargin by prod. categoryGross margin dollars
OrdersNumber of ordersAverage size of order
693433322825
4722
OUTPUT MEASURES USED
A GOOD EVALUATION SYSTEM
Job Related Reliable Valid Standardized Practical Allow for comparability Useful
EVALUATING PERFORMANCE
Written Essays Critical Incidents Rating Scales Ranking
» Group Order Ranking
» Individual Ranking
» Paired Comparisons
Behaviorally-Anchored Rating Scales (BARS)
POTENTIAL EVALUATION PROBLEMS
Single Criterion
POTENTIAL EVALUATION PROBLEMS
Single Criterion
Employees evaluated on a single job criterion
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error
Evaluators mark differently:
– Mark high (Positive leniency error)
– Mark low (Negative leniency error)
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error Halo Effect
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error Halo Effect
Allowing the assessment of an individual on
one trait influence evaluation of that person
on other traits
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error Halo Effect Similarity Error
POTENTIAL EVALUATION PROBLEMS
Single Criterion Leniency Error Halo Effect Similarity Error
Giving special consideration to those who
have qualities that they perceive in
themselves.
OVERCOMING EVALUATION PROBLEMS
Use multiple criteria De-emphasize personality traits and
other qualitative measures Use multiple evaluators Train evaluators
Base%
Using Performance Measure%
Using
Communication skills
Product knowledge
Attitude
Selling skills
Initiative and aggressiveness
Appearance and manner
Knowledge of competition
Team player
Enthusiasm
88
85
82
79
76
75
71
67
66
Time management
Cooperation
Judgment
Motivation
Ethical/Moral behavior
Planning ability
Pricing knowledge
Report quality
Creativity
6362
62
61
59
58
55
54
54
Source: Donald W.Jackson, John L. Schlacter, and William G. Wolfe, “Examining the Bases Utilized for Evaluating Salespeoples’ performance,” Journal of Personal Selling & Sales Management, Vol. 15, No. 4 (Fall 1995), p. 63.
QUALITATIVE MEASURES USED IN EVALUATIONS
MEASURING QUALITY OF RELATIONSHIPS
Customers rate salesperson::
– adding value
– diagnosing problems
– providing solutions
– monitoring the account
– managing the relationships
DISCUSSING EVALUATIONS
Prepare, prepare, prepare!
TEAM EVALUATIONS
Establish a link between team performance and outcomes in order to promote individual and team effort. Use:
Team Work Team Leadership Team Productivity Team Relations Team Communications
FROM THE TEXT
Read Chapter 16 except– Four Factor Model (775/776)– Multiple Regression Models (777/778)– Performance Matrix (778/779)