Chapter 16 Evaluating and Controlling Salespeople.

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


Sales Volume

Must relate volume figures to predetermined standards of acceptable performance.


Sales Volume

Market Share

PERFORMANCE FACTORSPERFORMANCE FACTORSOutputsOutputs

Sales Volume

Market Share

Figured by:

Representative’s Sales Volume

Territorial Market Potential


Sales Volume Market Share Gross Profit


Sales Volume Market Share Gross Profit

A salesperson’s direct contribution to profit is a logical yardstick for evaluating

performance.


Sales Volume Market Share Gross Profit Batting Average


Sales Volume Market Share Gross Profit Batting Average

Number of orders received

Number of calls made


Sales Volume Market Share Gross Profit Batting Average Routing Efficiency


Sales Volume Market Share Gross Profit Batting Average Routing Efficiency

# of miles traveled

# of calls made


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


Single Criterion

Employees evaluated on a single job criterion


Single Criterion Leniency Error


Single Criterion Leniency Error

Evaluators mark differently:

– Mark high (Positive leniency error)

– Mark low (Negative leniency error)


Single Criterion Leniency Error Halo Effect


Single Criterion Leniency Error Halo Effect

Allowing the assessment of an individual on

one trait influence evaluation of that person

on other traits


Single Criterion Leniency Error Halo Effect Similarity Error


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)

Chapter 16 Evaluating and Controlling Salespeople.

Documents

Transcript of Chapter 16 Evaluating and Controlling Salespeople.