Crest Light case study - salesman evaluation and performance monitoring

7/29/2019 Crest Light case study - salesman evaluation and performance monitoring

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GROUP MEMBERS

ANUPAM GARG

CHETAN MATHUR

JATINDER


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CRESTLIGHT PAPER COMPANY

Established in late 1940s and added a whole

range of photographic and reproduction paper

and supplies

Started acquisitions in 1964 and added

specialty paper merchant and a major form

printing house

Five principal divisions: Equipment, Supplies,

Paper, Education and Formss


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EDUCATION DIVISION

Formed in 1970 to give special attention towardsthe increasing demand from education sector

After 9 years, the division carried a range of 1000

items and sold directly to Local EducationAuthorities, Central Supplies Departments,

Universities and Schools

Gross margin for supply to LEA was 40% while forwholesalers it was only 26%


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DAVID FARREL Rises to top management position very fast

Interested in understanding others viewpoints Follows unexpected approach and direct manner

Bachelors degree in Economics from Nottinghamand MBA from Manchester Business School

Sales Management Trainee with a branded foodcompany prior to MBA Degree

Joined as assistant to Group Marketing Director atgroup head office at Crestlight

ANDREW SMYTHE


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CRESTLINE EXISTING EVALUATION METHOD

Mr. Andrew smith the existing divisional sales manager used

subjective evaluation for performance evaluation.Factors considered in subjective evaluation

Degree of acceptance by customers (indicated from Andrews statementabout Halbertthat how well he is liked by the customers)

Amount of effort for new business (indicated from his comment about

Jennings commitment as how he didnt let his marital problem affect hiswork)

Ability to acquire business (statement about Verker & Anderson for lowsales volume)

Amount of service given to customers

Dependability : supervision needed (statement about Thompson aboutneeding guidance)

Resourcefulness (indicative from depraved statement about Ian Campbellregarding his unexciting, quite and unimaginative sales technique and alsofrom supportive statement towards John Randall for is ability to think upnew ideas)


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Salesman Commision

Halbert 3870

jennings 3585

Bindon 2340

Vereker 1680

Prince 2310

Anderson 1680

Randall 2310

Thompson 1845

Campbell 2145

The effect of subjective

evaluation and statementsregarding each salesman is

evident on the amount of

commission given to them


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Lack of outcomes

Ill defined personality traits

Halo effect Leniency of harshness

Central tendency

Interpersonal bias

PROBLEMS WITH SUBJECTIVE EVALUATION


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Problems at Crestlight paper company

The growth of about 20% above the year 1977 was mainlyrepresented by prices increases rather than volume indicating

the sales persons are failing to add new customers.

No fixed sales quota for salesman, so there is no proper

criteria to evaluate the performance of salesman

Current performance evaluation is suffering from

Fundamental attribution error

Mr. wesely is neglecting background information such as differences in

territory and its difficulty.

The perception of sales force is based on Person factors.


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Expenses Ratios

The sales expense ratio combines both salespersons inputs and results produced

by those inputs in a single number

Sales expense ratio = expenses/sales

Cost per call ratio = total costs/ number of calls


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ACCOUNT DEVELOPMENT AND SERVICING RATIOS

Salesman accounts soldTotal accountsavailable

accountpenetration ratio

sales/ accountratio

Halbert 239 570 0.42 1079.50

jennings 509 1060 0.48 469.55

Bindon 476 934 0.51 327.73

Vereker 353 653 0.54 317.28

Prince 413 566 0.73 372.88

Anderson 398 699 0.57 281.41

Randall 202 531 0.38 702.97

Thampson 364 423 0.86 337.91

Campbell 317 529 0.60 451.10

These ratios reflect how well the salespeople are capturing potential business that

exists in their territories

Account penetration ratio = accounts sold / total number of accounts available.

Sales per account ratio = sales dollar volume / total number of accounts sold


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CALL ACTIVITY OR PRODUCTIVITY

SalesmanCalls peraccount ratio

territoryarea

Halbert 5.15 1600

jennings 2.29 25600

Bindon 2.21 44600

Vereker 3.99 28200Prince 2.90 13000

Anderson 3.64 7300

Randall 5.80 15400

Thampson 3.35 15400

Campbell 3.58 78800

It measure the effort and planning salespeople put into their customer calls activities

and the success they derive from it

Calls per account ratio = No. of calls / number of accounts

THE RESULTS OF OBJECTIVE

MEASURE ARE CONTRADICTING

TO THE SUBJECTIVE MEASURE

ADOPTED EARLIER AT CRESTLIGHT


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LIMITATIONS OF RATIOS

Sales Expense Ratio Expenses depend on many factors like

area, number of accounts, travelling required etc.

Cost per call ratio Remuneration are included in costs, so

higher remuneration lead to higher ratio.

Account penetration ratio Affected by presence of

competitors, buying habits of students in the area etc.

Sales per account ratio - Number of students in each account

affect this ratio.

Call conversion ratio - Depends on the number of new

accounts as new accounts may require more calls than old

ones as they need more convincing


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Crest Light case study - salesman evaluation and performance monitoring

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