Chapter 16 Evaluating and Controlling Salespeople

WHY EVALUATE SALESPEOPLE? n n To link compensation and rewards to performance. n n To identify salespeople capable of promotion n n To identify salespeople to be retrenched n n To identify training and counseling needs n n To identify criteria for recruitment and selection n n To clarify work expectations n n To motivate salespeople. n n 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 for sales force, including: Revenues Contribution profits Market share Expense ratios Design sales plan Set product performance standards for: OrganizationSalespeople RegionsAccounts Districts Measure results against standard Take Corrective Action

QUALITIES OF A WELL- RUN SALES FORCE n Reputation of company among its customers n Ability to hold old accounts n Quality management team n Ability to keep top salespeople n Innovativeness n Product/technical knowledge n Quality of training n Ability to open new accounts n Ability to meet sales targets n Communication with clients

PERFORMANCE STANDARDS n Planned levels that the firm expects to reach throughout the year. n Planned achievement levels that the firm expects to reach throughout the year.

PERFORMANCE STANDARDS Performance Standards should be: n n equitable and reasonable n n varied n n critical to success on the job n n based on inputs and outputs (outcomes)

ASSESSING PERFORMANCE n n Measure inputs (effort, number of sales calls, number of proposals…) n n Measure outputs (sales, profitability) n n The outcome-based perspective looks at outputs only n n The behavioral-based perspective consists of measuring both inputs and outputs.

Input-based System Behavior Calls Reports Complaints Demonstrations Dealer meetings Display set up Travel/entertainment expenses Results Sales revenues Sales growth Sales/quota Sales/potential New accounts Contribution margins Contribution percentage Output-based System Salesperson Evaluation Behavior Professional Development ResultsProfitability ASSESSING PERFORMANCE

PERFORMANCE FACTORS Inputs n n Number of Sales Calls Daily call rate can be measured against company averages/predetermined standard

PERFORMANCE FACTORS Inputs n n Number of Sales Calls n n Selling Expenses Selling expenses may be compared to a company standard

PERFORMANCE FACTORS Outputs n Sales n Sales Volume

PERFORMANCE FACTORS Outputs n n Sales Volume Must relate volume figures to predetermined standards of acceptable performance.

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share Figured by: Representative’s Sales Volume Territorial Market Potential

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit A salesperson’s direct contribution to profit is a logical yardstick for evaluating performance.

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit n n Batting Average

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit n n Batting Average Number of orders received Number of calls made

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit n n Batting Average n n Routing Efficiency

PERFORMANCE FACTORS Outputs n n Sales Volume n n Market Share n n Gross Profit n n Batting Average n n Routing Efficiency # of miles traveled # of calls made

PERFORMANCE FACTORS Outputs = Sales to Account= Dollar Sales _ # Accounts = Average Order Size=Dollar Sales # Orders = Growth Ratio=# New Accounts Total # Accounts = Account Success=Accounts sold_ Total # Accounts

OUTPUT MEASURES USED

A GOOD EVALUATION SYSTEM n n Job Related n n Reliable n n Valid n n Standardized n n Practical n n Allow for comparability n n Useful

EVALUATING PERFORMANCE n n Written Essays n n Critical Incidents n n Rating Scales n n Ranking » »Group Order Ranking » »Individual Ranking » »Paired Comparisons n n Behaviorally-Anchored Rating Scales (BARS)

POTENTIAL EVALUATION PROBLEMS n n Single Criterion

POTENTIAL EVALUATION PROBLEMS n n Single Criterion Employees evaluated on a single job criterion

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error Evaluators mark differently: – –Mark high (Positive leniency error) – –Mark low (Negative leniency error)

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error n n Halo Effect

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error n n Halo Effect Allowing the assessment of an individual on one trait influence evaluation of that person on other traits

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error n n Halo Effect n n Similarity Error

POTENTIAL EVALUATION PROBLEMS n n Single Criterion n n Leniency Error n n Halo Effect n n Similarity Error Giving special consideration to those who have qualities that they perceive in themselves.

OVERCOMING EVALUATION PROBLEMS n n Use multiple criteria n n De-emphasize personality traits and other qualitative measures n n Use multiple evaluators n n Train evaluators

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 n : n Customers rate salesperson: – –adding value – –diagnosing problems – –providing solutions – –monitoring the account – –managing the relationships

DISCUSSING EVALUATIONS n n Prepare, prepare, prepare!

TEAM EVALUATIONS Establish a link between team performance and outcomes in order to promote individual and team effort. Use: n n Team Work n n Team Leadership n n Team Productivity n n Team Relations n n Team Communications

FROM THE TEXT n n Read Chapter 16 except – –Four Factor Model (775/776) – –Multiple Regression Models (777/778) – –Performance Matrix (778/779)