1. Evaluating the Performance of Salespeople
Module Ten
Evaluating the Performance of Salespeople

2. Learning Objectives
Discuss the different purposes of salesperson performance evaluations.
Differentiate between an outcome-based and a behavior-based perspective for evaluating and controlling salesperson performance.
Describe the different types of criteria necessary for comprehensive evaluations of salesperson performance.

3. Learning Objectives
Compare the advantages and disadvantages of different methods of salesperson performance evaluations.
Explain how salesperson performance information can be used to identify problems, determine their causes, and suggests sales management actions to solve them.
Discuss the measurement Importance of salesperson job satisfaction.

4. Evaluating Salesperson Performance at City Wholesale
Setting the Stage
Evaluating Salesperson Performance at City Wholesale
What were the primary changes Prince made to the performance evaluation process?
How did the changes impact City Wholesale’s sales force?
Answers
Prince changed the frequency of the review process from annually to quarterly. He also began asking the question “What do you think we’re not doing?”
2. The more frequent evaluations improved communications and ultimately, improved salesperson performance.

5. Purposes of Salesperson Performance Evaluations
To ensure that compensation and other reward disbursements are consistent with actual salesperson performance
To identify salespeople that might be promoted
To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination 2

6. Purposes of Salesperson Performance Evaluations
To determine the specific training and counseling needs of individual salespeople and the overall sales force
To provide information for effective human resource planning
To identify criteria that can be used to recruit and select salespeople in the future
To advise salespeople of work expectations 2

7. Purposes of Salesperson Performance Evaluations
To motivate salespeople
To help salespeople set career goals
To relate salesperson performance to sales organization goals.
To enhance communications between salesperson and sales manager.
To improve salesperson performance 2

8. Salesperson Performance Evaluation Approaches: Conclusions
Most evaluate on an annual basis
Most combine input and output criteria which are evaluated using quantitative and qualitative measures
When used, performance standards or quotas are set in collaboration with salespeople
Many assign weights to different objectives and incorporate territory data. 3

9. Salesperson Performance Evaluation Approaches: Conclusions
Most use multiple sources of information
Most are conducted by the field sales manager who supervises the salesperson
Most provide a written copy of the review and personal discussion 3

10. 360-Degree Feedback System
Sales Manager
Evaluation
Salesperson is evaluated by multiple raters
Helps salespeople better understand their ability to add value to their organization and their customers
Salesperson
Team Members
Evaluation
Oneself
Evaluation
Internal Customers
Evaluation
External Customers
Evaluation 3

11. Key Issues in Evaluating and Controlling Salesperson Performance
Outcome-Based Perspective
Focuses on objective measures of results with little monitoring or directing of salesperson behavior by sales managers
Behavior-Based Perspective
Incorporates complex and often subjective assessments of salesperson characteristics and behaviors with considerable monitoring and directing of salesperson behavior by sales managers 4

12. Perspectives on Salesperson Performance Evaluation
Outcome-Based
Little monitoring of people
Little managerial direction of salespeople
Straightforward objectives measures of results
Behavior-Based
Considerable monitoring of salespeople
High levels of managerial direction of salespeople
Subjective measures of salesperson characteristics, activities, and strategies 6

13. Dimensions of Salesperson Performance Evaluation
Behavioral
Results
Salesperson
Performance
Professional
Development
Profitability 7

14. Criteria for Performance Evaluation
Behavior: Consists of criteria related to activities performed by individual salespeople
Sales calls,
customer complaints,
required reports submitted,
training meetings,
letters and calls
Should not only address activities related to short-term sales generation but should also include non-selling activities needed to ensure long-term customer satisfaction. 8

15. Criteria for Performance Evaluation
Professional Development:
Assess improvements in certain characteristics of salespeople that are related to successful performance in the sales job
Characteristics include - Attitude, product knowledge, initiative and aggressiveness, communication skills, ethical behavior 8

16. Criteria for Performance Evaluation
Results:
Salespeople measured objectively based on results such as – sales, market share, and accounts
A sales quota represents a reasonable sales objective for a territory, district, region, or zone
Some research shows that rewards for achieving results have a negative effect on performance and satisfaction 8

17. Market Response Framework
Salesperson Factors
Characteristics
Role
Perceptions
Aptitude
Skill Level
Motivation
Behavior
Effort
Quality
Planning and Control Unit
Environmental Factors
Control Unit
Attractiveness
Business
Position
Organizational Factors
Marketing Effort
Sales Management Effort 12

18. Elements Important in Assigning Sales Quotas
Concentration of businesses within the territory
Geographic size of the territory
Growth of businesses within the territory
Commitment by the sales manager to assist the sales representative
Complexity of products sold 13

19. Elements Important in Assigning Sales Quotas
Sales representative’s past sales performance
Extent of product line
Financial support (e.g., compensation) a firm provides
Relationship of product line
Amount of clerical support 13

20. Criteria for Performance Evaluation
Profitability:
Salespeople have an impact on gross profits through the specific products they sell and/or through the prices they negotiate for final sale.
Salespeople affect net profits by the expenses they incur in generating sales.
Criteria Examples
Net profit dollars
Gross margin per sale
Return on investment
Number of orders secured
Selling expenses versus budget 8

21. Performance Evaluation Methods: Characteristics any method should include
Job Relatedness
Reliability
Validity
Standardization
Practicality
Comparability
Discriminability
Usefulness 12

22. Performance Evaluation Methods Graphic Rating/Checklist Methods
Salespeople are evaluated using some type of performance evaluation form
Especially useful in evaluating behavioral and professional development criteria
May be filled out by customers
Disadvantage is providing evaluations that discriminate sufficiently 13

23. Performance Evaluation Methods: Ranking Methods
Rank all salespeople according to relative performance on each performance criterion
These methods force discrimination as to the performance of individual salespeople
May be complex
Rankings only reveal relative performance evaluation 14

24. Performance Evaluation Methods: Objective-Setting Methods
Management By Objectives (MBO)
Mutual setting of well-defined and measurable goals within a specified time period.
Managing activities within the specified time period toward the accomplishment of the stated objectives.
Appraisal of performance against objectives. 15

25. Performance Evaluation Methods Behaviorally Anchored Rating Scales (BARS)
Links behaviors to specific results
Salespeople are used to develop performance results and critical behaviors
Positive feedback about behaviors may be more affective than positive output feedback 16

26. Performance Evaluation Bias
Occurs when a manager’s evaluation of a salesperson is affected by considerations other than the specified criteria
Common sources of bias:
Personal relationships
Perceived difficulty of territory
Outcomes (i.e., ends justifies the means) 17

27. Evaluating Team Performance
Consider the criteria on which members will be evaluated and the methods used to evaluate performance
Establish a link between team performance and positive outcomes to promote individual and team effort
May be beneficial to allow team to help develop goals and evaluation criteria 18

28. Framework for Using Performance Information
Evaluate Salespeople against Relevant Performance Criteria
Compare Salesperson Evaluations to Identify Problem Area
Investigate Problem Areas to Identify Causes of Performance Problems
Determine Sales Management Actions to Eliminate Causes of Future
Problems and to Solve Existing Problems 19

29. Salesperson Job Satisfaction
Job satisfaction related to turnover, absenteeism, motivation, and organizational commitment
Job satisfaction may be related to performance (direction of relationship is unknown)
INDSALES may be used to measure job satisfaction
Results may identify areas where manager may intervene to improve job satisfaction 20