1. McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 16 Evaluating a Salesperson’s Performance Every defeat, every heartbreak, every loss, contains its own seed, its own lesson on how to improve your performance the next time. Malcolm X

2. 16-2 Procedure for Evaluating Salespeople (Fig. 16-1) 1. Establish basic policies 2. Select evaluation bases 3. Set performance standards 4. Compare performances standards 5. Discuss results with salespeople

3. 16-3 Frequency of Performance Evaluations (Fig. 16-2)

4. 16-4 Output Factors Used as Evaluation Bases (Fig. 16-3)  Sales volume –In dollars and in units –By products and customers (or customer groups) –By mail, telephone, and personal sales calls  Sales volume as a percentage of: –Quota –Market potential (i.e., market share)  Gross margin by product line, customer group, and order size  Orders –Number of orders –Average size (dollar volume) of order –Batting average (orders / calls) –Number of canceled orders  Accounts –Percentage of accounts sold –Number of new accounts –Number of lost accounts –Number of accounts with overdue payment

5. 16-5 Quantitative Input Factors Used as Evaluation Bases (Fig. 16-4)  Calls per day (call rate)  Days worked  Selling time versus nonselling time  Direct selling expense –In total –As percentage of sales volume –As percentage of quota  Nonselling activities –Advertising displays set up –E-mails/letters written to prospects –Telephone calls made to prospects –Number of meetings held with dealers and/or distributors –Collections made –Number of customer complaints received

6. 16-6 Qualitative Input Factors Used as Evaluation Bases (Fig. 16-5)  Personal efforts of the sales reps –Management of their time –Planning and preparation for calls –Quality of sales presentations –Ability to handle objections and to close sales  Knowledge –Product –Company and company policies –Competitor’s products and strategies –Customers  Customer relations  Personal appearance and health  Personality and attitudinal factors – Cooperativeness – Resourcefulness – Acceptance of responsibility – Ability to analyze logically and make decisions

7. 16-7 Ratio Measures Sales = Days worked X Days worked X Call rate X Batting average X Average order Calls Days worked Orders Calls Sales Orders XX

8. 16-8 A Behaviorally Anchored Rating Scale for Evaluating Team Participation (Fig. 16-6) Rating Description Numeric RatingBehaviors Outstanding10Can be expected to go beyond what is normally expected to help the team achieve its goals Above average 8Can be expected always to cooperate and contribute to the team objectives. Tries hard to help make the team successful. Average 5Usually willing to cooperate and participate in team efforts. Below average 2Can be expected to participate in team efforts only to the extent required. Shows no initiative with regard to team efforts. Poor 0Unwilling to participate. At times may work against team goals.

9. 16-9 Evaluation of Sales Reps’ Performance (Fig. 16-7) Product Line:EquipmentClothingTotalEquipmentClothingTotal Total sales (000)$480$720$ 1,200$220$460$ 680 Sporting goods stores320440760160320480 Ski shops16028044060140200 Total calls made700900 Sporting goods stores300500 Ski shops400 Total orders taken500600 Sporting goods stores150450 Ski shops350150 Days worked220240 Expenses$48,000$40,000 Miles traveled60,00045,000 Total market potential$2.00$4.00$6.00$1.20$2.40$ 3.60 (millions) Sporting goods stores1.602.404.000.801.602.40 Ski shops0.401.602.000.400.801.20 Sporting GoodsSkiGoodsSki StoresShopsTotalStoresShopsTotal Average order$5,087$1,257$2,400$1,067$1,333$1,133 Batting average0.5000.8750.7140.9000.3750.666 Calls per day3.183.75 Miles per call8650 Expense per sales dollar4.00%5.90% Cost per call, excluding commission$68.57$44.44 Cost per order, excluding$96.00$66.67 commission EquipmentClothingTotalEquipmentClothingTotal Total percent of market24.0%18.0%20.0%18.3%19.0% Sporting goods stores20.0%18.0%19.0%20.0% Ski shops40.0%17.5%22.0%15.0%17.5%16.7% Joe JacksonGus Dean

10. 16-10 Evaluation of Sales Reps’ Performance (Fig. 16-7) (continued) Product Line:EquipmentClothingTotalEquipmentClothingTotal Total sales (000)$240$280$ 520$940$1,460$ 2,400 Sporting goods stores1001602605809201,500 Ski shops140120260360540900 Total calls made1,1002,700 Sporting goods stores5001,300 Ski shops6001,400 Total orders taken8501,950 Sporting goods stores4001,000 Ski shops450950 Days worked230690 Expenses$36,000$124,000 Miles traveled35,000140,000 Total market potential (millions)$1.20 $ 2.40$4.40$ 7.60$ 12.00 Sporting goods stores0.720.641.363.124.647.76 Ski shops0.480.561.041.282.964.24 Sporting GoodsSkiGoods StoresShopsTotalStoresSki ShopsTotal Average order$ 650$ 578$ 612$1,500.00$947.00$1,231.00 Batting average0.8000.7500.7730.6790.7690.722 Calls per day4.83.9 Miles per call3252 Expense per sales dollar6.90%5.20% Cost per call, excluding$32.72$ 45.92 commission Cost per order, excluding$42.23$ 63.59 commission EquipmentClothingTotalEquipmentClothingTotal Total percent of market20.0%23.3%21.7%21.4%19.2%20.0% Sporting goods stores13.9%25.0%19.1%18.6%19.8%19.3% Ski shops29.2%21.4%25.0%28.1%18.2%21.2% TotalPaula Burns