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Chapter 16

Evaluating salesforce performance

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Prof. Sunitha Ratnakaram,Associate Professor, VVSB

MBA, M. Phil, MFM, M. SC. (Psychology),

UGC JRF, (Ph. D)

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In this chapter we will discuss:

Sales force performance Determinants of sales force performance

Performance evaluation

Information sources for evaluation Criteria for the evaluation of sales force

performance

Establishing of performance standards

Methods of sales force evaluation

Monitoring & reviewing of sales force

performance

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Introduction

Sales mangers & their activities

Function which is overlooked by them

evaluation

Achieving fair balance between costs &

profits is the major responsibility

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Sales force performance

Relation between sales force performance

& overall performance of organizations

Impact of effective sales force

performance on the bottom-line

Newer methods of sales force training

Sales managers awareness about thefactors influencing sales force

performance

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Determinants of sales force

performance

Changing dynamics of the market have

increased the pressure on sales force

Many studies were conducted to know

the factors which will influence sales

force performance

They are

1. Internal factors

2. External factors

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Internal factors

a) Motivation

b) Skill level

c) Job satisfaction

d) Role perception

e) Personal factors (age, sex, weight, height,appearance, marital status, education &

no. of dependents)f) Ego drive

g) Empathy

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External factors

a) Environmental factors

b) Organizational factors

a) communication & work flow

b) compensation systemc) Sales management functions

a) Sales force planning

b) Forecastingc) Territory management

d) Compensation

e) Control

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Performance evaluation

Important process which enhances the way

organization is managed & provides

recommendations for further improvement

Why is it a critical function?

What it constitutes?

Comparing objectives with results

Provides feedback, management

expectations are made known

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Sales force evaluation process

Determine the factors thatinfluence sales force performance

Select criteria for sales force evaluation

Establish performance standards

Compare sales force performance

Performance review & feed back

Evaluation

process

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Purpose of evaluation

To monitor the performance & ensure

that it is in alignment with corporate

goals & objectives

To keep track of progress

To take decisions regarding

compensation, promotion & transfer

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Objectives to be fulfilled

Appreciate good performance

Discuss & suggest ways to overcome

short comings

Review & update standards of

performance

Enhance superiorsub ordinaterelationship

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Reasons for evaluation

1. To be aware of company objectives Increasing the focus on new products

Reducing time spent on non selling activities

Retaining the existing customer base Providing training facilitates

Providing focus on value added activities

2. To improve motivation & skills3. To appraise past performance

4. To develop a sales plan to increase future

sales

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Who should evaluate?

Immediate supervisorbetter estimation

Sales manager overall performance

Territory managerrarely Regional manager - rarely

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When to evaluate?

Weekly, monthly, quarterly, half-yearly orannual basis

Systematic & formal procedures only comes

under evaluation Depends on complexity & duration of sales

plan

Time to take corrective actions also to beconsidered

As frequently as possible depending on jobprofile.

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Information sources for evaluation

Source of information influences thecriteria that the manager selects to

measure sales force performance

Sales manager should be aware ofstrengths & weaknesses of the sources of

information

Formal process for the collection ofinformation helps in efficient & accurate

evaluation system

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Major sources of information

Company records Sales volumes, sales order to call ratio, profitability, selling

expenses etc.

Reports from sales persons Activity, expenses, call reports

Customers Inadequacy of sales persons reports can be removed

Managers field visit Communication skills, interpersonal skills, technical product

knowledge, personality traits

Managers personal insights Other sources

Distributors, personal contacts, published & electronic sources etc.

Information from peers & subordinates (3600 feed back)

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Criteria for the evaluation of sales

force performance

Performance can be considered &

evaluated in terms of behavior &

outcome based components

Criteria for measurement should be

derived form job description of the sales

personnel

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Qualitative criteria

Personal competencies

Planning skills, team work, aptitude &

attitude, product knowledge

Measurability leads to ambiguity

Shift from planning skills, knowledge of

company policies, time management to

communication skills, ethical behavior &

team orientation

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Major qualitative criterions

1. Sales skills

Technical skills

Interpersonal skills

Salesmanship skills

2. Territory management

3. Personality traits

Adaptability Locus of control

Ego drive

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Quantitative criteria Mostly used & easier to standardize & implement

Quantitative measures can be segregated into input& output measures

Input measures

Avg. no. of sales calls per day

Ratio of sales cost to sales No. of reports submitted by sales persons

Output measures

Sales volume

Sales orders

No. of new accounts

No. of advertising displays

Gross profit obtained from new accounts

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Establishing of performance

standards Based on the criteria standards are to be

formulated

Standards act as a bench mark & helps inevaluating performance

Can be prepared by a sales manager singly or inconsultation with other sales personnel

No. of standards to be used is one of majordecisions & difficulty involved in the weight to be

given to each factor Large companies will have common set of

performance standards

Relationship between input & output measures tobe kept in mind while setting standards

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Areas of performance standards

Quantity standards

Quality standards

Time based standards Cost based standards

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Quantity standardsQuality standards

Sales calls per day

Number of orders

No. of salespresentations

No. of lunches

hosted for a

customer

Team work

Adaptability

Ethical behavior Ability to gather

information etc.

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Time based standards

Time taken between identifying customer

need & preparing sales proposal

Time gap between a customer enquiry &

the sales call

Time between complaint & solving

problem

Time between getting order & collecting

sales amount etc.

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Cost based standards

Ratio of selling costs to sales

Gross profit obtained from new

customers

Expenses incurred per order

No. of gifts & entertainment expenses

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Most widely used quantitative

performance standards

Sales volume based on quota

Sales volume in comparison to previous

years sales & net profits

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Methods of sales force evaluation

Several methods were developed in this regard

Cotham & Cravens gave a model using standarddeviation in 1969

Cravens, Woodruff & Stamper developed a modelin 1972, using total sales volume

Jackson & Aldag propounded MBO method forsales force in 1974

Cocanaugher & Ivancevich developed BARS in

1978 Few of them are behavior based, few of them are

results based and few of them are personality traitbased

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Some f the methods for evaluation

1. Essays: where sales manager describes theperformance of sales person in few paragraphs

2. Rating scales: based on standardized

performance measures

3. Forced choice method: where the sales manageris asked to go through groups of statements &

select those that best explain the individual

4. Ranking: useful when entire sales force has to beevaluated. Techniques used are alternative

ranking, paired comparison ranking & multiple

ranking

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5. New methods of evaluation

a) Critical incident approach

b) Work standards method

c) Management by objectives (MBO)

d) Behaviorally Anchored Rating Scale(BARS)

e) Family of Measures (FOM) as a method of

sales force performance evaluation(continuous & compares past performancewith present performance)

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Monitoring & reviewing of sales

force performance

Need for monitoring

How to monitor?

Sales reports, invoices, order forms,

accounting records & direct interaction

Review is the final stage in evaluation

An evaluation interview can be conducted

in regard to this periodically where the

aspects of improvements can be discussed

along with clarifying doubts