Evaluation 19th lec

8/7/2019 Evaluation 19th lec

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Subject: Sales and Distribution ManagementSubject: Sales and Distribution Management

BATCH: SPRING SUMMER/2010-2013BATCH: SPRING SUMMER/2010-2013

Book Recommended : P. VenugopalBook Recommended : P. VenugopalBy Sunny Mehta (Inspirational Trainer)By Sunny Mehta (Inspirational Trainer)

Topic : Evaluation



Rice & Grain ExampleRice & Grain Example….….



SALES FORCESALES FORCE

LEADERSHIPLEADERSHIP

Evaluating PerformanceEvaluating Performance



Purposes of SalespersonPerformance Evaluations I

1. To ensure that compensation andother reward disbursements are

consistent with actual salespersonperformance

2. To identify salespeople that might bepromoted

3. To identify salespeople whose

employment should be terminated and



Purposes of SalespersonPerformance Evaluations II

4. To determine the specific trainingand counseling needs of individual

salespeople and the overall salesforce

5. To provide information for effectivehuman resource planning

6. To identify criteria that can be used

to recruit and select salespeople in



Purposes of SalespersonPerformance Evaluations III

7. To advise salespeople of workexpectations

8. To motivate salespeople

9. To help salespeople set career goals

10.To improve salesperson performance



Salesperson PerformanceEvaluation Approaches I

1. Most evaluate on an annual basis

2. Most combine input and output criteriawhich are evaluated using quantitativeand qualitative measures

3. When used, performance standards or

quotas are set in collaboration withsalespeople

4. Many assign weights to different

objectives and incorporate territory

General conclusions:



Salesperson PerformanceEvaluation Approaches II

5. Most use multiple sources of information

6. Most are conducted by the field salesmanager who supervises thesalesperson

7. Most provide a written copy of thereview and personal discussion

General conclusions:



SalespersonSalesperson

360-Degree Feedback System

• Salesperson isevaluated bymultiple raters

• Helps salespeoplebetter understandtheir ability to add

value to theirorganization andtheir customers

Internal Cus

tomers

E

v a l u a t i o n

E

v a l u a t i o n

E v a l u a t i o n

E v a l u a t i o n E x t e r n a l C u s t o m

e r s

Eva

luation

Eva

luation

Eva

luation

Eva

luation

Oneself

E v a l u a t i o n

E v a l u a t i o n

E v a l u a t i o n

E v a l u a t i o n

Sales Manager

E v a l u a

t i o n

E v a l u a

t i o n

E v a l u a t i o n

E v a l u a t

i o n

T e a m M e m

b e r s

Evalu

ation

Evalu

ation

Evalu

ation

Evalu

ation



A Sales Force Evaluation ModelA Sales Force Evaluation Model

Take Corrective ActionMeasure results against

standard

Set product performance standards for:

Organization Salespeople

Regions AccountsDistricts

Design sales plan

Set goals and objectives for

sales force, including:

RevenuesContribution profitsMarket shareExpense ratios



Output Measures Used in Sales Force Evaluation

Sales Profit

Sales volume dollars Net profit

Sales volume previous year’s growth Gross margin percentage

Sales to quota Return on investment

Sales growth Net profit as a percentage of salesSales volume by product Gross margin dollars

Sales volume by customer Margin by product category

New account sales Accounts

Sales volume in units Number of new accounts

Sales volume to potential (market share) Number of accounts lostOrders Number of accounts sold

Number of orders Number of accounts buying full line

Average order size

Batting average (orders/calls)

Output Measures Used in SalesOutput Measures Used in Sales

Force EvaluationForce Evaluation



Output Measures Used in SalesOutput Measures Used in Sales


Performance MeasurePercentUsing Performance Measure

PercentUsing

SalesSales volume dollarsSales volume previous year’s salesSales to quotaSales growth

Sales volume by productSales volume by customer New account salesSales volume in unitsSales volume to potential

AccountsNumber of new accounts

Number of accounts lostNumber of accounts buying full line

79%766555

4844423527

69

3327

ProfitNet profitGross margin percentageReturn on investmentNet profit as a percentage of sales

Margin by product categoryGross margin dollars

OrdersNumber of ordersAverage size of order

69%343332

2825

4722



Input or Behavior Measures Used in Sales Force Evaluation

Expenses Effort

Total expenses Number of calls

Selling expenses to budget Number of calls per day

Selling expenses as a percentage of sales Number of calls to quota

Nonselling Activities Number of days worked

Advertising displays set up Number of reports turned in

Number of service calls Number of prospecting phone calls

Number of customer complaints Selling time vs. non-selling time

Input or Behavior Bases Used inInput or Behavior Bases Used in

Sales Force EvaluationSales Force Evaluation



Input or Behavior Bases Used inInput or Behavior Bases Used in

Sales Force EvaluationSales Force Evaluation

BasePercent

Using BasePercent

Using

Selling expenses to budget

Total expenses

Selling expenses as a % of sales

Number of calls

55%

53

49

48

Number of calls per day

Number of reports turned in

Number of days worked

Selling time vs.nonselling time

42%

38

33

27



Qualitative Bases Used in SalesQualitative Bases Used in Sales


Qualitative Bases Used in Sales Force Evaluation

Attitudinal and Personality Factors Time management

Attitude Ability to plan

Enthusiasm Appearance and manner

Cooperation Knowledge

Creativity and resourcefulness Product knowledge

Initiative and aggressiveness Pricing knowledge

Motivation Knowledge of competition

Selling Skills Ethical and moral behavior

Communication Skills Team player



Qualitative Bases Used in SalesQualitative Bases Used in Sales


BasePercentUsing Performance Measure

PercentUsing

Communication skills

Product knowledge

Attitude

Selling skillsInitiative and aggressiveness

Appearance and manner

Knowledge of competition

Team player

Enthusiasm

88%

85

82

7976

75

71

67

66

Time management

Cooperation

Judgment

MotivationEthical/Moral behavior

Planning ability

Pricing knowledge

Report preparation and submission

Creativity

63%

62

62

6159

58

55

54

54



A Model of SalespersonA Model of Salesperson

EvaluationEvaluation

Input-based SystemInput-based System

ResultsResults

Sales revenues

Sales growth

Sales/quota

Sales/potential

New accounts

Contribution margins

Contribution

percentage

Output-based SystemOutput-based System

SalespersonSalesperson

EvaluationEvaluation

Behavior Behavior

Calls

Reports

Complaints

Demonstrations

Dealer meetings

Display set up

Travel/entertainment

expenses

ki S l l 0



Ranking Salespeople on 10Ranking Salespeople on 10

Input/Output FactorsInput/Output Factors

Performance factors Pete Jones Ann Smith

Sales (annual) $1,400,000 $1,100,000

Days worked 210 225

Calls 1,200 1,500

Orders 480 750

Expenses $19,000 $14,900

Calls per day 5.7 6.7

Batting average (orders per calls) 40% 50%

Sales per order $2,916 $1,466

Expenses per call $15.83 $9.93

Expenses per order $39.58 $19.86

Expenses as % of sales 1.35% 1.35%



Ranking Salespeople onRanking Salespeople on

10 Input/Output Factors10 Input/Output Factors

3.87

3.66

3.44

3.23

3.02

2.80

2.59

2.38

2.16

1.95

1.74

1.53

1.31

1.10

Millions

$

Contribution Margin (%)Contribution Margin (%)

34.8 35.1 36.0 36.6 37.2 37.8 38.7

SS

AA

LLEE

SS

YY

RR

22

Avg Sales $3.17

Avg contribution $1.13

Avg contribution % 35.8

Age 45

Calls 1122Number of salespeople 18

COMPROMISERSCOMPROMISERSAvg Sales 2.91

Avg contribution 1.09


Age 37

Calls 888Number of salespeople 11

STARSSTARS

Avg Sales 1.78



Age 44

Calls 958

Number of salespeople 11

LAGGARDSLAGGARDS

Avg Sales 2.03



Age 35

Calls 921

Number of salespeople 16

SLOWPOKESSLOWPOKES

on ons w en u comeon ons w en u come



on ons w en u comeon ons w en u comeversus Behavioral Systems areversus Behavioral Systems are

preferredpreferred

Outcome Systems(OS)Outcome Sy stems(OS)

• CustomersCustomers need informationinformation

• Customers trust theCustomers trust the

salespersonsalesperson• There are ways toThere are ways to

close the dealclose the deal

• Sales environment isSales environment is

competitivecompetitive

Behavioral System(BS)Behavioral Sy stem(BS)

• Salespeople lackSalespeople lack

experienceexperience

• No need to protectNo need to protect

the brand imagethe brand image• Nonselling behaviorsNonselling behaviors

are a priorityare a priority

• Difficult to assignDifficult to assign

sales creditsales credit



Expense to SalesExpense to Sales == ExpensesExpenses

SalesSales

Growth Ratio =Growth Ratio = # New Accounts# New AccountsTotal # AccountsTotal # Accounts

Account Success =Account Success = Accounts SoldAccounts Sold

Total # AccountsTotal # Accounts

Account Related RatiosAccount Related Ratios

o e s om n ng npuo e s om n ng npu



Widely used, simple to use, easy to understandWidely used, simple to use, easy to understand

Add ranks for overall performance measureAdd ranks for overall performance measure

Alternatives to sales/salespersonAlternatives to sales/salesperson− Sales to potential -- good coverage of (limited) market

− Sales to quota -- ability to increase revenue

− Sales per order -- profitability relative to size of customer

− Batting average -- efficiency of calls

− Gross margin percentage -- ability to control price

selling best mix of products Variation -- weight importance of each criterionVariation -- weight importance of each criterion

o e s om n ng npuo e s om n ng npuOutput Controls: RankingOutput Controls: Ranking

ProceduresProcedures



Feel free to mail me at:Feel free to mail me at:

[email protected]@gmail.com

Join the Group On Fb : Creating Miracles in Sales-Join the Group On Fb : Creating Miracles in Sales-

Connection wid Philosophies of Lyf(A Brain Game)Connection wid Philosophies of Lyf(A Brain Game)

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Evaluation 19th lec