Evaluating the Performance of Salespeople

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Evaluating the Performance of Salespeople

• Module Ten

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Evaluating Salespeoples PerformanceAn Experts
Viewpoint
At Synygy, Inc, each sales director is assigned
salespeople to mentor. Every Monday, the
director meets with each salesperson for a
bullet point review. In addition, each month
and each quarter Synygys salespeople meet with
their managers to review progress and reassess
their goals for the year. These reviews are
critical since they play a larger role in
determining each salespersons quarterly bonus.
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Evaluating Salespeoples PerformanceAn Experts
Viewpoint
Synygys salesperson performance evaluation
system allows the company to improve
salespeoples performance and appropriately
compensate salespeople for their performance. As
such, it serves two very useful functions in
effectively managing the sales force to help
achieve the companys goals.
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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

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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

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Purposes of Salesperson Performance Evaluations

• To advise salespeople of work expectations
• To motivate salespeople
• To help salespeople set career goals
• To improve salesperson performance

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Salesperson PerformanceEvaluation Approaches
General 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.

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Salesperson PerformanceEvaluation Approaches
General 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

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360-Degree Feedback System

• Salesperson is evaluated by multiple raters
• Helps salespeople better understand their ability
  to add value to their organization and their
  customers

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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

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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

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Dimensions of Salesperson Performance
Evaluation
Behavioral
Results
Salesperson Performance
Professional Development
Profitability
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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

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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

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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

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Market Response Framework
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Elements Important in Assigning Sales Quotas

• NEEDS OF THE ORGANIZATION!!!!!!!!
• 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

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Elements Important in Assigning Sales Quotas

• Sales representatives past sales performance
• Extent of product line
• Financial support (e.g., compensation) a firm
  provides
• Relationship of product line
• Amount of clerical support

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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

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Performance Evaluation Methods Characteristics
any method should include

• Job Relatedness
• Reliability
• Validity
• Standardization
• Practicality
• Comparability
• Discriminability
• Usefulness

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Performance Evaluation MethodsGraphic
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

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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

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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.

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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

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Performance Evaluation Bias

• Occurs when a managers 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)

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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

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Framework for UsingPerformance Information
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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