Sales Force Evealuation

7/31/2019 Sales Force Evealuation

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Performance Evaluation & Control of Sales Force


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Agenda

Overview

Purpose

Gathering information

Measures of performance

Qualitative

Quantitative

Evaluation of performance and action

Case study


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Overview

SetObjectives

DetermineSales

Strategy

SetPerformance Standards

Measureand

Compare

TakeAction

Sales force evaluation is the comparison of sales force objectives with results.

Company

Regions

Products

Salespeople

Accounts

Profit contribution

Market share

Customer satisfaction

Customer service

Expenses


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Purpose

SalesForce

Evaluation

Attainment andsetting ofobjectives

Training

Motivation

Compensation

The prime reason for evaluation is to attempt to attain companyobjectives.


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Gathering Information

Acquiring the right information is crucial for evaluation and objective setting.

Product/Brand relatedsales

Daily/weekly report Expense claims

Problems/opportunitiesrevealed

IndividualSalesperson(Quantitative)

Field visits Performance

indicators

Attitude/Work habits

Organizational ability

SalesManagement(Qualitative) Customer-seller

relationship

Delivery Product reliability

MR Projects

Past sales levels Expense levels

Calls achieved

Company Records


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Determinants of sales force performance

Motivation

Skill level

Job satisfaction

Role perception

Personal factors

Ego drive

Empathy

Internal Factors

Environmental factors

Organizational factors Communication & work flow

Compensation system

Sales management functions

Sales force planning

Forecasting

Territory management

Compensation

Control

External factors


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Quantitative Measures of Performance

No. of calls made

Calls per potential account

Calls per active account

No. of quotations

No. of calls on prospects

Sales Revenue

Profits/Profit Margin

Sales per account

Sales revenue as % of

potential

No. of orders

No. of new customers

Input Measures

Output

Measures


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Performance Measurement Ratios

1. Selling expense ratio

2. Territorial net profit

3. Territorial market share

4. Sales coverage effectiveness index

5. Call frequency ratio

6. Order per call ratio

7. Average cost per call

8. Average order size

9. Average order value= Sales revenue/no. of orders


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Performance Measurement Ratios

1. Strike rate = Number of orders / Number of quotations

2. Sales revenue per call ratio

3. Profit per call ratio4. Order per call ratio

5. Average order value= Sales revenue/no. of orders

6. Prospecting success ratio= No. of new customers/No. of prospects

visited

7. Average profit contribution per order= Profits generated/No. of orders

Unfairness, in terms of sales results, can

be exposed by

Total salary (including commission)/sales revenue

Total salary (including commission)/profits.


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Qualitative Measures of Performance

Sales relatedactivities

Selling skills

Personalcharacteristics

FeaturesMore subjective

Done during sales visits

Assess the productivity andprofitability


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Qualitative Measures of Performance

Ability to close the sale

Sales skills

Are customers well satisfied with the service?

Customer relationships

How well does the salesperson carry out the preparation?

Self-organisation

Does he know his own products and its customer benefits and applications?

Product knowledge

How will he respond to the objectives determined by management?

Co-operation and attitudes


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Salesperson Evaluation Matrix

-Praise

-Reward

-Promote

-Limited Praise

-Guide

-Train

-Limited Praise

-Advise

-Educate

-Discuss

-Train

-Punish

-Remove

Qualitativelymeasured

results

Quantitativelymeasured

resultsGood Averag

eBad

Good

Averag

e

Bad


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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 ofsalesperson 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 ofsalesperson characteristics,

activities, and strategies


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Dimensions of Salesperson Performance Evaluation

Behavioral

Professional

Development

Results

Profitability

SalespersonPerformance


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Criteria for Performance Evaluation

Behavior

Consists of criteria related to activities performed by individualsalespeople

Sales calls,

customer complaints,

required reports submitted,

training meetings,

letters and calls

Should not only address activities related to short-term salesgeneration but should also include non-selling activities needed

to ensure long-term customer satisfaction.


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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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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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Profitability

Salespeople have an impact on gross profits through thespecific 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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Job Relatedness

Reliability

Validity Standardization

Practicality

Comparability

Usefulness

Characteristics any method should

include:

Performance Evaluation Methods:


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Salespeople are evaluated using some type of performance

evaluation form

Especially useful in evaluating behavioral and professionaldevelopment criteria

Forms may be filled out by customers at times

Disadvantage is providing evaluations that discriminate

sufficiently

Graphic Rating/Checklist Methods:



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Rank all salespeople according to relative performance on each

performance criterion

These methods force discrimination as to the performance ofindividual salespeople

May be complex at times

Rankings only reveal relative performance evaluation

Ranking Method:



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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.

Objective-Setting Methods



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Behaviorally Anchored Rating Scales (BARS)

Links behaviors to specific

results

Salespeople are used to

develop performance results

and critical behaviors

Positive feedback aboutbehaviors may be more

affective than positive output

feedback



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Euro Champs

Morning field meeting

Cold calling Daily activity reports, depositing payments, and request

delivery for closed sales

Role-playing and mock demonstrations for new recruits

Keeping up to date with product information in terms ofinnovation and upgrades

Closing sales, collecting payments, making courtesy calls on

existing customers, and generating references or retrainingcustomers

Reporting and feedback is 3 times in a day

At the morning meeting before heading out on cold-calls

At the midday meeting to report on door knocking results

and morning demos And at the end-of-day review to register afternoon follow

ups, demos, and sales numbers

Supervision

Case study: Eureka Forbes


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Salary

Rent allowance

A special pay

A demo allowance (forcustomer sales

specialist probationers)

A leave travel concession

Holiday bonus

Medical reimbursement

A travel reimbursement

Compensation Base salary is scaled against length of service, total

sales, and average sales over the last 6 months

A contingency compensation scheme based onnumber of units sold could be invoked in the event ofmarriage or hospitalization.

An averagely successful salesman earns two-thirds of his monthly earnings throughcommissions

This emphasis has an automatic sieving effect:anyone who cannot learn to sell does not getcommission and hence earns less and exits veryquickly.

Evaluation of a Euro Champ

Evaluation and Compensation


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Doesnt reward only on sales volume

Points are given on successful completion of various stages of selling process and compensation linked

to the points scored

An averagely successful salesman earns two-thirds of his monthly earnings through commissions

This emphasis has an automatic sieving effect: anyone who cannot learn to sell does not get

commission and hence earns less and exits very quickly

EFLs Compensation Plan


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Thank you

Sales Force Evealuation

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