1Evaluating the

Sales Force9

It is only through evaluation

that value exists: and without

evaluation the nut of existence

would be hollow.

Friedrich Nietzsche

Learning Objectives

Understand the importance of evaluation in sales

management

Study the Sales Force Evaluation Model

Distinguish between input and output measures of

sales performance

Discuss the value of behavioural control procedures

for salespeople

Understand outcome based evaluation procedures

Describe the evaluation models that use both input

and output data

Role of Evaluation in Sales

Management

Sales Force Evaluation

Adjust sales territories Determine training and

development needs of salesperson/s

Motivate salespeople and establish work expectations

Link compensation and rewards to performance

Identify individuals for promotion or

termination

Help salespeople set and work towards their

career goals

Establish recruiting criteria for

salespeople

Interrelationship of planning,

implementation, and evaluation

PlanningSet goals

Determine strategies

and tactics

Implementation

Organize

Staff

Operate

EvaluationCompare goals and

results

Explain variances

Fact finding is more important than Fault finding

oWhat happened?

oWhy did it happen?

oWhat can we do about it? 4

Comprehensive Performance

Appraisal Areas

Input Measures

Output Measures

ProfitabilityPersonal

Development

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Output Measures Used in Sales

Force Evaluation

Sales Orders

Profits Accounts

Sales Volume Analysis

Sales Definition:Order booking

Shipment of goods

Receipt of payment

Source of InformationInvoices / Cash receipts

Sales persons call reports

Warranty cards

Store audits

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Sales Analysis

8

Sale

s A

naly

sis

All levels

In Sales

Organisation

Different

Type of

Sales

Different

Type of

Analysis

National and/or international levels sales organisation

Regional level

Branch level

Territory level

Individual level

Total sales of the company

By type of products

By type of distribution channels

By type of customer classifications

By size of orders

Comparisons with sales quotas / targets

Comparisons with previous periods

Comparisons with industry / competitors

Comparisons within sales organisations

Comparisons with sales forecasts

Orders/Accounts

Number of Orders

Average Order Size

Number of new accounts

Number of accounts lost

Number of accounts sold

Number of accounts

buying full line

ORDERS ACCOUNTS

Productivity Analysis

Productivity is generally measured by ratio between

output & input

Sales = Days Worked x Call Rate x Batting

Average x Average OrderCall Rate = Calls per day worked

Batting Average = Orders/Call

Average Order = Sales amount per order

Companies also look at:Sales Volume per Call

o Revenue generated by rep/Number of calls made

Average Cost per Call

o Sales Expenses of rep/Number of calls made

Productivity Analysis

Productivity can be improved by companies by:Reducing sales force size

Hiring manufacturers reps. or agents on commission basis

Using the internet, telemarketing, direct mail to reach

customers

Increasing sales volume substantially

Profitability Analysis

Identify unprofitable product lines, territories,

and customer segments

Evaluate territory and product performance by

profitability

Calculate year-end sales team bonuses.

Sales Costs = Profit

Profit for Sales Force Evaluation

Net Profit

Gross Margin

Gross Margin Percentage

Return on Investment

Net profit as a percentage of sales

Margin by product category

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Profitability Analysis

Close rate shows how well rep can close once she

has attempted to seal the deal by giving price

quotes

Profit per call can indicate if rep is offering too many discounts to customers

Close Rate =Number of Orders

Number of Quotations

Profit Per Call =Total Profit

Number of Calls Made

Input Measures Cost Analysis

Look at various major costs as a percentage of sales

Total

Salaries

Travel

Training

These could be seen across:

Territories

Products

Customer Classifications

Assists sales managers identify inefficient

functions/products and determine which customer

segments are most expensive to serve

Input Measures

Number of days worked

Sales calls per day, week, or

month

Sales calls per customer

Product demonstrations

conducted

Required reports completed

Number of prospecting

phone calls

Selling time vs. non-selling

time

Dealer meetings

Customer training

sessions conducted

Number of service calls

Number of customer

complaints

Advertising displays

Effort Other Activities

A Model of Salesperson Evaluation

Output Measures Sales revenues

Sales growth

Sales to quota

Sales to potential

New accounts

Contribution margins

Contribution percentage

Input Measures Calls

Reports

Complaints

Demonstrations

Dealer Meetings

Display set up

Travel/entertainment

expenses

Perspectives on Salesperson

Performance Evaluation

Output Measures Little monitoring of people

Little managerial direction of

salespeople

Straightforward objectives

measures of results

Use in competitive sales

environment

Input Measures Considerable monitoring of

salespeople

High levels of managerial

direction of salespeople

Subjective measures of

salesperson characteristics,

activities, and strategies

Used when non-selling

behaviours are a priority

For new recruits

Qualitative Performance Measures

Judgments made by supervisors about reps

performance or abilitiesJob knowledge

Problem-solving skills

Creativity

Attitude and morale

Internal and external relationships

Initiative and judgment

Ability to plan

Communications with management

Normally reviewed against an ideal rep

Relating the Performance of the Sales

Force to the Firms Salespeople

Possible reasons for a sales revenue shortfall

Sales force didnt work hard enough1

Firms pricing isnt competitive2

Products suffer from quality or delivery problems3

Reps lack sales ability or need additional training4

Look at changes in distribution set up5

Policies for Performance Evaluation

Normally annualFrequency

Immediate supervisor and review by branch head

Who conducts evaluation

Sales analysis, daily and monthly reports

Sources of Information

Should be conducted with each salesperson

Formal Review

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Tools and Methods to Perform

Qualitative Measurements

ForceRanking

Each reps performance is ordered from highest to lowest within a district or region

Rating Scales

Uses phrases or terms as anchors that describe characteristics or performance

The EssayTechnique

Brief statement written by the sales mgr to describe reps overall performance level

Management by Objectives

Goal setting and evaluative process resulting in mutually agreed-upon performance measures

Behaviorally Anchored

Rating Scale

Set of scaled statements describing performance rep received in terms of various job behaviors

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Salesperson

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

Sales Manager

Eva

lua

tion

5 Types of Evaluation Bias

CentralTendency Bias

Managers tendency to rate in the center of the scale

Leniency or Harshness Tendency

Occurs when rep is rated at the extremes

Halo Effect 1 or more evaluation categories influence the

overall assessment of the rep

InterpersonalBias

Occurs when performance ratings are influenced by how much manager likes or dislikes rep

OutcomeBias

Allowing results of an action to influence mgrs assessment (e.g., rep closes large important sale)

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Reducing Sales Management Errors in

Performance Evaluations

Be familiar with each trait on evaluation form1

Dont allow one factor to influence others2

Base ratings on actual performance, not potential3

Dont overrate reps evaluate them objectively4

Rate rep on performance over entire period5

List sound reasons for all appraisal ratings6

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26

Sales Force

Automation9

Technology overtaking the

human touch

Sales Force Automation

The streamlining of the sales cycles in the

business to cut cost of customer contact and

enhance customer experience.

It records every business opportunity from

prospecting to closure within the guiding

principles of:Build customer experience

Develop customer insight

Build CRM programmes

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Use of Technology in Sales Management

Commonly used technologyCell phones

Global Positioning Systems

Laptop Computers

Personal Digital Assistants

E-mail for communication with

customers and head office and

prospecting

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Benefits of SFA and CRM

Lowering of customer acquisition cost

Direct relationship with field force

Greater accountability of sales force

Real time management of marketing information

system

Enhancement of customer focus

Updating of databases to manage customer

interaction and improve sales forecasting

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Objectives of CRM and SFA

Applications

To increase revenue

To enhance per customer profitability

To increase ROMI (return of marketing

investments)

To enhance winning sales approach

To increase sales executive productivity

To increase information flow for prudent decision

making

To promote sales executive retention and reduce

field force turnover

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Linking Sales Process and Activity

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Opportunity GenerationSales collateral preparation, despatch

and data capture

Sales collateral preparation, despatch

and data captureLead Allocation

Prospect ContactedSales manager moderation if the

contact not done in the desired period

Order PlacedGenerate contract and management

approval

Prospect Qualified

Product Solution Identified Finalise product solution and price

Schedule meeting if lead is firm

Areas of Automation in Sales

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Lead tracking and conversion rates to gauge productivity of sales staff

Length of average sales cycle Size of order book How many sales calls lead to an order in a typical market

Lead Management

Basic customer data, their purchase process, sales progress on each call and scheduling of further calls

Scheduling of follow up calls Identification of customers who were part of recent

promotional programmes

Contact Management

Areas of Automation in Sales

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Linking people, territories and quotas to help the sales manager in customer profiling, lead generation and order booking by territories

Sales Territory

Management

Conversion of tacit knowledge into explicit knowledge as an aid to sales people

Knowledge Management

Knowledge Management

Sales presentation slides

Corporate profile and policy handbooks

Business proposal templates

Industry and competitive data

Transcripts of sales meetings and executive briefings

Training modules

Previous customer correspondences

Contract documents

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Sales Force Automation (SFA)

Systems

SFA also automates the

reporting system by

salespeople

There is an inherent

resistance to the use of

SFA by salespeople and

managers due to lack of

flexibility

Benefits of SFA

Helps mangers evaluate and coach reps Improves companys sales forecasts

Instant Access

Manual records are taken away by reps on moving away

Retention of Customer Information

Data available online for reps and managers

Improved Customer Interaction

For completion of tasksTicklers

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Sales Tools and Uses of SFA/CRM

by Job Role

CEO

Sales forecast

VP of Sales

Sales forecast

Identify/share best practices

Track performance by salesperson, product, etc.

Capture win/loss data for strategic planning/pricing

Create or use models to understand segments

Sales

Management

Sales forecast

Identify big impact opportunities

Identify coaching & training opportunities by examining win/loss ratios by rep & stage of sales process

Monitor activities by account or by rep relative to results

Sales

Rep

Access to customer data

Access to pricing formulas & product info for better proposals

Integrated access to other relevant info (shipping, billing, etc.)

Faster access to leads

Next Session

38

Eureka Forbes Case