Module Ten
Evaluating the Performance
of Salespeople
Evaluating Salespeople’s Performance
An Expert’s 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 Synygy’s
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
salesperson’s quarterly bonus.
Action
Evaluating Salespeople’s Performance
An Expert’s Viewpoint:
Result
Synygy’s salesperson performance evaluation system
allows the company to improve salespeople’s 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
company’s goals.
Purposes of Salesperson
Performance Evaluations
1.
To ensure that compensation and other reward
disbursements are consistent with actual
salesperson performance
2.
To identify salespeople who might be promoted
3.
To identify salespeople whose employment
should be terminated and to supply evidence to
support the need for termination
Purposes of Salesperson
Performance Evaluations
4.
To determine the specific training and counseling
needs of individual salespeople and the overall
sales force
5.
To provide information for effective human
resource planning
6.
To identify criteria that can be used to recruit and
select salespeople in the future
Purposes of Salesperson
Performance Evaluations
7.
To advise salespeople of work expectations
8.
To motivate salespeople
9.
To help salespeople set career goals
10. To improve salesperson performance
Salesperson Performance
Evaluation Approaches
General conclusions:
1.
Most evaluate on an annual basis
2.
Most combine input and output criteria which are
evaluated using quantitative and qualitative
measures
3.
When used, performance standards or quotas are
set in collaboration with salespeople
4.
Many assign weights to different objectives and
incorporate territory data.
Salesperson Performance
Evaluation Approaches
General conclusions:
5.
Most use multiple sources of information
6.
Most are conducted by the field sales manager
who supervises the salesperson
7.
Most provide a written copy of the review and
personal discussion
360-Degree Feedback System
• Helps salespeople
better understand
their ability to add
value to their
organization and
their customers
Sales Manager
Evaluation
• Salesperson is
evaluated by
multiple raters
Salesperson
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
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
Dimensions of Salesperson
Performance Evaluation
Behavioral
Results
Salesperson
Performance
Professional
Development
Profitability
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 shortterm sales generation but should also include nonselling activities needed to ensure long-term
customer satisfaction
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
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
Market Response Framework
Environmental
Factors
• Control Unit
Attractiveness
• Business
Position
Salesperson
Factors
Characteristics
• Role
Perceptions
• Aptitude
• Skill Level
• Motivation
Organizational Factors
• Marketing Effort
• Sales Management Effort
Behavior
• Effort
• Quality
Planning
and Control
Unit
Behavior
• Effort
• Quality
Elements Important in
Assigning Sales Quotas
• 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
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
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
Performance Evaluation Methods:
Characteristics any method should include
•
•
•
•
•
•
•
•
Job Relatedness
Reliability
Validity
Standardization
Practicality
Comparability
Discriminability
Usefulness
Performance Evaluation Methods
Graphic 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
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
Performance Evaluation Methods:
Objective-Setting Methods
Management By Objectives (MBO)
1.
Mutual setting of well-defined and measurable goals
within a specified time period.
2.
Managing activities within the specified time period
toward the accomplishment of the stated objectives.
3.
Appraisal of performance against objectives.
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
Performance Evaluation Bias
• Occurs when a manager’s 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)
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
Framework for Using
Performance Information
Evaluate Salespeople against Relevant Performance Criteria
Compare Salesperson Evaluations to Identify Problem Area
Investigate Problem Areas to Identify Causes of Performance Problems
Determine Sales Management Actions to Eliminate Causes of Future
Problems and to Solve Existing Problems
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
Do you need a college degree?
I am a 19-year-old marketing/entrepreneurship student. I have
some really great business ideas, but it's hard to be taken
seriously in terms of loans, venture capital, etc. I've pitched
ideas under false pretenses such as age and status and have
gotten very positive interest, but I obviously cannot continue
that. My father told me he'd help me after college, but I cannot
wait three more years and watch someone else take my ideas.
.
Tyler Fabschutz
Boulder, Colo.
"Be cool, stay in school" is indoctrinated into students from
preschool to postgrad, but the entrepreneurial impulse is not
always suited to college. Just ask such unmatriculated
successes as Larry Ellison, Ron Popeil, or Shawn Fanning.
Even lesser-known dropout CEOs, like Tim Handley of
Advantage Credit International, a Pensacola, Fla., outfit that
sells credit reports to the mortgage industry, preach the merits
of leaping into the working world. "A degree is not critical by
any stretch," says Handley, who started his company several
years after dropping out of Cal State-Bakersfield and now
boasts sales of $18 million a year.
Do you need a college degree?
Except for a few snobs, most investors don't care how many
letters you string after your name. What they do care
about is whether you have vetted your ideas and
validated the market opportunities with professionals
steeped in industry knowledge. And stop misrepresenting
yourself immediately, says Molly Pieroni, a partner at
JatoTech, an Austin VC firm. At JatoTech, it's a dealbreaker. Plain and simple, nobody wants to invest money
with a liar, no matter how brilliant the idea.
Correlation between
grades in college and
success in life is very
Also, bear in mind that the best, cheapest resources for
low.
young entrepreneurs can
be found on campus. You have
access to a great library, and fellow students, professors,
and alumni are readily available to critique and develop
your plan to the point where it will stand up to investor
scrutiny. Ultimately, it may be cool to stay in school.
Besides, as Pieroni points out, "nobody says you have to
be a straight-A student--especially if you were going to
drop out anyway."