Chapter 14 Sales Force Performance Evaluation. Copyright © Houghton Mifflin Harcourt Publishing...
-
Upload
timothy-price -
Category
Documents
-
view
222 -
download
2
Transcript of Chapter 14 Sales Force Performance Evaluation. Copyright © Houghton Mifflin Harcourt Publishing...
Chapter 14
Sales Force Performance Evaluation
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 2
Chapter Outline
• Sales Force Performance Appraisal• A Contemporary Approach to Sales Force
Performance Evaluation• Providing Feedback and Improving Sales Force
Performance• Emerging Perspectives in Twenty-First Century
Sales Force Performance Appraisals
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 3
Sales Force Performance Appraisal
• A salesperson performance appraisal is a systematic process for establishing whether the salesperson’s job behavior contributes to the fulfillment of a firm’s sales objectives and for providing specific feedback to the individual.
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 4
Sales Force Performance Appraisal
• Performance appraisals can help managers accomplish the following: – increase/decrease compensation
and awards to high/low performers – identify training needs of
salespeople– mentor salespeople about their
careers– revise sales performance and
evaluation process– develop a top notch sales team
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 5
Challenges in Salesperson Performance Appraisals
• Evaluating salespeople is challenging because they encounter the following hurdles:– mostly work alone in the field – engage in a multitude of
activities– have differences in territory
potentials– have physical disparities in
their territories– face intense, varying
competition– have to allocate their time
between account development and account maintenance
– need sufficient time to adjust to their assigned territories Source: © Jack Hollingsworth/Corbis
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 6
Timing of Salesperson Performance Appraisals
• Performance appraisals are usually conducted over these intervals:– once a year– sometimes semiannually – sometimes quarterly
• Evaluations include two kinds of criteria:– objective (quantitative) criteria– subjective (qualitative)
measuresSource: © Jack Hollingsworth/Corbis
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 7
A Contemporary Approach to Sales Force Performance Evaluation
Establish sales goals and objectives.
Establish sales goals and objectives.
Set sales force performance standards.
Set sales force performance standards.
Allocate resources and sales force efforts.
Allocate resources and sales force efforts.
Measure sales force performance against standards.
Measure sales force performance against standards.
Develop the sales plan. Develop the sales plan.
Take corrective action. Take corrective action.
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 8
Establish Sales Goals and Objectives
• Formulate sales goals, such as these:– increasing sales by 5
percent each year over the next five years
– increasing market share by 4 percent by the next five years
– reducing customer defections by 12 percent
– increasing the new customer base by 10 percent each year
Source: Flying Colours Ltd
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 9
Develop the Sales Plan
3.Action
programs
3.Action
programs
2.Opportunities and
problems
2.Opportunities and
problems
1. Situation analysis
1. Situation analysis
4.Performance
evaluation systems
4.Performance
evaluation systems
Sales Plan
Sales Plan
“What’s the best way to get there?”
• strategies and tactics
“What’s the best way to get there?”
• strategies and tactics
“How much progress are we making toward our destination?”
• set standards of performance
• evaluate actual performance versus planned standards
• take corrective action on variances from plan
“How much progress are we making toward our destination?”
• set standards of performance
• evaluate actual performance versus planned standards
• take corrective action on variances from plan
“Where are we now?”
• market situation and competitive environment
• product sales situation
“Where are we now?”
• market situation and competitive environment
• product sales situation
“Where do we want to go?”
• internal environment
• external environment
• planning assumptions and constraints
• sales forecasts• contingency planning
“Where do we want to go?”
• internal environment
• external environment
• planning assumptions and constraints
• sales forecasts• contingency planning
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 10
Sales Force Performance Evaluation
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 11
Types of Sales Quotas
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 12
Administration of Sales Quotas
5. Maintain control
(performance evaluation).
5. Maintain control
(performance evaluation).
4. Keep the sales force updated.
4. Keep the sales force updated.
3.Include salespeople
in quota setting.
3.Include salespeople
in quota setting.
2.Create
understandable quotas.
2.Create
understandable quotas.
1. Set realistic
quotas.
1. Set realistic
quotas.
Administration of sales quotas
Administration of sales quotas
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 13
Sales Force Performance Evaluation Using Sales Quotas
• To see a video on managing sales performance, go to– http://www.sellingpower.com/content/video/?
mid=281&pageNum=4&catid=13
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 14
Measure Sales Force Performance Against Standards
1.Performance
planning“Where am I going?”
“How will I get there?”“How will I be measured?”
1.Performance
planning“Where am I going?”
“How will I get there?”“How will I be measured?”
2.Performance
appraisalProvide immediate feedback
(praise, or correction) on each task accomplished.
2.Performance
appraisalProvide immediate feedback
(praise, or correction) on each task accomplished.
3.Performance
review:Conduct
overall performance evaluation.
3.Performance
review:Conduct
overall performance evaluation. Performance
evaluation monitoring system
stages
Performance evaluation
monitoring system stages
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 15
Websites of Firms Specializing in Sales Force Performance Evaluation
• Peruse the websites of various firms that specialize in conducting sales force appraisals, at– http://www.performance-appraisal.com/intro.htm– http://www.achieveglobal.com/Solutions/
Sales_Measurement– http://www.synygy.com/solutions/
Performance_management/perfrevmgt.html– http://www.360-degree-evaluations.com/360-demo.asp
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 16
Types of Performance Appraisal Techniques
3.Behaviorally
anchored rating scales
3.Behaviorally
anchored rating scales
2.Graphic rating
scales
2.Graphic rating
scales
1. Descriptive statements
1. Descriptive statements
4.Management by
objectives
4.Management by
objectives
Types of performance
appraisal techniques
Types of performance
appraisal techniques
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 17
Graphic Rating Scales
Semantic differential graphic rating scale
product knowledge
poor ___ ___ ___ ___ ___ _X_ ___ excellent 1 2 3 4 5 6 7
Likert-type graphic rating scale
product knowledge
____________ _______ ___X__ ______ __________unsatisfactory below average above outstanding
average average
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 18
Behaviorally Anchored Rating Scales
Salesperson will always cooperate in any way with other sales force team members, even if such effort is personally inconvenient or requires self-sacrifice.
Salesperson will always cooperate in any way with other sales force team members, even if such effort is personally inconvenient or requires self-sacrifice.
Salesperson is generally antagonistic toward other team members and frequently undercuts group efforts.
Salesperson is generally antagonistic toward other team members and frequently undercuts group efforts.
Salesperson seldom helps others and tends to resent contributing to group effort.Salesperson seldom helps others and tends to resent contributing to group effort.
Salesperson will occasionally help team members with field sales problemsSalesperson will occasionally help team members with field sales problems
Salesperson is usually willing to help other team members on field sales problems.Salesperson is usually willing to help other team members on field sales problems.
Salesperson can be expected to go out of his or her way to help other team members with any work-related problem.
Salesperson can be expected to go out of his or her way to help other team members with any work-related problem.
9
8
7
6
5
4
3
2
1
10
0
Cooperation with sales team members
Categories of performance Observed behavior
Very high indicates strong willingness to cooperate with other members of the sales team
Very high indicates strong willingness to cooperate with other members of the sales team
Moderate
indicates an average amount of cooperation with other team members
Moderate
indicates an average amount of cooperation with other team members
Very low indicates generally no team effort, which often hurts group performance
Very low indicates generally no team effort, which often hurts group performance
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 19
Management by Objectives
Step 1
Set sales objectives.
Step 4
Conduct annual performance evaluation
of salespeople.
Planning phasePlanning phasePlanning phasePlanning phase
Control phaseControl phaseControl phaseControl phase
Mo
dif
y a
nd
ad
just
M
od
ify
an
d a
dju
st
MB
O c
ycle
MB
O c
ycle
Mo
dif
y a
nd
ad
just
M
od
ify
an
d a
dju
st
MB
O c
ycle
MB
O c
ycle
Step 2
Develop sales plans and implement them.
Step 3
Periodically monitor performance and alter sales tactics to stay on
track.
Step 3
Periodically monitor performance and alter sales tactics to stay on
track.
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 20
Limitations of Sales Force Evaluation Systems
• stereotyping• contrast error• similar-to-me error• first-impression error• leniency or harshness error• central tendency error• escalation of commitment error• fundamental attribution error• self-serving bias• central tendency
Source: Stockbyte
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 21
Limitations of Sales Force Evaluation Systems
• political concerns• fear of reprisal• varying evaluation standards• interpersonal bias• questionable personality traits• organization use• recency bias• no outcome focus• inadequate sampling of job
activities
Source: Stockbyte
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 22
Sales subordinates
Sales subordinates
Accounts payable
managers
Accounts payable
managers
Self-appraisal
Self-appraisal
Sales manager
Sales manager
Sales team peers
Sales team peers
Purchasing managers (clients)
Purchasing managers (clients)
360-degreesalespersonperformance
appraisal
360-degreesalespersonperformance
appraisal
Inte
rnal
cu
sto
mer
sIn
tern
al c
ust
om
ers
Exte
rnal cu
stom
ers
Exte
rnal cu
stom
ers
Other departmental
coworkers
Other departmental
coworkers
Emerging Perspectives in Twenty-first Century Sales Force Performance Appraisals:360-Degree Performance Evaluation
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 23
Software for Conducting Sales Force Performance Evaluations
• Peruse the following website to learn about software for sales force performance evaluations at– http://www.callidussoftware.com– http://www.varicent.com
– http://www.einsof.com/about_us.jsp
• Test drive Solution Selling Software, a sales performance assessment tool, at– http://www.salesforce.com/appexchange/
detail_overview.jsp?id=a0330000002VYILAA4&NavCode__c=&tab=publisher
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 24
Sales Force Performance Appraisals:Performance Evaluations of Team Selling
• In cooperation, sales managers and sales force team members select relevant performance criteria and appraisal methods.
• Each team member rates all the other members on the following: – teamwork– leadership– productivity– team relations
Source: Stockbyte
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 25
Emerging Perspectives In Twenty-First Century Sales Force Performance Appraisals:Performance Review Ranking System
• Evaluate salespeople on performance using a scale, such as this:– A = excellent
– B = above average
– C = average
– D = satisfactory performance
– E = sub-par performance
• Then rank each salesperson and place them in performance categories:– top 20 percent– middle 70 percent– bottom 10 percent
• Move out the bottom performers with new talent, thus creating meritocracies.
Source: Stockbyte
Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 26
Ethical Situation: What Would You Do?
Discussion Question You are one of six regional sales managers for a large manufacturer of consumer products. About ten district sales managers report to each one of the regional sales managers. This year, your national sales manager is requiring all the company’s sales managers to use a Likert-type performance evaluation scale to rate each of their subordinates on various dimensions. The evaluation scale has five performance blocks or segments labeled: outstanding, above average, average, below average, and poor. Knowing that these evaluations will be used for current raises and bonuses, and promotions over the longer run, you plan to rate all the district sales managers reporting to you as at least “above average” and some “outstanding.” In all honesty, you know that four of your district managers should be rated no better than “average,” but you don’t want to hurt their chances for raises, bonuses, and promotion, so you just don’t use the bottom three segments of the evaluation scale. By rating your people higher than they should be, you feel that you retain their loyalty and support while keeping morale higher than it would be if your performance evaluations were more accurate. You rationalize this evaluation approach to yourself by asking: “Who gets hurt if I rate my people on the high side? Other regional sales managers probably do the same thing.”