Chapter 16

Evaluating a Salesperson’sPerformance

Learning Objectives

• Nature and the importance of performance evaluation

• Procedure for evaluating salespeople

Concept of evaluation and performance

• Strengths and weaknesses• Basis for self-development• Always try to improve their performance(e.g., new order receive, customer satisfaction)

Importance of Performance Evaluation

A good performance review can be a major aid in sales force management tasks:

• Promotions and pay increases• Identify sales techniques • Uncover needs for improvements in the

compensation plans• increase morale (e.g., you know what is

expected).

Procedure for Evaluating Salespeople(Fig. 16-1)

1. Establish basic policies

2. Select evaluation bases

3. Set performance standards

4. Compare performances standards

5. Discuss results with salespeople

Difficulties Involved in Evaluating Performance

Many duties cannot be measured objectively, and some task are difficult to evaluate

(e.g., to build goodwill with customers)Some tasks can only be evaluated subjectively.

19%

43%

13%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Sal

es

Org

aniz

atio

ns (

%)

No evaluationconducted

At leastquarterly

Quarterly tobiannually

Biannually toannually

Frequency of Performance Evaluations (Fig. 16-2)

Output Factors Used as Evaluation Bases (Fig. 16-3)

• Sales volume– In dollars and in units– By products and customers (or customer groups)– By mail, telephone, and personal sales calls

• Sales volume as a percentage of:– Quota– Market potential (i.e., market share)

• Gross margin by product line, customer group, and order size• Orders

– Number of orders– Average size (dollar volume) of order– Batting average (orders / calls)– Number of canceled orders

• Accounts– Percentage of accounts sold– Number of new accounts– Number of lost accounts– Number of accounts with overdue payment

• Sales volume– In dollars and in units– By products and customers (or customer groups)– By mail, telephone, and personal sales calls

• Sales volume as a percentage of:– Quota– Market potential (i.e., market share)

• Gross margin by product line, customer group, and order size• Orders

– Number of orders– Average size (dollar volume) of order– Batting average (orders / calls)– Number of canceled orders

• Accounts– Percentage of accounts sold– Number of new accounts– Number of lost accounts– Number of accounts with overdue payment

Quantitative Input Factors Used as Evaluation Bases (Fig. 16-4)

• Calls per day (call rate)• Days worked• Selling time versus non selling time• Direct selling expense

– In total– As percentage of sales volume– As percentage of quota

• Non selling activities– Advertising displays set up– E-mails/letters written to prospects– Telephone calls made to prospects– Number of meetings held with dealers and/or distributors– Collections made– Number of customer complaints received

Qualitative Input Factors Used as Evaluation Bases (Fig. 16-5)

• Personal efforts of the sales reps– Management of their time– Planning and preparation for calls– Quality of sales presentations– Ability to handle objections and to close sales

• Knowledge– Product– Company and company policies– Competitor’s products and strategies– Customers

• Customer relations• Personal appearance and health• Personality and attitudinal factors

– Cooperativeness– Resourcefulness– Acceptance of responsibility– Ability to analyze logically and make decisions

Ratio Measures

Sales =

Days worked X

Days worked X Call rate X Batting average X Average order

CallsDays worked

OrdersCalls

SalesOrdersX X

A Behaviorally Anchored Rating Scale for Evaluating Team Participation (Fig. 16-6)

Rating

Description

Numeric

Rating Behaviors

Outstanding 10 Can be expected to go beyond what is normally

expected to help the team achieve its goals

Above average  8 Can be expected always to cooperate and

contribute to the team objectives. Tries hard to

help make the team successful.

Average  5 Usually willing to cooperate and participate in

team efforts.

Below average  2 Can be expected to participate in team efforts

only to the extent required. Shows no initiative

with regard to team efforts.

Poor  0 Unwilling to participate. At times may work

against team goals.

Evaluation of Sales Reps’ Performance(Fig. 16-7)Evaluation of Sales Reps’ Performance(Fig. 16-7)

Product Line: Equipment Clothing Total Equipment Clothing TotalTotal sales (000) $480 $720 $ 1,200 $220 $460 $   680  Sporting goods stores 320 440 760 160 320 480  Ski shops 160 280 440 60 140 200Total calls made 700 900  Sporting goods stores 300 500  Ski shops 400 400Total orders taken 500 600  Sporting goods stores 150 450  Ski shops 350 150Days worked 220 240Expenses $48,000 $40,000Miles traveled 60,000 45,000Total market potential $2.00 $4.00 $6.00 $1.20 $2.40 $  3.60  (millions)  Sporting goods stores 1.60 2.40 4.00 0.80 1.60 2.40  Ski shops 0.40 1.60 2.00 0.40 0.80 1.20

Sporting Sporting Goods Ski Goods SkiStores Shops Total Stores Shops Total

Average order $5,087 $1,257 $2,400 $1,067 $1,333 $1,133Batting average 0.500 0.875 0.714 0.900 0.375 0.666Calls per day 3.18 3.75Miles per call 86 50Expense per sales dollar 4.00% 5.90%Cost per call, excludingcommission $68.57 $44.44

Cost per order, excluding $96.00 $66.67commission

Equipment Clothing Total Equipment Clothing TotalTotal percent of market 24.0% 18.0% 20.0% 18.3% 19.0% 19.0%  Sporting goods stores 20.0% 18.0% 19.0% 20.0% 20.0% 20.0%  Ski shops 40.0% 17.5% 22.0% 15.0% 17.5% 16.7%

Joe Jackson Gus Dean

Evaluation of Sales Reps’

Performance(Fig. 16-7)(continued)

Evaluation of Sales Reps’

Performance(Fig. 16-7)(continued)

Product Line: Equipment Clothing Total Equipment Clothing Total

Total sales (000) $240 $280 $   520 $940 $1,460 $  2,400

  Sporting goods stores 100 160 260 580 920 1,500

  Ski shops 140 120 260 360 540 900

Total calls made 1,100 2,700

  Sporting goods stores 500 1,300

  Ski shops 600 1,400

Total orders taken 850 1,950

  Sporting goods stores 400 1,000

  Ski shops 450 950

Days worked 230 690

Expenses $36,000 $124,000

Miles traveled 35,000 140,000

Total market potential

  (millions) $1.20 $1.20 $  2.40 $4.40 $ 7.60 $  12.00

  Sporting goods stores 0.72 0.64 1.36 3.12 4.64 7.76

  Ski shops 0.48 0.56 1.04 1.28 2.96 4.24

Sporting Sporting

Goods Ski Goods

Stores Shops Total Stores Ski Shops Total

Average order $  650 $  578 $  612 $1,500.00 $947.00 $1,231.00

Batting average 0.800 0.750 0.773 0.679 0.769 0.722

Calls per day 4.8 3.9

Miles per call 32 52

Expense per sales dollar 6.90% 5.20%

Cost per call, excluding $32.72 $   45.92

commission

Cost per order, excluding $42.23 $   63.59

commission

Equipment Clothing Total Equipment Clothing Total

Total percent of market 20.0% 23.3% 21.7% 21.4% 19.2% 20.0%

  Sporting goods stores 13.9% 25.0% 19.1% 18.6% 19.8% 19.3%

  Ski shops 29.2% 21.4% 25.0% 28.1% 18.2% 21.2%

TotalPaula Burns

Group Project Question

• Identify a product that you want to sell and who is your target market – describe in detail the product characteristics and the target market characteristics

• Select your marketing strategies (i.e., the 4’Ps and the promotional mix)

• Describe what selling techniques are appropriate for your product.

Group Project Format

• Font – Arial 11, pg. 15-20• Should have the followings:• Title page• Contents• Details of report ( Introduction, body and

conclusion, recommendations)• References (APA format)• Due Date: 22 December 2011