Performance Evaluation for SalesPerson
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Transcript of Performance Evaluation for SalesPerson
PERFORMANCE EVALUATION FOR SALESMEN
Presented By:
J. Jacob
MBA School of Management Studies
INTRODUCTION
Performance Evaluation Process includes:
Establishing performance standards Recording performances Evaluating performances against the
standards Taking action
PURPOSES OF SALESPERSON PERFORMANCE EVALUATIONS
1. To ensure that compensation and other reward disbursements are consistent with actual salesperson performance
2. To identify salespeople that 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
7. To advise salespeople of work expectations
PURPOSES OF SALESPERSON PERFORMANCE EVALUATIONS
8. To motivate salespeople9. To help salespeople set career goals10. To relate salesperson performance to
sales organization goals.11. To enhance communications between
salesperson and sales manager.12. To improve salesperson performance
STANDARDS OF PERFORMANCE
Performance standards are designed to measure the performance of activities that the company considers most important.
Performance standards are established for the business as a whole and, ultimately, for each salesperson. These standards are used to gauge the extent of achievement of general and related specific objectives.
QUANTITATIVE PERFORMANCE STANDARDS
Most companies use quantitative performance standards.
Comparisons of sales volume performance with sales volume potential.
Qualitative performance standards also measure success in achieving profit objectives.
TYPES OF QUANTITATIVE PERFORMANCE STANDARDS
Sales Quotas Selling expense ratio Territorial net profit/gross margin ratio Territorial market share Sales coverage effectiveness index Call frequency ratio Calls per day Order call ratio Average cost per call Average order size Non-selling activities Multiple quantitative performance standards
SALES QUOTAS
A Quota is a quantitative objective expressed in absolute terms and assigned to a specific marketing unit.
May be dollars, or units of product Quotas specify desired levels of
accomplishment for sales volume, gross margin, net profit, expenses, performance of non selling activities, or a combination of these and similar items.
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 representative’s past sales performance
Extent of product line
Financial support (e.g., compensation) a firm provides
Relationship of product line
Amount of clerical support
Selling expense ratio:To control the relation of selling expenses to sales volume.Target selling expense ratio should be set individually for each person on the sales force.Selling expense ratio standards are used more by industrial product companies than by consumer-product companies.
Territorial net profit or gross margin ratio:Target ratios of net profit or gross margin to sales for each territory focus sales personnel’s attention on the need for selling a balanced line and for considering relative profitability..
QUALITATIVE PERFORMANCE CRITERIA
Qualitative criteria are used for appraising performance characteristics that affect sales results, especially over the long run, but whose degree of excellence can be evaluated only subjectively.
Factors of Qualitative analysis of salesperson performance:
Job Factors:Product KnowledgeAwareness of customer needsRelationship with customersNumber of sales callsQuota performanceService follow-up
Personal Factors:PunctualityGeneral attitudeDress & AppearanceDiligenceCooperationAccuracyAdaptabilityReliability
SalespersonSalesperson
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
Inte
rnal C
ustom
ers
Evaluation
Evaluation
External Customers
Eval
uation
Eval
uation
Ones
elf
Evaluation
Evaluation
Sales ManagerEvalu
atio
nEvalu
atio
n
Team M
embers
Evaluation
Evaluation
360-DEGREE PERFORMANCE FEEDBACK Integrates feedback from external customers,
internal customers, other members of the selling team, the sales manager, and the salesperson
Provides the impetus for a more productive dialogue between the sales manager and salesperson at performance review time
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
BARS SYSTEMS Behaviorally anchored rating scale (BARS)
system concentrates on criteria the individual can control
Requires sales managers to consider in detail a wide range of components of job performance
Requires clearly defined anchors for each performance criteria
PERFORMANCE MANAGEMENT SYSTEM Requires a commitment to integrating
all the elements of feedback on the process of serving customers
Results in performance information that is timely, accurate, and relevant to the firm’s customer management initiative
Salespeople take the lead in goal setting, performance measurement, and adjustment of their own performance
Behavior – what people do; the tasks on which they expend effort
Performance – behavior evaluated in terms of its contribution to the goals of the organization
Effectiveness – some summary index of organizational outcomes for which the individual is at least partly responsible
Performance versus Effectiveness
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
BehavioralBehavioral
ProfessionalDevelopmentProfessionalDevelopment
ResultsResults
ProfitabilityProfitability
SalespersonPerformanceSalespersonPerformance
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 short-term sales generation but should also include non-selling 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
Salesperson Factors
Characteristics• Role Perceptions• Aptitude• Skill Level• Motivation
Behavior• Effort• Quality
Planning and
Control Unit
Behavior• Effort• Quality
Environmental Factors• Control Unit Attractiveness• Business Position
Organizational Factors• Marketing Effort• Sales Management Effort
PERFORMANCE EVALUATION METHODSGRAPHIC 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 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)