Chapter 12
Sales Force Performance
Main references :
Sales Force Management 2017 by Gregory A. Rich &
Selling & Sales Management 2019 David Jobber, Geoffrey Lancaster and
Kenneth Le Meunier-FitzHugh
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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.
• 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 by identifying key areas to improve and to focus on
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/inequalities in their territories
• face intense, varying competition
• have to allocate their time between account development ( e.g. new sales, new
customers) and account maintenance ( maintaining sales , current customers or
increase sales with current customers etc)
• need sufficient time to adjust to their assigned territories
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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) measures
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A Contemporary Approach to Sales Force
Performance Evaluation
Establish sales goals
and objectives.
Develop the sales plan.
Set sales force
performance standards.
Allocate resources
and sales force efforts.
Measure sales force
Take corrective action.
performance against standards.
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1.Establish Sales Goals and Objectives
• Formulate sales goals, such as examples:
• 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
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2. Develop the Sales Plan
“How much progress are we making
toward our destination?”
• set standards of performance “Where are we now?”
• evaluate actual performance • market situation and
versus planned standards 4. competitive environment
• take corrective action on Performance
evaluation • product sales situation
variances from plan systems
3.
Action
Sales 1.
Situation
programs
Plan analysis
“Where do we want to go?”
“What’s the best way to get • internal environment
there?” 2. • external environment
Opportunities
• strategies and tactics and • planning assumptions and
problems
constraints
• sales forecasts
• contingency planning
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3. Sales Force Performance Evaluation
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Types of Sales Quotas
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Administration of Sales Quotas
1.
Set realistic
quotas.
5. 2.
Maintain control Create
(performance understandable
evaluation). quotas.
Administration
of
sales quotas
3.
4. Include
Keep the sales salespeople
force updated. in quota
setting.
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Output Factors Used as Evaluation Bases
Sales volume
o In dollars and in units
o By products and customers
o By email, telephone, and personal sales calls
Sales volume as a percentage of
o Quota
o Market potential (i.e., market share)
Gross margin by
o Product line, customer group, order size
Orders
o Number of orders
o Average order size
o Batting average (orders/calls)
o Number of canceled orders
Accounts
o Percentage of accounts sold
o Number of new accounts
o Number of accounts with overdue payment
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Quantitative Input Factors Used as Evaluation Bases
Calls per day (call rate)
Days worked
Selling time versus nonselling time
Direct selling expense
o In total
o As percentage of sales volume
o As percentage of quota
Nonselling activities
o Advertising displays set up
o E-mails/letters written to prospects
o Telephone calls made to prospects
o Number of meetings held with dealers and/or distributors
o Number of service calls made
o Collections made
o Number of customer complaints received
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Qualitative Input Factors Used as Evaluation Bases
Personal efforts of the salespeople
o Management of their time
o Planning and preparation for calls
o Quality of sales presentations
o Ability to handle objections and to close sales
o Inputting information into SFA/CRM system
Knowledge
o Product
o Company and company policies
o Competitor’s products and strategies
o Customers
Customer Relations
Personal appearance and health
Personality and attitudinal factors
o Cooperativeness
o Resourcefulness
o Acceptance of responsibility
o Ability to analyze logically and make decisions
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Another category of evaluation bases is: Ratio Measures
Calls Orders Sales
Sales = Days worked X X X
Days worked Calls Orders
Call X Batting X Average
Sales = Days worked X rate Average order
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4. Measure Sales Force Performance Against
Standards
1.
3.
Performance
Performance
planning
review:
“Where am I going?”
Conduct
“How will I get there?”
overall performance
“How will I be
evaluation.
Performance measured?”
evaluation monitoring
system stages
2.
Performance
appraisal
Provide immediate
feedback
(praise, or correction) on
each
task accomplished.
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Standards serve as a benchmark, or a par for the course, against
which a salesperson’s performance can be measured
The sales manager must be sure to clearly communicate the
standards to the salespeople
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Types of Performance Appraisal Techniques
4.
Management
by
objectives
3. Types of 1.
Behaviorally performance
appraisal Descriptive
anchored
techniques statements
rating scales
2.
Graphic
rating
scales
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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
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Behaviorally Anchored Rating Scales
Cooperation with sales team members
Categories of performance Observed behavior
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Very high Salesperson will always cooperate in any way
9 with other sales force team members, even if
indicates strong willingness to such effort is personally inconvenient or
cooperate with other members 8 requires self-sacrifice.
of the sales team
7 Salesperson can be expected to go out of his or
her way to help other team members with any
work-related problem.
Moderate 6
indicates an average amount of Salesperson is usually willing to help other team
cooperation with other team 5 members on field sales problems.
members
4 Salesperson will occasionally help team members
with field sales problems
3
Very low Salesperson seldom helps others and tends to
2 resent contributing to group effort.
indicates generally no team
effort, which often hurts group
performance 1 Salesperson is generally antagonistic toward
other team members and frequently undercuts
0
group efforts.
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Management by Objectives
Planning phase
Step 1 Step 2
Set sales objectives. Develop sales plans and
implement them.
Modify and adjust
MBO cycle
Step 4 Step 3
Conduct annual Periodically monitor
performance evaluation of performance and alter sales
salespeople. tactics to stay on track.
Control phase
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Limitations of Sales Force Evaluation Systems
• stereotyping
• political concerns
• contrast error • fear of reprisal
• similar-to-me error • varying evaluation standards
• first-impression error • interpersonal bias
• leniency or harshness error • questionable personality traits
• central tendency error • organization use
• no outcome focus
• escalation of commitment
error • inadequate sampling of job activities
• fundamental attribution error
• self-serving bias
• central tendency
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Emerging Perspectives in Twenty-first Century
Sales Force Performance Appraisals: 360-Degree Performance Evaluation
Sales
manager
Sales
subordinates Purchasing
managers
External customers
(clients)
Internal customers
360-degree
Other salesperson
departmental
coworkers
performance
appraisal
Accounts
payable
Sales team
managers
peers
Self-
appraisal
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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
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Behaviorally Anchored Rating Scales
(BARS)
Evaluate the salesperson’s performance on
TEAM PARTICIPATION
(check one):
___Unwilling to ___Can be ___Usually ___Can be expected ___Can be
participate. At expected to willing to always to cooperate and expected to go
times may work participate in cooperate and contribute to the team beyond what is
against team team efforts only participate in objectives. Tries hard to normally expected
goals to the extent team efforts help make the team to help the team
required. successful. achieve its goals.
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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
Source: Stockbyte
• Move out the bottom performers with new talent, thus
creating meritocracies.
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Tutorial 12
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