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Evaluating the

Performance
of Salespeople

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

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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 salespeople
9. To help salespeople set career goals
10. To relate salesperson performance to sales
organization goals.
11. To enhance communications between
salesperson and sales manager.
12. To improve salesperson performance

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Salesperson Performance
Evaluation Approaches
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
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

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360-Degree Feedback System
Sales Manager

Evaluation
¾ Salesperson is

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ability to add value to
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Key Issues in Evaluating and


Controlling Salesperson Performance
¾ Outcome-
Outcome-Based Perspective
z Focuses on objective measures of results with little
monitoring or directing of salesperson behavior by
sales managers

¾ Behavior-
Behavior-Based Perspective
z Incorporates complex and often subjective
assessments of salesperson characteristics and
behaviors with considerable monitoring and directing
of salesperson behavior by sales managers

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Perspectives on Salesperson
Performance Evaluation
Outcome-Based Behavior-Based
¾ Little monitoring of people ¾ Considerable monitoring of
salespeople
¾ Little managerial direction
of salespeople ¾ High levels of managerial
direction of salespeople
¾ Straightforward objectives
measures of results ¾ Subjective measures of
salesperson characteristics,
activities, and strategies

Dimensions of Salesperson
Performance Evaluation
Behavioral
Behavioral Results
Results

Salesperson
Salesperson
Performance
Performance

Professional
Professional Profitability
Profitability
Development
Development

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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:
¾ Assess improvements in certain
characteristics of salespeople that are
related to successful performance in
the sales job

¾ Characteristics include - Attitude, product


knowledge, initiative and aggressiveness,
communication skills, ethical behavior

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Criteria for Performance Evaluation
Results:
¾ Salespeople measured objectively based on results
such as – sales, market share, and accounts

¾ A sales quota represents a reasonable sales objective


for a territory, district, region, or zone

¾ 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

Characteristics
• Role Planning Behavior
Salesperson Behavior
Perceptions and Control • Effort
Factors • Effort
• Aptitude Unit • Quality
• Quality
• Skill Level
• Motivation

Organizational Factors
• Marketing Effort
• Sales Management Effort

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Elements Important in
Assigning Sales Quotas

¾ Concentration of businesses within the territory


¾ Geographic size of the territory
¾ Growth of businesses within the territory
¾ Commitment by the sales manager to assist the sales
representative
¾ Complexity of products sold

Elements Important in
Assigning Sales Quotas

¾ Sales representative’
representative’s past sales performance
¾ Extent of product line
¾ Financial support (e.g., compensation) a firm provides
¾ Relationship of product line
¾ Amount of clerical support

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Criteria for Performance Evaluation

Profitability:
¾ Salespeople have an impact on gross profits through
the specific products they sell and/or through the
prices they negotiate for final sale.
¾ Salespeople affect net profits by the expenses they
incur in generating sales.
¾ Criteria Examples
z Net profit dollars
z Gross margin per sale
z Return on investment
z Number of orders secured
z Selling expenses versus budget

Performance Evaluation Methods:


Characteristics any method should include

¾ Job Relatedness
¾ Reliability
¾ Validity
¾ Standardization
¾ Practicality
¾ Comparability
¾ Discriminability
¾ Usefulness

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Performance Evaluation Methods
Graphic Rating/Checklist Methods

¾ Salespeople are evaluated using some type of


performance evaluation form

¾ Especially useful in evaluating behavioral and


professional development criteria

¾ May be filled out by customers

¾ Disadvantage is providing evaluations that discriminate


sufficiently

Performance Evaluation Methods:


Ranking Methods

¾ Rank all salespeople according to relative


performance on each performance criterion
¾ These methods force discrimination as to the
performance of individual salespeople
¾ May be complex
¾ Rankings only reveal relative performance
evaluation

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Performance Evaluation Methods: Objective-
Setting Methods

Management By Objectives (MBO)


1. Mutual setting of well-
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)

¾ Links behaviors to
specific results
¾ Salespeople are used to
develop performance
results and critical
behaviors
¾ Positive feedback about
behaviors may be more
affective than positive
output feedback

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Performance Evaluation Bias
¾ Occurs when a manager’
manager’s
evaluation of a salesperson is
affected by considerations other
than the specified criteria
¾ Common sources of bias:
z Personal relationships
z Perceived difficulty of territory
z 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

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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


¾ Job satisfaction related to turnover,
absenteeism, motivation, and
organizational commitment
¾ Job satisfaction may be related to
performance (direction of relationship
is unknown)
¾ Results may identify areas where
manager may intervene to improve
job satisfaction

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