Ex8 & 9
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10.IngramSM8Ch10.pptxEvaluating the Performance of Salespeople
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
1
Learning Objectives
Discuss the different purposes of salesperson performance evaluations.
Differentiate between an outcome-based and a behavior-based perspective for evaluating and controlling salesperson performance.
Describe the different types of criteria necessary for comprehensive evaluations of salesperson performance.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
2
Learning Objectives
Compare the advantages and disadvantages of different methods of salesperson performance evaluations.
Explain how salesperson performance information can be used to identify problems, determine their causes, and suggests sales management actions to solve them.
Discuss the measurement Importance of salesperson job satisfaction.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
3
Purposes of Salesperson Performance Evaluations
To ensure that compensation and other reward disbursements are consistent with actual salesperson performance.
To identify salespeople that might be promoted.
To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
4
2
Purposes of Salesperson Performance Evaluations
To determine the specific training and counseling needs of individual salespeople and the overall salesforce.
To provide information for effective human resource planning.
To identify criteria that can be used to recruit and select salespeople in the future.
To advise salespeople of work expectations.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
5
2
Purposes of Salesperson Performance Evaluations
To motivate salespeople.
To help salespeople set career goals.
To relate salesperson performance to sales organization goals.
To enhance communications between salesperson and sales manager.
To improve salesperson performance.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
6
2
Salesperson Performance Evaluation Approaches
Most evaluate on an annual basis.
Most combine input and output criteria which are evaluated using quantitative and qualitative measures.
When used, performance standards or quotas are set in collaboration with salespeople.
Many assign weights to different objectives and incorporate territory data.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
7
3
Salesperson Performance Evaluation Approaches
Most use multiple sources of information.
Most are conducted by the field sales manager who supervises the salesperson.
Most provide a written copy of the review and personal discussion.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
8
3
Salesperson
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.
Internal Customers
Evaluation
External Customers
Evaluation
Oneself
Evaluation
Sales Manager
Evaluation
Team Members
Evaluation
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
9
3
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.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
10
4
Perspectives on Salesperson Performance Evaluation
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
11
6
Outcome-Based
Behavior-Based
Little monitoring of people
Little managerial direction of salespeople
Straightforward objectives measures of results
Considerable monitoring of salespeople
High levels of managerial direction of salespeople
Subjective measures of salesperson characteristics, activities, and strategies
Dimensions of Salesperson Performance Evaluation
Behavioral
Professional
Development
Results
Profitability
Salesperson
Performance
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
12
7
Criteria for Performance Evaluation
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.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
13
8
Behavior
Consists of criteria related to activities performed by individual salespeople, including:
Customer Complaints
Required Reports Submitted
Training Meetings
Letters and Calls
Sales calls
Criteria for Performance Evaluation
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
14
8
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
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
15
8
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
Elements Important in Assigning Sales Quotas
Concentration of businesses within the territory
Commitment by the sales manager to assist the sales representative
Growth of businesses within the territory
Geographic size of the territory
Complexity of products sold
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
16
13
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
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
17
13
Criteria for Performance Evaluation
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
18
8
Profitability:
Salespeople have an impact on gross profits through the specific products they sell and/or through the prices they negotiate for final sale.
Salespeople affect net profits by the expenses they incur in generating sales.
Criteria Examples
Net profit dollars
Gross margin per sale
Return on investment
Number of orders secured
Selling expenses versus budget
Performance Evaluation Methods
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
19
12
Characteristics any method should include:
Reliability
Validity
Standardization
Practicality
Comparability
Discriminability
Usefulness
Job Relatedness
Performance Evaluation Methods
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
20
13
Graphic Rating/Checklist Methods
Especially useful in evaluating behavioral and professional development criteria
May be filled out by customers
Disadvantage is providing evaluations that discriminate sufficiently
Salespeople are evaluated using some type of performance evaluation form
Performance Evaluation Methods
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
21
14
Ranking Methods
These methods force discrimination as to the performance of individual salespeople
May be complex
Rankings only reveal relative performance evaluation
Rank all salespeople according to relative performance on each performance criterion
Performance Evaluation Methods
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
22
15
Objective-Setting Methods
Mutual setting of well-defined and measurable goals within a specified time period.
Managing activities within the specified time period toward the accomplishment of the stated objectives.
Appraisal of performance against objectives.
Management By Objectives (MBO)
Performance Evaluation Methods
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
Behaviorally Anchored Rating Scales (BARS)
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
23
16
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)
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
24
17
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.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
25
18
Framework for Using Performance Information
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
26
19
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
Job satisfaction related to turnover, absenteeism, motivation, and organizational commitment.
Job satisfaction may be related to performance (direction of relationship is unknown).
INDSALES may be used to measure job satisfaction.
Results may identify areas where manager may intervene to improve job satisfaction.
Chapter 10: Evaluating the Performance of Salespeople
Ingram
LaForge
Avila
Schwepker Jr.
Williams
Sales Management: Analysis and Decision Making
27
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