Evaluating the Performance of Salespeople

1. Evaluating the Performance of Salespeople Module Ten

2. Action Evaluating Salespeople’s PerformanceAn Expert’s Viewpoint: At Synygy, Inc, each sales director is assigned salespeople to mentor. Every Monday, the director meets with each salesperson for a “bullet point” review. In addition, each month and each quarter Synygy’s salespeople meet with their managers to review progress and reassess their goals for the year. These reviews are critical since they play a larger role in determining each salesperson’s quarterly bonus.

3. Result Evaluating Salespeople’s PerformanceAn Expert’s Viewpoint: Synygy’s salesperson performance evaluation system allows the company to improve salespeople’s performance and appropriately compensate salespeople for their performance. As such, it serves two very useful functions in effectively managing the sales force to help achieve the company’s goals.

4. Purposes of Salesperson Performance Evaluations • To ensure that compensation and other reward disbursements are consistent with actual salesperson performance • To identify salespeople who might be promoted • To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination

5. Purposes of Salesperson Performance Evaluations • To determine the specific training and counseling needs of individual salespeople and the overall sales force • To provide information for effective human resource planning • To identify criteria that can be used to recruit and select salespeople in the future

6. Purposes of Salesperson Performance Evaluations • To advise salespeople of work expectations • To motivate salespeople • To help salespeople set career goals • To improve salesperson performance

7. Salesperson PerformanceEvaluation 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. General conclusions:

8. Salesperson PerformanceEvaluation 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 General conclusions:

9. Sales Manager Evaluation Oneself Team Members Evaluation Evaluation Salesperson Evaluation Evaluation Internal Customers External Customers 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

10. 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

11. 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 Perspectives on Salesperson Performance Evaluation

12. Dimensions of Salesperson Performance Evaluation Behavioral Results Salesperson Performance Professional Development Profitability

13. 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

14. 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

15. 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

16. Environmental Factors • Control Unit • Attractiveness • Business • Position • Characteristics • Role • Perceptions • Aptitude • Skill Level • Motivation • Behavior • Effort • Quality Planning and Control Unit • Behavior • Effort • Quality Salesperson Factors • Organizational Factors • Marketing Effort • Sales Management Effort Market Response Framework

17. 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

18. Elements Important in Assigning Sales Quotas • Sales representatives past sales performance • Extent of product line • Financial support (e.g., compensation) a firm provides • Relationship of product line • Amount of clerical support

19. Criteria for Performance Evaluation 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

20. Performance Evaluation Methods: Characteristics any method should include • Job Relatedness • Reliability • Validity • Standardization • Practicality • Comparability • Discriminability • Usefulness

21. 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 MethodsGraphic Rating/Checklist Methods

22. 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: Ranking Methods

23. Performance Evaluation Methods: Objective-Setting Methods Management By Objectives (MBO) • 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.

24. 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

25. 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)

26. 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

27. 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 Framework for UsingPerformance Information

28. 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

29. Do you need a college degree? I am a 19-year-old marketing/entrepreneurship student. I have some really great business ideas, but it's hard to be taken seriously in terms of loans, venture capital, etc. I've pitched ideas under false pretenses such as age and status and have gotten very positive interest, but I obviously cannot continue that. My father told me he'd help me after college, but I cannot wait three more years and watch someone else take my ideas. . Tyler Fabschutz Boulder, Colo. "Be cool, stay in school" is indoctrinated into students from preschool to postgrad, but the entrepreneurial impulse is not always suited to college. Just ask such unmatriculated successes as Larry Ellison, Ron Popeil, or Shawn Fanning. Even lesser-known dropout CEOs, like Tim Handley of Advantage Credit International, a Pensacola, Fla., outfit that sells credit reports to the mortgage industry, preach the merits of leaping into the working world. "A degree is not critical by any stretch," says Handley, who started his company several years after dropping out of Cal State-Bakersfield and now boasts sales of $18 million a year.

30. Do you need a college degree? Except for a few snobs, most investors don't care how many letters you string after your name. What they do care about is whether you have vetted your ideas and validated the market opportunities with professionals steeped in industry knowledge. And stop misrepresenting yourself immediately, says Molly Pieroni, a partner at JatoTech, an Austin VC firm. At JatoTech, it's a deal-breaker. Plain and simple, nobody wants to invest money with a liar, no matter how brilliant the idea. Also, bear in mind that the best, cheapest resources for young entrepreneurs can be found on campus. You have access to a great library, and fellow students, professors, and alumni are readily available to critique and develop your plan to the point where it will stand up to investor scrutiny. Ultimately, it may be cool to stay in school. Besides, as Pieroni points out, "nobody says you have to be a straight-A student--especially if you were going to drop out anyway." Correlation between grades in college and success in life is very low.