Performance Evaluation For Salesperson 5j545s

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

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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 the need for termination

PURPOSES OF SALESPERSON PERFORMANCE EVALUATIONS

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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 To advise salespeople of work expectations

PURPOSES OF SALESPERSON PERFORMANCE EVALUATIONS

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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

STANDARDS OF PERFORMANCE 

Performance standards are designed to measure the performance of activities that the company considers most important.

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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     

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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 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 ASG SALES QUOTAS

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Concentration of businesses within the territory

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Geographic size of the territory

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Growth of businesses within the territory

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Commitment by the sales manager to assist the sales representative

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Complexity of products sold

ELEMENTS IMPORTANT IN ASG SALES QUOTAS

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Sales representative’s past sales performance

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Extent of product line

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Financial (e.g., compensation) a firm provides

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Relationship of product line

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Amount of clerical

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 consumerproduct 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 Knowledge

Awareness of customer needs Relationship with customers Number of sales calls Quota performance Service follow-up

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Personal Factors: Punctuality General attitude Dress & Appearance Diligence Cooperation Accuracy Adaptability Reliability

360-DEGREE SYSTEM Sales Manager

Salesperson is evaluated by multiple raters

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Helps salespeople better understand their ability to add value to their organization and their customers

Evaluation

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Salesperson

360-DEGREE PERFORMANCE 

Integrates from external customers, internal customers, other of the selling team, the sales manager, and the salesperson

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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) 

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

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 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

Performance versus Effectiveness   

Behavior – what people do; the tasks on which they expend effort Performance – behavior evaluated in 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

KEY ISSUES IN EVALUATING AND CONTROLLING SALESPERSON PERFORMANCE

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Outcome-Based Perspective 

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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 Behavior-Based

Outcome-Based 

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Little monitoring of people Little managerial direction of salespeople Straightforward objectives measures of results

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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

Results

Salesperson Performance

Professional Development

Profitability

CRITERIA FOR PERFORMANCE EVALUATION Behavior: Consists of criteria related to activities performed by individual salespeople • • •

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Sales calls, customer complaints, required reports submitted, training meetings, letters and calls

Should not only address activities related to shortterm sales generation but should also include nonselling 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

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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 s

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A sales quota represents a reasonable sales objective for a territory, district, region, or zone

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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

Salesperson Factors

• Role Perceptions • Aptitude • Skill Level • Motivation

Organizational Factors • Marketing Effort • Sales Management Effort

Behavior

• Effort • Quality

Planning and Control Unit

Behavior

• Effort • Quality

PERFORMANCE EVALUATION METHODS

GRAPHIC RATING/CHECKLIST METHODS

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Salespeople are evaluated using some type of performance evaluation form

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Especially useful in evaluating behavioral and professional development criteria

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May be filled out by customers

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Disadvantage is providing evaluations that discriminate sufficiently

PERFORMANCE EVALUATION METHODS:

RANKING METHODS

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Rank all salespeople according to relative performance on each performance criterion

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These methods force discrimination as to the performance of individual salespeople

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May be complex

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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.

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Managing activities within the specified time period toward the accomplishment of the stated objectives.

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Appraisal of performance against objectives.

PERFORMANCE EVALUATION BIAS

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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)