Evaluating the performance of sales people

1. Evaluating the Performance
of Salespeople
Module Ten

2. 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

3. 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

4. Salesperson Performance
Evaluation Approaches: Conclusions
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.

5. 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
Salesperson Performance
Evaluation Approaches: Conclusions

6. 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
Sales Manager
Evaluation

7. 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

8. Module 10:
Evaluating the Performance of Salespeople
Perspectives on Salesperson
Performance Evaluation
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

9. Module 10:
Evaluating the Performance of Salespeople
Dimensions of Salesperson
Performance Evaluation
Behavioral
Professional
Development
Results
Profitability
Salesperson
Performance

10. Criteria for Performance Evaluation
Behavior: Consists of criteria related to
activities performed by individual salespeople
• Sales calls,
• Customer complaints
• Reports submissions
• 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.

11. 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

12. 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

13. 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

14. 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

15. Module 10:
Evaluating the Performance of Salespeople
Performance Evaluation Methods
Graphic Rating/Checklist Methods
• 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

16. Module 10:
Evaluating the Performance of Salespeople
Performance Evaluation Methods:
Ranking Methods
• 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

17. Performance Evaluation Methods:
Objective-Setting Methods
Management By Objectives (MBO)
1. Mutual setting of 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.

18. 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

19. 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)

20. Module 10:
Evaluating the Performance of Salespeople
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

21. Module 10:
Evaluating the Performance of Salespeople
Framework for Using
Performance Information
Determine Sales Management Actions to Eliminate Causes of Future
Problems and to Solve Existing Problems
Evaluate Salespeople against Relevant Performance Criteria
Compare Salesperson Evaluations to Identify Problem Area
Investigate Problem Areas to Identify Causes of Performance Problems