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Targets of the sales force must be realistic and must help provide incentives to boost sales activities. For
example 3M ESPE, takes note of the fact that the sales person considers the target achievable and he is
motivated to meet it, rather than get an impression that it is an unattainable target.
The purpose of target setting has been largely discussed as a way to accomplish a specified volume of
sales per month This method of evaluation of salesperson performance has been approached from at least
three perspectives (Boles, Donthu, and Lohtia 1995). One perspective is to focus only on output measures
of performance, regardless of input factors (Anderson and Oliver 1987). For example, salespeople could
be evaluated only on sales volume or quota attainment. A second approach was to temper the evaluation
of performance with a subjective assessment of potentially mitigating factors, such as perceived territory
difficulty or salesperson effort (Jackson, Keith, and Schlacter 1983). A third approach was to evaluate the
salesperson's actual performance against expected performance, based on the level of various input
factors believed to influence performance (Beswick and Cravens 1977).
The above methods assume the objective of the company is to maximize sales. The company’s objective
may however be to:
a) Ensure penetration of the product in a specified area within a stipulated time frame, or
b) To create awareness and/or generate trial for the product
If the company has these objectives, then the sales may not be the ideal basis for target setting for sales
force as the efforts of the sales force would be wrongly directed to maximizing sales rather than
developing the market. As Boles Donthu, and Lohtia (1995) state the assessment of salesperson
performance and the consequences of that assessment should be closely linked to the conceptualization
and measurement of salesperson performance. That is the objective of the target setting should ensure
that the effort of the salesman is directed towards the goals of the marketing function (refer to the
Bentonite case below).
Identifying and using the correct basis for setting targets is therefore essential for achieving the company
goals as well as motivating the salespersons to perform. Cravern and Woodruff (1973) have also
suggested selecting variables corresponding to the operational measures for a given organization. This
chapter develops a framework to identify the appropriate measure for evaluation to achieve the company
objectives as well as motivate the salesperson to perform effectively.
Different scenarios:
1. Introductory phase of the product life cycle
a. The product that is predominately evaluated by search attributes: The objective of the
company and the effort of the sales force have to be directed to creating awareness and
interest for the product. As the consumers are evaluating the quality based on search
attributes, the salesman’s effort should be to ensure that the product is visible to the
consumer and the consumer has the option of looking at the search attributes. This can
be achieved by ensuring proper displays and point of purchase advertisements. As in the
case of the “Aashirwad ready to eat foods”.
The current scenario is that Ready to eat foods like “Aashirwad” curries is preferred by a
select market segment (refer selling style chapter). The task for the sales force is to
spread awareness and information about the product in as many ways as possible.
Though the food products area experience items, a ready-to-eat concept is a convenience
product and purchased by mainly taking into account the search attributes (quantity,
type of curry, price etc). The role of the sales force would therefore be to ensure that the
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brand awareness is created through higher visibility. Hence, the sales force efforts should
be directed to ensuring display of the product and the point of purchase advertisements
in as many outlets as possible. Thus the parameters on which salesman are evaluated
should be number of displays organized, amount of point of purchase advertisements
that have been displayed.
b. The product that is predominately evaluated by experience attribute: Here also the
objective of the company is to create awareness. However, the process by which the
awareness can be created for products, which are evaluated by experience attributes,
would be to show that the product is able to deliver the benefit the consumer is
interested in. “Seeing is believing” would be basis on which awareness and interest can
be created. Hence the number of demonstrations would be the ideal type of evaluation
criteria for the salespersons.
Fans are mainly evaluated on the search attributes of design, price etc. In mid nineties
when the market was in a growing phase in India, the evaluation criteria had to ensure
penetration and new market development. This was captured in the evaluation criteria of
Crompton Greaves India Limited fans and appliances division.
Evaluation of the sales force of Crompton and Greaves was done on the basis of both
objective and subjective criteria.
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kept to the minimum. His handling of this sensitive issue with the dealers was very
important.
iii. Territory development: The salesperson had to make an assessment of the potential
demand for his products in his territory. Whether a new dealer has to be appointed
or can the existing dealers service the demand had to be looked at.
iv. Promotion /Publicity: The efforts expended by the salesperson in the publicity of the
company's products. This includes local promotions and co-operative advertising
with the dealers. It also took into account the activities undertaken by them for
selling the products in rural areas.
v. Market Feedback: The amount of relevant or pertinent information, which the
salesperson was able to provide about his territory.
Qualitative criteria include:
vi. Relationship with dealers. The feedback about the salesperson was obtained from
the dealers.
vii. Sincerity towards job and diligence: The Company evaluated his hard work and
commitment towards the job.
Similarly paints, though a credence product, are purchased mainly for the shades, which
are search attributes. So the evaluation of the sales force selling paints in a growing
market has to be towards increasing market penetration. This was reflected in the
evaluation criteria of ICI Paints also
• Sales force Evaluation of TV Set top Boxes takes into account the following
parameters
– Penetration in Metros as against target
– Vendors signed-up for providing service
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ICICI Prudential Insurance Company also set its evaluation criteria to include prospect
calls made and follow-up calls made.
For example, TVS Electronics Ltd., has the following basis for evaluation of sales force:
i. Town salience (TVSE share in that town in %)
ii. Partner Salience per town (number of partners buying TVSE in that town)
iii. Extraction per partner (TVSE sales value per month in Rs lacs)
Based on the above discussion, table 8.2 summarizes the most important evaluation criteria for the sales
force under different situations. The company can have other criteria also, so as to enable it to move from
one type of criteria to another type easily as the product moves in the product life cycle (specifics dealt in
performance evaluation chapter).
Table 8.2 Sales force Evaluation criteria for different market situations
Market condition
(Product life cycle) Type of Product
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Search attributes Experience attributes Credence
(example Non (example Durables / attributes
durables) Industrial Prod.) (example
Services)
Section 2
8.3 Process of target setting:
Once the evaluation criteria have been finalized the company should set targets. Setting targets can be
done by a “top down” or “bottoms up” approach. In top-down approaches, company personnel provide
aggregate company forecasts that sales managers divide into zone, region, district, territory, and account
forecasts. In bottom-up approaches, account forecasts are combined into territory, district, region, zone,
and company forecasts (figure 8.1).
Forecast of General
Economic and Business
Conditions for the Country
as a whole
3M ESPE
The factors, which are considered for target setting, are discussed below.
1. The business unit’s targets for the year – The target of the business unit serves as a guideline for
the sales people’s target. The product target for the business unit is distributed across the various
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Delphi Method is a group decision process about the likelihood that certain events will
occur. The Delphi Method makes use of a panel of experts.
http://www.ryerson.ca/~mjoppe/ResearchProcess/841TheDelphiMethod.htm
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sales personnel. The target of a sales person comprises revenue targets for different product
lines.
2. Previous Track Record – The target allocation considers the sales person’s achievement in terms
of revenue generation in the previous cycle. The target setting team analyses the various factors
that contributed to the performance in the previous cycle
3. Market Factors – This basically considers the macro environment factors that affect the market in
general. These also play a crucial factor in the sales revenue for the product.
Bottoms up approach: Here the estimates of sales are worked out in consultation with the field sales force
and integrated to the region.
Ador Fontech Limited, special purpose welding electrodes finalizes targets using a bottoms up approach.
Their process is as follows:
i. The geographical region of one state is divided into various territories. The industries falling in these
territories are then analysed vis-aà -vis the product range and the business potential in that territory
ii. Each industry segment is anaysed depending on the potential for the product range and the status
and health of that particular industry and the individual customer.
iii. The targets are then fixed product wise and customer wise for the particular territory with a scope of
creating another 10 to 15% new customer base and promotion of new products being added in the
coming year.
Similarly, Telco Construction Equipment Company uses a bottoms up approach. Annual Forecast of the
company are based on the projects and constructions activity in an area. The potential of machines is
derived and then on the target market share basis, final figures of targets are arrived.
While both methods are adopted, when the effort is more developmental based (as in the case of products
in the introductory phase of the product life cycle or products evaluated by credence attributes), the
targets should be bottoms up (table 8.3). In these cases the efforts in individual markets need to be
considered. On the other hand, if the efforts of the salesforce are more towards generating sales then the
company should adopt top down approach. Here also the effort, could vary from each to region, but as the
sales are going to be influenced by the company support (advertising) and macro economic parameters,
the top management who are more familiar with these two aspects should decide on the targets and then
divide the sales quantity into specific territory targets. Local field staff who may not be aware of (a) the
type of support that the company is planning for their territory and (b) the macro economic factors that
are likely to influence the market would not therefore be in a position to give a correct estimate for the
target.
Table 8.3 Process of target setting
Market condition (Product
life cycle) Type of Product
Search attributes Experience attributes Credence attributes
(ex: Non durables) (ex: Durables / (ex: Services)
Industrial Prod).
In general bottoms up targets are considered realistic as the sales force is directly involved in the target
setting, but in tops down approach there is a possibility that the targets may not be considered realistic or
may be considered very high. The company should therefore explain the reason for the targets; otherwise
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the sales persons would consider the (unrealistic) targets are being thrust on them 20 and may not be
motivated to achieve them.
To capture the sales and sales effort the company has identified, sales as the main criteria but it has
also given weightage for effectiveness of sales calls and collection. Being an industrial product,
product knowledge was considered important for effective selling, so the company has given
weightage for technical knowledge also. Other qualitative criteria of the functioning of the salesforce
(integrity and adherence to company norms) were also given importance. The weightages for
different criteria were as follows:
A. QUANTITATIVE ASPECTS (70%) :
1. Sales Booking : 35%
2. Correctness of order processing :5%
3. Number of sales call : 5%
4. Number of calls for enquiry generation : 5%
5. Number of sales call for problem solving / rapport building :5%
6. Collection of outstanding : 15%
B. QUALITATIVE ASPECTS (30%) :
1. Technical knowledge : 15%
2 Adherence to company norms, adaptability to changes, quality standards : 10%
3. Integrity : 5%
M/S Ador Fontech Limited, which is also in the similar market situation as the above company, also
had the primary criteria as sales. The company assigned 50% weightage to sales. In addition they
have also included the other parameters (as detailed below), which focus on market development.
CRITERIA WEIGHTAGE
- Overall Sales Performance 50%
- Overall Sales Growth achieved 20%
- New Product Sales 10%
- Growth in Individual product category 5%
- New Customer developed 5%
- New Applications Developed 5%
- Customer Service 5%
10.2: Define the reports and the frequency at which the reports.
The time period for the evaluation has to be clearly defined taking into account the way the sales effort
needs to be spread. For example, sales should be reviewed fortnightly or monthly so that the salespersons
effort is spread evenly through out the year.
A company had the following frequency for checking the performance of the salesperson:
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As stated by Vroom’s Expectancy theory, a sales person will perform only if he/she feels that it is
achievable.
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PARAMETERS PERIOD
a) Visits to the retailers Weekly
b. Primary Sales (Unit, value) MONTHLY
(Distributor buying from the company)
c. Product promotion Monthly
d. Outstandings Monthly
Since the sales activities take place outside the view of the sales manager, each of the above evaluation
criteria would convert into a report from the salesperson. So increasing the evaluation parameters would
mean increasing the number of reports a salesperson has to fill and therefore, diverting the attention of
the salesperson from the primary activity to form filling.
For example, a company had a daily tour report for the salesman, which included information on the
dealers met, and the outcome. The salesmen, who used to make sales calls till 9pm (travel another hour to
reach home) and start early next morning, were left with no time and interest to fill the daily report. In
practice what was noticed was that all the salespersons used to fill the daily reports once a week and
submit them. The company also did not monitor the daily reports and an office assistant just filed the
reports. The entire exercise of daily reports was thus an unproductive activity (refer Box 10.2 also). The
company should therefore identify parameters and reporting pattern based on the need for enhancing the
effectiveness of the sales force.
Qualitative parameters
Space provided by trade for ITC Merchandising is Good relative to that provided to other
Cigarette/FMCG Companies.(score0/1/2)
Overall relationship of salesperson with trade(score 0/1)
Ability to capture market intelligence, competitor’s activity. (score 0/1)
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TMT SAIL
The reporting officer has an exclusive one-to-one meeting with his subordinate to discuss the plan
fulfillment after the appraise has filled up the self-appraisal. The discussion includes review of
constraints faced, facilitating resources, strengths and weaknesses of the appraise, his developmental
needs and suggestions for improvement. The reporting officer then fills the performance assessment form
which is a five point rating scale with weightages. The outcome of the PRP is noted in the specific form
and signed by both the appraise and the reporting officer.
The appraisees will be classified into the following grades in the order of merit : O,A,B,C.
84 & Above : O
68 – 83 :A
52 - 67 :B
20 – 51 :C
After receiving the appraisal forms from the Reporting Officer, the Reviewing Officer ( one rank higher
than the Reporting Officer) fills up a similar performance assessment sheet having the same 5 point rating
scale. The Personnel Office then compiles the total scores of both the Reporting and Reviewing Officers
giving 50% weight-age to each.
Total scores are then arranged in the descending order for an Appraisal group( e.g. salespersons who are
in the same group and the primary gradings are sorted in such a manner that the total number of
appraisees in the group are distributed so that there are 10% appraisees in O grade, 20% in A, 45 – 55 %
in B and 15-25 % in C.
In the final stage comes the Performance Review Committee (PRC) comprising of HODs and Sectional
Heads that decides the final grades.
(i) The salespersons who get O/A grades consistently and thus fulfill the
criteria for promotions to the next level are promoted while those who do not have
to wait for longer period till they get the minimum grade points or reach the
timescale limit for promotion
(ii) The high and low performers are both recommended for job rotation
often to a different territory and in some rare cases even to a
different function.
(iii) The development needs identified in the process of the appraisal
system are taken as inputs for planning training programmes for
the salespersons once such common needs have been identified.
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