Module Ten

Evaluating the Performance of Salespeople

Learning Objectives

1.

2.

3.

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.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Learning Objectives

4.

5.

6.

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.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Setting the Stage

Evaluating Salesperson Performance at City Wholesale 1. What were the primary changes Prince made to the performance evaluation process? 2. How did the changes impact City Wholesales sales force?

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Purposes of Salesperson Performance Evaluations

1. 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

2. 3.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Purposes of Salesperson Performance Evaluations

4. 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

5. 6. 7.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Salesperson Performance Evaluation Approaches: Conclusions

1. 2. Most evaluate on an annual basis Most combine input and output criteria which are evaluated using quantitative and qualitative measures

3.
4.

When used, performance standards or quotas are set in collaboration with salespeople
Many assign weights to different objectives and incorporate territory data.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Salesperson Performance Evaluation Approaches: Conclusions

5. 6. 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

7.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

360-Degree Feedback System

Sales Manager

Salesperson is evaluated by multiple raters Helps salespeople better understand their ability to add value to their organization and their customers

Salesperson

Evaluation
Ingram LaForge Avila Williams

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Dimensions of Salesperson Performance Evaluation

Behavioral

Results

Salesperson Performance

Professional Development

Profitability

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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 shortterm sales generation but should also include nonselling activities needed to ensure long-term customer satisfaction.
Professional Selling: A Trust-Based Approach Module 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Market Response Framework

Environmental Factors Control Unit Attractiveness Business Position Characteristics Role Perceptions Aptitude Skill Level Motivation

Salesperson Factors

Behavior Effort Quality

Planning and Control Unit

Behavior Effort Quality

Organizational Factors Marketing Effort Sales Management Effort

Professional Selling: A Trust-Based Approach Module 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Williams

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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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Performance Evaluation Methods:

Characteristics any method should include

Job Relatedness Reliability Validity Standardization Practicality Comparability Discriminability Usefulness

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Performance Evaluation Methods:

Objective-Setting Methods
Management By Objectives (MBO)
1. 2. 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.

3.

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Performance Evaluation Bias

Occurs when a managers 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)

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

Framework for Using Performance Information

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.

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

Professional Selling: A Trust-Based Approach

Module 10: Evaluating the Performance of Salespeople

Ingram

LaForge Avila Williams

Schwepker Jr.