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Evaluating sales force performance

PowerPoint Presentation:
Prof. Sunitha Ratnakaram, Associate Professor, VVSB MBA, M. Phil, MFM, M. SC. (Psychology), UGC
JRF , (Ph. D)

In this chapter we will discuss::
In this chapter we will discuss: Sales force performance Determinants of sales force performance
Performance evaluation Information sources for evaluation Criteria for the evaluation of sales force
performance Establishing of performance standards Methods of sales force evaluation Monitoring &
reviewing of sales force performance

Introduction :
Introduction Sales mangers & their activities Function which is overlooked by them evaluation Achieving
fair balance between costs & profits is the major responsibility

Sales force performance:
Sales force performance Relation between sales force performance & overall performance of
organizations Impact of effective sales force performance on the bottom-line Newer methods of sales
force training Sales managers awareness about the factors influencing sales force performance

Determinants of sales force performance:
Determinants of sales force performance Changing dynamics of the market have increased the pressure
on sales force Many studies were conducted to know the factors which will influence sales force
performance They are Internal factors External factors

Internal factors:
Internal factors Motivation Skill level Job satisfaction Role perception Personal factors (age, sex, weight,
height, appearance, marital status, education & no. of dependents) Ego drive Empathy

External factors:
External factors Environmental factors Organizational factors communication & work flow compensation
system Sales management functions Sales force planning Forecasting Territory management
Compensation Control

Performance evaluation:
Performance evaluation Important process which enhances the way organization is managed & provides
recommendations for further improvement Why is it a critical function? What it constitutes? Comparing
objectives with results Provides feedback, management expectations are made known

Sales force evaluation process:
Sales force evaluation process Determine the factors that influence sales force performance Select
criteria for sales force evaluation Establish performance standards Compare sales force performance
Performance review & feed back Evaluation process

Purpose of evaluation:
Purpose of evaluation To monitor the performance & ensure that it is in alignment with corporate goals &
objectives To keep track of progress To take decisions regarding compensation, promotion & transfer

Objectives to be fulfilled:
Objectives to be fulfilled Appreciate good performance Discuss & suggest ways to overcome short
comings Review & update standards of performance Enhance superior sub ordinate relationship

Reasons for evaluation:
Reasons for evaluation To be aware of company objectives Increasing the focus on new products
Reducing time spent on non selling activities Retaining the existing customer base Providing training
facilitates Providing focus on value added activities To improve motivation & skills To appraise past
performance To develop a sales plan to increase future sales

Who should evaluate?:
Who should evaluate? Immediate supervisor better estimation Sales manager overall performance
Territory manager rarely Regional manager - rarely

When to evaluate?:
When to evaluate? Weekly, monthly, quarterly, half-yearly or annual basis Systematic & formal
procedures only comes under evaluation Depends on complexity & duration of sales plan Time to take
corrective actions also to be considered As frequently as possible depending on job profile.

Information sources for evaluation :
Information sources for evaluation Source of information influences the criteria that the manager selects
to measure sales force performance Sales manager should be aware of strengths & weaknesses of the
sources of information Formal process for the collection of information helps in efficient & accurate
evaluation system

Major sources of information:
Major sources of information Company records Sales volumes, sales order to call ratio, profitability,
selling expenses etc. Reports from sales persons Activity, expenses, call reports Customers Inadequacy
of sales persons reports can be removed Managers field visit Communication skills, interpersonal skills,
technical product knowledge, personality traits Managers personal insights Other sources Distributors,
personal contacts, published & electronic sources etc. Information from peers & subordinates (360 0 feed
back)

Criteria for the evaluation of sales force performance:
Criteria for the evaluation of sales force performance Performance can be considered & evaluated in
terms of behavior & outcome based components Criteria for measurement should be derived form job
description of the sales personnel

Qualitative criteria:
Qualitative criteria Personal competencies Planning skills, team work, aptitude & attitude, product
knowledge Measurability leads to ambiguity Shift from planning skills, knowledge of company
policies, time management to communication skills, ethical behavior & team orientation

Major qualitative criterions:
Major qualitative criterions Sales skills Technical skills Interpersonal skillsSalesmanship skills Territory
management Personality traits Adaptability Locus of control Ego drive

Quantitative criteria:
Quantitative criteria Mostly used & easier to standardize & implement Quantitative measures can be
segregated into input & output measures Input measures Avg. no. of sales calls per day Ratio of sales
cost to sales No. of reports submitted by sales persons Output measures Sales volume Sales orders No.
of new accounts No. of advertising displays Gross profit obtained from new accounts

Establishing of performance standards:
Establishing of performance standards Based on the criteria standards are to be formulated Standards
act as a bench mark & helps in evaluating performance Can be prepared by a sales manager singly or in
consultation with other sales personnel No. of standards to be used is one of major decisions & difficulty
involved in the weight to be given to each factor Large companies will have common set of performance
standards Relationship between input & output measures to be kept in mind while setting standards

Areas of performance standards:
Areas of performance standards Quantity standards Quality standards Time based standards Cost based
standards

Quantity standards Quality standards:
Quantity standards Quality standards Sales calls per day Number of orders No. of sales presentations
No. of lunches hosted for a customer Team work Adaptability Ethical behavior Ability to gather
information etc.

Time based standards:
Time based standards Time taken between identifying customer need & preparing sales proposal Time
gap between a customer enquiry & the sales call Time between complaint & solving problem Time
between getting order & collecting sales amount etc.

Cost based standards:
Cost based standards Ratio of selling costs to sales Gross profit obtained from new customers Expenses
incurred per order No. of gifts & entertainment expenses

Most widely used quantitative performance standards:
Most widely used quantitative performance standards Sales volume based on quota Sales volume in
comparison to previous years sales & net profits

Methods of sales force evaluation:
Methods of sales force evaluation Several methods were developed in this regard Cotham & Cravens
gave a model using standard deviation in 1969 Cravens, Woodruff & Stamper developed a model in
1972, using total sales volume Jackson & Aldag propounded MBO method for sales force in 1974
Cocanaugher & Ivancevich developed BARS in 1978 Few of them are behavior based, few of them are
results based and few of them are personality trait based

Some f the methods for evaluation:
Some f the methods for evaluation Essays: where sales manager describes the performance of sales
person in few paragraphs Rating scales: based on standardized performance measures Forced choice
method: where the sales manager is asked to go through groups of statements & select those that best
explain the individual Ranking: useful when entire sales force has to be evaluated. Techniques used are
alternative ranking, paired comparison ranking & multiple ranking

5. New methods of evaluation:
5. New methods of evaluation Critical incident approach Work standards method Management by
objectives (MBO) Behaviorally Anchored Rating Scale (BARS) Family of Measures (FOM) as a method of
sales force performance evaluation (continuous & compares past performance with present performance)

Monitoring & reviewing of sales force performance:
Monitoring & reviewing of sales force performance Need for monitoring How to monitor? Sales reports,
invoices, order forms, accounting records & direct interaction Review is the final stage in evaluation An
evaluation interview can be conducted in regard to this periodically where the aspects of improvements
can be discussed along with clarifying doubts