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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
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Wholesale’s sales force?
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
Purposes of Salesperson
Performance Evaluations
1.
2.
3.
Professional Selling:
A Trust-Based Approach
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
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
Purposes of Salesperson
Performance Evaluations
4.
5.
6.
7.
Professional Selling:
A Trust-Based Approach
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
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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.
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
Salesperson Performance
Evaluation Approaches: Conclusions
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
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
360-Degree Feedback System
Sales Manager
Evaluation
• Salesperson is
evaluated by
multiple raters
• Helps salespeople
better understand
their ability to add
value to their
organization and
their customers
Professional Selling:
A Trust-Based Approach
Salesperson
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
Perspectives on Salesperson
Performance Evaluation
Outcome-Based
Behavior-Based
• Little monitoring of
people
• Little managerial
direction of salespeople
• Straightforward
objectives measures of
results
Professional Selling:
A Trust-Based Approach
• Considerable monitoring
of salespeople
• High levels of managerial
direction of salespeople
• Subjective measures of
salesperson
characteristics, activities,
and strategies
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
Dimensions of Salesperson
Performance Evaluation
Behavioral
Results
Salesperson
Performance
Professional
Development
Professional Selling:
A Trust-Based Approach
Profitability
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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.
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Schwepker Jr. Williams
Market Response Framework
Environmental
Factors
• Control Unit
Attractiveness
• Business
Position
Salesperson
Factors
Characteristics
• Role
Perceptions
• Aptitude
• Skill Level
• Motivation
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
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
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Professional Selling:
A Trust-Based Approach
Net profit dollars
Gross margin per sale
Return on investment
Number of orders secured
Selling expenses versus budget
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
Performance Evaluation Methods:
Characteristics any method should include
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•
Professional Selling:
A Trust-Based Approach
Job Relatedness
Reliability
Validity
Standardization
Practicality
Comparability
Discriminability
Usefulness
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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.
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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)
Professional Selling:
A Trust-Based Approach
Module 10:
Evaluating the Performance of Salespeople
Ingram
LaForge Avila
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Schwepker Jr. Williams
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
Schwepker Jr. Williams