Chapter 16. Evaluating a Sales Person's Performance. Performance Evaluation 11/8/2010

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1 Chapter 16 Evaluating a Sales Person's Every Defeat, every heartbreak, every loss, contains its own seed. Its own lesson on how to improve your performance next time. Malcom X Evaluation Concept of Evaluation and Development Concept of Evaluation and Direction Importance of Evaluation Difficulties in Evaluating Importance of a Good Job Description Procedure for Evaluating Salespeople (Fig. 16-1), p. 461 Establish Basic Policies Discuss Results with Salespeople Select Evaluation Bases Compare to Standards Set Standards 1

2 Sales Organizations (%) 11/8/2010 Program for Evaluating 1. Establish Some Basic Policies MBO 2. Select Bases for Evaluation Output Measures (Fig 16-3, p. 463) Problem of Data Comparability Measures Quantitative (Fig 16-4, p. 464) Qualitative (Fig 16-5, p. 464) Ratio Measures Sources of Information Frequency of Evaluations (Fig. 16-2) 45% 43% 40% 35% 30% 25% 20% 19% 25% 15% 13% 10% 5% 0% No evaluation conducted At least quarterly Quarterly to biannually Biannually to annually Output Factors Used as Evaluation Bases (Fig. 16-3, p. 463) Sales volume In dollars and in units By products and customers (or customer groups) By mail, telephone, and personal sales calls Sales volume as a percentage of: Quota Market potential (i.e., market share) Gross margin by product line, customer group, and order size Orders Number of orders Average size (dollar volume) of order Batting average (orders / calls) Number of canceled orders Accounts Percentage of accounts sold Number of new accounts Number of lost accounts Number of accounts with overdue payment 2

3 Quantitative Factors Used as Evaluation Bases (Fig. 16-4, p. 464) Calls per day (call rate) Days worked Selling time versus nonselling time Direct selling expense In total As percentage of sales volume As percentage of quota Nonselling activities Advertising displays set up s/letters written to prospects Telephone calls made to prospects Number of meetings held with dealers and/or distributors Collections made Number of customer complaints received Qualitative Factors Used as Evaluation Bases (Fig. 16-5, p. 464) Personal efforts of the sales reps Management of their time Planning and preparation for calls Quality of sales presentations Ability to handle objections and to close sales Knowledge Product Company and company policies Competitor s products and strategies Customers Customer relations Personal appearance and health Personality and attitudinal factors Cooperativeness Resourcefulness Acceptance of responsibility Ability to analyze logically and make decisions Ratio Measures, p. 465 Sales = Days worked X Calls Days worked X Orders Calls X Sales Orders Days worked X Call rate X Batting average X Average order 3

4 Evaluation versus Output Effort versus Results (Quantitative) (Qualitative) Output (Quantitative) Evaluation and The Selling Process Prospecting $$ Output (Results) Gaining Commitment Follow-up Pre-Approach Approach Meeting Objections Presentation (Demonstration) Need Assessment Program for Evaluating 3. Set Standards 4. Compare to Standards Interpreting Quantitative Data Sales Volume and Market Share Gross Profit Number and Size of Orders Call Rate Batting Average Direct-Selling Expenses Routing Efficiency 4

5 Program for Evaluating Evaluating Qualitative Factors Behaviorally Anchored Rating Scales (BARS) 5. Discuss Evaluation with the Salesperson A Behaviorally Anchored Rating Scale (BARS) for Evaluating Team Participation (Fig. 16-6, p. 471) Rating Description Numeric Rating Behaviors Outstanding 10 Can be expected to go beyond what is normally expected to help the team achieve its goals Above average 8 Can be expected always to cooperate and contribute to the team objectives. Tries hard to help make the team successful. Average 5 Usually willing to cooperate and participate in team efforts. Below average 2 Can be expected to participate in team efforts only to the extent required. Shows no initiative with regard to team efforts. Poor 0 Unwilling to participate. At times may work against team goals. 5

6 Evaluation of Sales Reps (Fig. 16-7) Product Line: Equipment Clothing Total Equipment Clothing Total Total sales (000) $480 $720 $ 1,200 $220 $460 $ 680 goods stores Ski shops Total calls made goods stores Ski shops Total orders taken goods stores Ski shops Days worked Expenses $48,000 $40,000 Miles traveled 60,000 45,000 Total market potential $2.00 $4.00 $6.00 $1.20 $2.40 $ 3.60 (millions) goods stores Ski shops Goods Ski Goods Ski Stores Shops Total Stores Shops Total Average order $5,087 $1,257 $2,400 $1,067 $1,333 $1,133 Batting average Calls per day Miles per call Expense per sales dollar 4.00% 5.90% Cost per call, excluding commission $68.57 $44.44 Cost per order, excluding $96.00 $66.67 commission Joe Jackson Gus Dean Equipment Clothing Total Equipment Clothing Total Total percent of market 24.0% 18.0% 20.0% 18.3% 19.0% 19.0% goods stores 20.0% 18.0% 19.0% 20.0% 20.0% 20.0% Ski shops 40.0% 17.5% 22.0% 15.0% 17.5% 16.7% Evaluati on of Sales Rep s Perform ance Paula Burns Total Product Line: Equipment Clothing Total Equipment Clothing Total Total sales (000) $240 $280 $ 520 $940 $1,460 2,400 $ goods stores ,500 Ski shops Total calls made 1,100 2,700 goods stores 500 1,300 Ski shops 600 1,400 Total orders taken 850 1,950 goods stores 400 1,000 Ski shops Days worked Expenses $36,000 $124,000 Miles traveled 35, ,000 Total market potential (millions) $1.20 $1.20 $ 2.40 $4.40 $ 7.60 $ goods stores Ski shops Goods Ski Goods Stores Shops Total Stores Ski Shops Total Average order $ 650 $ 578 $ 612 $1, $ $1, Batting average Calls per day Miles per call Expense per sales dollar 6.90% 5.20% Cost per call, excluding $32.72 $ commission Cost per order, excluding $42.23 $ commission Equipment Clothing Total Equipment Clothing Total Total percent of market 20.0% 23.3% 21.7% 21.4% 19.2% 20.0% goods stores 13.9% 25.0% 19.1% 18.6% 19.8% 19.3% Ski shops 29.2% 21.4% 25.0% 28.1% 18.2% 21.2% 6