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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
Wholesales 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 evaluated 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

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Professional Selling:
A Trust-Based Approach

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Module 10:
Evaluating the Performance of Salespeople

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Helps salespeople
better understand
their ability to add
value to their
organization and
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Evaluation
Evaluation

Salesperson is
evaluated by multiple
raters

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Sales Manager

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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

Professional Selling:
A Trust-Based Approach

Module 10:
Evaluating the Performance of Salespeople

Ingram

LaForge Avila
Schwepker Jr. Williams

Dimensions of Salesperson
Performance Evaluation
Behavioral
Behavioral

Results
Results

Salesperson
Salesperson
Performance
Performance

Professional
Professional
Development
Development

Professional Selling:
A Trust-Based Approach

Profitability
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

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

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

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

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

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

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 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
Schwepker Jr. Williams

Performance Evaluation Methods:


Characteristics any method should include

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:


Characteristics any method should include

Professional Selling:
A Trust-Based Approach

Module 10:
Evaluating the Performance of Salespeople

Ingram

LaForge Avila
Schwepker Jr. Williams

Professional Selling:
A Trust-Based Approach

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

Graphic Rating/Checklist Methods

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: ObjectiveSetting Methods

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 Methods


Behaviorally Anchored Rating Scales (BARS)

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 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
Schwepker Jr. Williams

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

Evaluating Team Performance

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

Salesperson Job Satisfaction

Professional Selling:
A Trust-Based Approach

Module 10:
Evaluating the Performance of Salespeople

Ingram

LaForge Avila
Schwepker Jr. Williams