Chapter 14 Sales Force Performance Evaluation PowerPoint presentation prepared by Dr. Rajiv Mehta New Jersey Institute of Technology

Chapter 14

Sales Force Performance Evaluation

PowerPoint presentation prepared byDr. Rajiv Mehta

New Jersey Institute of Technology

Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 14 | 2

Chapter Outline

• Sales Force Performance Appraisal• A Contemporary Approach to Sales Force

Performance Evaluation• Providing Feedback and Improving Sales Force

Performance• Emerging Perspectives in Twenty-First Century

Sales Force Performance Appraisals


Learning Objectives

After reading this chapter, you should be able to do the following:1. Carry out the sales force performance evaluation process using the

outcome-based, behavior-based, and professional development measures.

2. Establish different types of sales goals and objectives, and develop the sales plan.

3. Set sales force performance standards.4. Allocate resources and efforts through sales quotas.5. List the major steps in the sales force performance evaluation

monitoring system (PEMS).6. Provide feedback and evaluation and improve sales force

performance.7. Apply twenty-first century sales force performance appraisal

methods.


Sales Force Performance Appraisal

• A salesperson performance appraisal is a systematic process for establishing whether the salesperson’s job behavior contributes to the fulfillment of a firm’s sales objectives and for providing specific feedback to the individual.


Sales Force Performance Appraisal

• Performance appraisals can help managers accomplish the following: – increase/decrease compensation

and awards to high/low performers – identify training needs of

salespeople– mentor salespeople about their

careers– revise sales performance and

evaluation process– develop a top notch sales team


Challenges in Salesperson Performance Appraisals

• Evaluating salespeople is challenging because they encounter the following hurdles:– mostly work alone in the field – engage in a multitude of

activities– have differences in territory

potentials– have physical disparities in

their territories– face intense, varying

competition– have to allocate their time

between account development and account maintenance

– need sufficient time to adjust to their assigned territories Source: © Jack Hollingsworth/Corbis


Timing of Salesperson Performance Appraisals

• Performance appraisals are usually conducted over these intervals:– once a year– sometimes semiannually – sometimes quarterly

• Evaluations include two kinds of criteria:– objective (quantitative) criteria– subjective (qualitative)

measuresSource: © Jack Hollingsworth/Corbis


A Contemporary Approach to Sales Force Performance Evaluation

Establish sales goals and objectives.

Establish sales goals and objectives.

Set sales force performance standards.

Set sales force performance standards.

Allocate resources and sales force efforts.

Allocate resources and sales force efforts.

Measure sales force performance against standards.

Measure sales force performance against standards.

Develop the sales plan. Develop the sales plan.

Take corrective action. Take corrective action.


Establish Sales Goals and Objectives

• Formulate sales goals, such as these:– increasing sales by 5

percent each year over the next five years

– increasing market share by 4 percent by the next five years

– reducing customer defections by 12 percent

– increasing the new customer base by 10 percent each year

Source: Flying Colours Ltd


Articles on Sales Force Performance Evaluation

• Read various articles on sales performance at– http://www.salesmanagermag.com/archive.html#Sale

sPerformance

– http://www.successfactors.com/talent-management/articles/

– http://www.successfactors.com/performance-management/downloads/#


Develop the Sales Plan

3.Action

programs

3.Action

programs

2.Opportunities and

problems

2.Opportunities and

problems

1. Situation analysis

1. Situation analysis

4.Performance

evaluation systems

4.Performance

evaluation systems

Sales Plan

Sales Plan

“What’s the best way to get there?”

• strategies and tactics

“What’s the best way to get there?”

• strategies and tactics

“How much progress are we making toward our destination?”

• set standards of performance

• evaluate actual performance versus planned standards

• take corrective action on variances from plan

“How much progress are we making toward our destination?”

• set standards of performance

• evaluate actual performance versus planned standards

• take corrective action on variances from plan

“Where are we now?”

• market situation and competitive environment

• product sales situation

“Where are we now?”

• market situation and competitive environment

• product sales situation

“Where do we want to go?”

• internal environment

• external environment

• planning assumptions and constraints

• sales forecasts• contingency planning

“Where do we want to go?”

• internal environment

• external environment

• planning assumptions and constraints

• sales forecasts• contingency planning




Sales Force Performance Standards

• To coach your sales team to improved productivity and learn about guidelines and various criteria that can be used in conducting sales performance evaluations visit– http://www.justsell.com/salestools/

salesevaluationtool.aspx


Types of Sales Quotas


Administration of Sales Quotas

5. Maintain control

(performance evaluation).

5. Maintain control

(performance evaluation).

4. Keep the sales force updated.

4. Keep the sales force updated.

3.Include salespeople

in quota setting.

3.Include salespeople

in quota setting.

2.Create

understandable quotas.

2.Create

understandable quotas.

1. Set realistic

quotas.

1. Set realistic

quotas.

Administration of sales quotas

Administration of sales quotas


Sales Force Performance Evaluation Using Sales Quotas

• To see a video on sales quota management, go to– http://www.sellingpower.com/video/index.asp?

date=10/5/2007


Measure Sales Force Performance Against Standards

1.Performance

planning“Where am I going?”

“How will I get there?”“How will I be measured?”

1.Performance

planning“Where am I going?”

“How will I get there?”“How will I be measured?”

2.Performance

appraisalProvide immediate feedback

(praise, or correction) on each task accomplished.

2.Performance

appraisalProvide immediate feedback

(praise, or correction) on each task accomplished.

3.Performance

review:Conduct

overall performance evaluation.

3.Performance

review:Conduct

overall performance evaluation. Performance

evaluation monitoring system

stages

Performance evaluation

monitoring system stages


Websites of Firms Specializing in Sales Force Performance Evaluation

• Peruse the websites of various firms that specialize in conducting sales force appraisals, at– http://www.performance-appraisal.com/intro.htm– http://www.achieveglobal.com/Solutions/

Sales_Measurement– http://www.synygy.com/solutions/

Performance_management/perfrevmgt.html– http://www.360-degree-evaluations.com/360-demo.asp


Types of Performance Appraisal Techniques

3.Behaviorally

anchored rating scales

3.Behaviorally

anchored rating scales

2.Graphic rating

scales

2.Graphic rating

scales

1. Descriptive statements

1. Descriptive statements

4.Management by

objectives

4.Management by

objectives

Types of performance

appraisal techniques

Types of performance

appraisal techniques


Graphic Rating Scales

Semantic differential graphic rating scale

product knowledge

poor ___ ___ ___ ___ ___ _X_ ___ excellent 1 2 3 4 5 6 7

Likert-type graphic rating scale

product knowledge

____________ _______ ___X__ ______ __________unsatisfactory below average above outstanding

average average


Behaviorally Anchored Rating Scales

Salesperson will always cooperate in any way with other sales force team members, even if such effort is personally inconvenient or requires self-sacrifice.

Salesperson will always cooperate in any way with other sales force team members, even if such effort is personally inconvenient or requires self-sacrifice.

Salesperson is generally antagonistic toward other team members and frequently undercuts group efforts.

Salesperson is generally antagonistic toward other team members and frequently undercuts group efforts.

Salesperson seldom helps others and tends to resent contributing to group effort.Salesperson seldom helps others and tends to resent contributing to group effort.

Salesperson will occasionally help team members with field sales problemsSalesperson will occasionally help team members with field sales problems

Salesperson is usually willing to help other team members on field sales problems.Salesperson is usually willing to help other team members on field sales problems.

Salesperson can be expected to go out of his or her way to help other team members with any work-related problem.

Salesperson can be expected to go out of his or her way to help other team members with any work-related problem.

9

8

7

6

5

4

3

2

1

10

0

Cooperation with sales team members

Categories of performance Observed behavior

Very high indicates strong willingness to cooperate with other members of the sales team

Very high indicates strong willingness to cooperate with other members of the sales team

Moderate

indicates an average amount of cooperation with other team members

Moderate

indicates an average amount of cooperation with other team members

Very low indicates generally no team effort, which often hurts group performance

Very low indicates generally no team effort, which often hurts group performance


Management by Objectives

Step 1

Set sales objectives.

Step 4

Conduct annual performance evaluation

of salespeople.

Planning phasePlanning phasePlanning phasePlanning phase

Control phaseControl phaseControl phaseControl phase

Mo

dif

y a

nd

ad

just

M

od

ify

an

d a

dju

st

MB

O c

ycle

MB

O c

ycle

Mo

dif

y a

nd

ad

just

M

od

ify

an

d a

dju

st

MB

O c

ycle

MB

O c

ycle

Step 2

Develop sales plans and implement them.

Step 3

Periodically monitor performance and alter sales tactics to stay on

track.

Step 3

Periodically monitor performance and alter sales tactics to stay on

track.


Limitations of Sales Force Evaluation Systems

• stereotyping• contrast error• similar-to-me error• first-impression error• leniency or harshness error• central tendency error• escalation of commitment error• fundamental attribution error• self-serving bias• central tendency

Source: Stockbyte


Limitations of Sales Force Evaluation Systems

• political concerns• fear of reprisal• varying evaluation standards• interpersonal bias• questionable personality traits• organization use• recency bias• no outcome focus• inadequate sampling of job

activities

Source: Stockbyte



• To see a video on tools for salespeople to individually manage their own sales performance, go to– http://www.sellingpower.com/video/index.asp?

date=11/7/2007


Sales subordinates

Sales subordinates

Accounts payable

managers

Accounts payable

managers

Self-appraisal

Self-appraisal

Sales manager

Sales manager

Sales team peers

Sales team peers

Purchasing managers (clients)

Purchasing managers (clients)

360-degreesalespersonperformance

appraisal

360-degreesalespersonperformance

appraisal

Inte

rnal

cu

sto

mer

sIn

tern

al c

ust

om

ers

Exte

rnal cu

stom

ers

Exte

rnal cu

stom

ers

Other departmental

coworkers

Other departmental

coworkers

Emerging Perspectives in Twenty-first Century Sales Force Performance Appraisals:360-Degree Performance Evaluation


Effective Sales Performance Evaluation

• To see a video on evaluating sales force performance by measuring customer satisfaction—an aspect of 360-degree performance—and employee satisfaction, which are drivers of financial performance, go to– http://www.sellingpower.com/video/index.asp?

date=11/20/2007


Software for Conducting Sales Force Performance Evaluations

• Peruse the following website to learn about software for sales force performance evaluations at– http://www.callidussoftware.com– http://www.varicent.com

– http://www.einsof.com/about_us.jsp

• Test drive Solution Selling Software, a sales performance assessment tool, at– http://www.salesforce.com/appexchange/

detail_overview.jsp?id=a0330000002VYILAA4&NavCode__c=&tab=publisher


Sales Force Performance Appraisals:Performance Evaluations of Team Selling

• In cooperation, sales managers and sales force team members select relevant performance criteria and appraisal methods.

• Each team member rates all the other members on the following: – teamwork– leadership– productivity– team relations

Source: Stockbyte


Emerging Perspectives In Twenty-First Century Sales Force Performance Appraisals:Performance Review Ranking System

• Evaluate salespeople on performance using a scale, such as this:– A = excellent

– B = above average

– C = average

– D = satisfactory performance

– E = sub-par performance

• Then rank each salesperson and place them in performance categories:– top 20 percent– middle 70 percent– bottom 10 percent

• Move out the bottom performers with new talent, thus creating meritocracies.

Source: Stockbyte


Ethical Situation: What Would You Do?

Discussion Question You are one of six regional sales managers for a large manufacturer of consumer products. About ten district sales managers report to each one of the regional sales managers. This year, your national sales manager is requiring all the company’s sales managers to use a Likert-type performance evaluation scale to rate each of their subordinates on various dimensions. The evaluation scale has five performance blocks or segments labeled: outstanding, above average, average, below average, and poor. Knowing that these evaluations will be used for current raises and bonuses, and promotions over the longer run, you plan to rate all the district sales managers reporting to you as at least “above average” and some “outstanding.” In all honesty, you know that four of your district managers should be rated no better than “average,” but you don’t want to hurt their chances for raises, bonuses, and promotion, so you just don’t use the bottom three segments of the evaluation scale. By rating your people higher than they should be, you feel that you retain their loyalty and support while keeping morale higher than it would be if your performance evaluations were more accurate. You rationalize this evaluation approach to yourself by asking: “Who gets hurt if I rate my people on the high side? Other regional sales managers probably do the same thing.”

Documents

Chapter 14 Sales Force Performance Evaluation PowerPoint presentation prepared by Dr. Rajiv Mehta New Jersey Institute of Technology