9

Evaluating the
Sales Force
It is only through evaluation
that value exists: and without
evaluation the nut of existence
would be hollow.
Friedrich Nietzsche

Learning Objectives
Understand the importance of evaluation in sales
management
Study the Sales Force Evaluation Model
Distinguish between input and output measures of
sales performance
Discuss the value of behavioural control procedures
for salespeople
Understand outcome based evaluation procedures
Describe the evaluation models that use both input
and output data

Role of Evaluation in Sales

Management
Establish recruiting
criteria for
salespeople

Help salespeople set

and work towards their
career goals

Identify individuals
for promotion or
termination

Adjust sales
territories

Sales Force
Evaluation

Determine training and

development needs of
salesperson/s

Motivate
salespeople and
establish work
expectations

Link compensation
and rewards to
performance

Interrelationship of planning,
implementation, and evaluation
Planning
Set goals
Determine strategies
and tactics

Evaluation
Compare goals and
results
Explain variances

Implementation
Organize

Staff
Operate

Fact finding is more important than Fault finding

oWhat happened?
oWhy did it happen?
oWhat can we do about it?

Comprehensive Performance
Appraisal Areas

Input
Measures

Output
Measures

Profitability

Personal
Development

Output Measures Used in Sales

Force Evaluation

Sales

Orders

Profits

Accounts

Sales Volume Analysis

Sales Definition:
Order booking
Shipment of goods
Receipt of payment

Source of Information
Invoices / Cash receipts
Sales persons call reports
Warranty cards
Store audits

Sales Analysis
National and/or international levels sales organisation

Sales Analysis

All levels
In Sales
Organisation

Regional level
Branch level
Territory level
Individual level

Different
Type of
Sales

Total sales of the company

By type of products

By type of distribution channels

By type of customer classifications
By size of orders

Different
Type of
Analysis

Comparisons with sales quotas / targets

Comparisons with previous periods
Comparisons with industry / competitors
Comparisons within sales organisations

Comparisons with sales forecasts

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Orders/Accounts
ORDERS

Number of Orders
Average Order Size

ACCOUNTS

Number of new accounts

Number of accounts lost
Number of accounts sold
Number of accounts
buying full line

Productivity Analysis
Productivity is generally measured by ratio between
output & input
Sales = Days Worked x Call Rate x Batting
Average x Average Order
Call Rate = Calls per day worked
Batting Average = Orders/Call
Average Order = Sales amount per order

Companies also look at:

Sales Volume per Call
o Revenue generated by rep/Number of calls made

Average Cost per Call

o Sales Expenses of rep/Number of calls made

Productivity Analysis
Productivity can be improved by companies by:
Reducing sales force size
Hiring manufacturers reps. or agents on commission basis
Using the internet, telemarketing, direct mail to reach
customers
Increasing sales volume substantially

Profitability Analysis

Sales Costs = Profit

Identify unprofitable product lines, territories,
and customer segments
Evaluate territory and product performance by
profitability
Calculate year-end sales team bonuses.

Profit for Sales Force Evaluation

Net Profit
Gross Margin
Gross Margin Percentage
Return on Investment
Net profit as a percentage of sales
Margin by product category

13

Profitability Analysis
Close rate shows how well rep can close once she
has attempted to seal the deal by giving price
quotes
Close Rate

Number of Orders
Number of Quotations

Profit per call can indicate if rep is offering too

many discounts to customers
Profit Per Call =

Total Profit
Number of Calls Made

Input Measures Cost Analysis

Look at various major costs as a percentage of sales
Total
Salaries
Travel
Training

These could be seen across:

Territories
Products
Customer Classifications

Assists sales managers identify inefficient

functions/products and determine which customer
segments are most expensive to serve

Input Measures
Effort
Number of days worked
Sales calls per day, week, or
month
Sales calls per customer
Product demonstrations
conducted
Required reports completed
Number of prospecting
phone calls
Selling time vs. non-selling
time

Other Activities

Dealer meetings
Customer training
sessions conducted
Number of service calls
Number of customer
complaints
Advertising displays

A Model of Salesperson Evaluation

Output Measures

Sales revenues
Sales growth
Sales to quota
Sales to potential
New accounts
Contribution margins
Contribution percentage

Input Measures

Calls
Reports
Complaints
Demonstrations
Dealer Meetings
Display set up
Travel/entertainment
expenses

Perspectives on Salesperson
Performance Evaluation
Output Measures
Little monitoring of people
Little managerial direction of
salespeople
Straightforward objectives
measures of results
Use in competitive sales
environment

Input Measures
Considerable monitoring of
salespeople
High levels of managerial
direction of salespeople
Subjective measures of
salesperson characteristics,
activities, and strategies
Used when non-selling
behaviours are a priority
For new recruits

Qualitative Performance Measures

Judgments made by supervisors about reps
performance or abilities
Job knowledge
Problem-solving skills
Creativity
Attitude and morale
Internal and external relationships
Initiative and judgment
Ability to plan
Communications with management

Normally reviewed against an ideal rep

Relating the Performance of the Sales

Force to the Firms Salespeople
Possible reasons for a sales revenue shortfall
1 Sales force didnt work hard enough
2 Firms pricing isnt competitive
3 Products suffer from quality or delivery problems
4 Reps lack sales ability or need additional training

5 Look at changes in distribution set up

Policies for Performance Evaluation

Frequency

Normally annual

Who conducts Immediate supervisor and

review by branch head
evaluation
Sources of
Information
Formal
Review

Sales analysis, daily and

monthly reports
Should be conducted with each
salesperson
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Tools and Methods to Perform

Qualitative Measurements
The Essay
Technique

Brief statement written by the sales mgr to describe

reps overall performance level

Rating
Scales

Uses phrases or terms as anchors that describe

characteristics or performance

Force
Ranking

Each reps performance is ordered from highest to

lowest within a district or region

Management
by Objectives

Behaviorally
Anchored
Rating Scale

Goal setting and evaluative process resulting in

mutually agreed-upon performance measures
Set of scaled statements describing performance
rep received in terms of various job behaviors
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360-Degree Feedback System

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

Sales Manager

Evaluation

Salesperson is
evaluated by
multiple raters

Salesperson

5 Types of Evaluation Bias

Halo Effect

1 or more evaluation categories influence the

overall assessment of the rep

Leniency or
Harshness
Tendency

Occurs when rep is rated at the extremes

Central
Tendency Bias
Interpersonal
Bias

Outcome
Bias

Managers tendency to rate in the center of

the scale
Occurs when performance ratings are influenced by
how much manager likes or dislikes rep
Allowing results of an action to influence mgrs
assessment (e.g., rep closes large important sale)
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Reducing Sales Management Errors in

Performance Evaluations
1 Be familiar with each trait on evaluation form
2 Dont allow one factor to influence others
3 Base ratings on actual performance, not potential
4 Dont overrate reps evaluate them objectively
5 Rate rep on performance over entire period

6 List sound reasons for all appraisal ratings

25

Sales Force
Automation
Technology overtaking the
human touch

26

Sales Force Automation

The streamlining of the sales cycles in the
business to cut cost of customer contact and
enhance customer experience.
It records every business opportunity from
prospecting to closure within the guiding
principles of:
Build customer experience
Develop customer insight
Build CRM programmes

27

Use of Technology in Sales Management

Commonly used technology
Cell phones
Global Positioning Systems
Laptop Computers
Personal Digital Assistants
E-mail for communication with
customers and head office and
prospecting

28

Benefits of SFA and CRM

Lowering of customer acquisition cost
Direct relationship with field force
Greater accountability of sales force
Real time management of marketing information
system
Enhancement of customer focus
Updating of databases to manage customer
interaction and improve sales forecasting

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Objectives of CRM and SFA

Applications
To increase revenue
To enhance per customer profitability
To increase ROMI (return of marketing
investments)
To enhance winning sales approach
To increase sales executive productivity
To increase information flow for prudent decision
making
To promote sales executive retention and reduce
field force turnover

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Linking Sales Process and Activity

Opportunity Generation

Sales collateral preparation, despatch

and data capture

Lead Allocation

Sales collateral preparation, despatch

and data capture

Prospect Contacted

Sales manager moderation if the

contact not done in the desired period

Prospect Qualified

Schedule meeting if lead is firm

Product Solution Identified

Finalise product solution and price

Order Placed

Generate contract and management

approval
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Areas of Automation in Sales

Lead
Management

Lead tracking and conversion rates to gauge productivity

of sales staff
Length of average sales cycle
Size of order book
How many sales calls lead to an order in a typical market

Contact
Management

Basic customer data, their purchase process, sales

progress on each call and scheduling of further calls
Scheduling of follow up calls
Identification of customers who were part of recent
promotional programmes

32

Areas of Automation in Sales

Sales
Territory
Management

Linking people, territories and

quotas to help the sales manager in
customer profiling, lead generation
and order booking by territories

Knowledge
Management

Conversion of tacit knowledge into

explicit knowledge as an aid to sales
people

33

Knowledge Management
Sales presentation slides
Corporate profile and policy handbooks
Business proposal templates
Industry and competitive data

Transcripts of sales meetings and executive briefings

Training modules
Previous customer correspondences
Contract documents
34

Sales Force Automation (SFA)

Systems
SFA also automates the
reporting system by
salespeople
There is an inherent
resistance to the use of
SFA by salespeople and
managers due to lack of
flexibility

Benefits of SFA
Instant Access

Helps mangers evaluate and coach reps

Improves companys sales forecasts

Retention of
Manual records are taken away by reps
on moving away
Customer Information
Improved Customer
Interaction

Ticklers

Data available online for reps and

managers

For completion of tasks

36

Sales Tools and Uses of SFA/CRM

by Job Role
CEO
Sales forecast

VP of Sales

Sales
Management

Sales forecast

Sales forecast

Identify/share
best practices

Identify big
impact
opportunities

Track
performance
by salesperson,
product, etc.
Capture win/loss
data for strategic
planning/pricing

Identify coaching
& training
opportunities by
examining
win/loss ratios by
rep & stage of
sales process

Create or use
models to
understand
segments

Monitor activities
by account or by
rep relative to
results

Sales
Rep
Access to
customer data
Access to pricing
formulas &
product info for
better proposals
Integrated access
to other relevant
info (shipping,
billing, etc.)
Faster access to
leads

Next Session

Eureka Forbes Case

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