1. Sales Force Management
11th Edition
Mark W. Johnston
Greg W. Marshall
Routledge 2013

2. Evaluation and Control of the Sales Program
Part 3
Evaluation and Control of the Sales Program
Routledge 2013

3. Evaluating Salesperson Performance
Chapter 13
Routledge 2013

4. The Case for a Focus on Sales Force Performance Management Systems
Inform sales force of how to sell
Provide managers w/ management framework
Enable measurement and continuous improvement of sales force performance
BPR and TQM movements didn’t significantly impact the sales force
CRM and SFA have sparked the current interest
Key elements
Proper Milestones
Workflow
Business Logic
Controls
Source: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group (2012).
Routledge 2013

5. Learning Objectives
Explain difference between performance and effectiveness
Identify objective measures of salesperson performance, output and input
Utilize ratio analysis as an objective approach to salesperson performance measurement
Discuss key issues related to subjective measurement of salesperson performance and forms used to administer such an evaluation
Understand how a sales manager can make performance review process more productive and valuable for the salesperson
Routledge 2013

6. Performance versus Effectiveness
Behavior – what people do; tasks on which they expend effort
Performance – behavior evaluated in terms of contribution to organizational goals
Effectiveness – summary index of organizational outcomes for which individual is at least partly responsible
Attribution theory – a classic theory of motivation
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7. Performance Evaluation Measures
Objective measures – reflect statistics sales manager can gather from the firm’s internal data
Output
Input
Ratios of output or input
Subjective measures – rely on personal evaluations by sales manager and others
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8. Leadership: Attributions and Salesperson Performance Evaluation
Attributing causes of outcomes has been studied extensive under the rubric of the attribution theory
Variables used for evaluations are in 3 categories:
Performance variables (i.e. task success or effectiveness)
Environmental variables (task difficulty and luck)
Person or dispositional, variables (ability and effort)
Heider proposed that evaluator assess performance based on the following relationships:
Ability – task difficulty/effort
Performance = (ability × effort ± task difficulty)
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9. Common Output and Input Measures Used to Evaluate Salespeople
Exhibit 13.1
Common Output and Input Measures Used to Evaluate Salespeople
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10. Ratio Measures
Expense ratios – combine both salespeople’s inputs and the results produced by those inputs in a single number
Account development and servicing ratios – a number of ratios concern accounts and orders that reflect on how well salespeople are capturing the potential business that exists in territories
Call activity and productivity ratios – call activity ratios measure the effort and planning salespeople put into their customer call activities and the successes they derive from it
Routledge 2013

11. Common Ratios Used to Evaluate Salespeople
Exhibit 13.2a
Common Ratios Used to Evaluate Salespeople
Routledge 2013

12. Common Ratios Used to Evaluate Salespeople
Exhibit 13.2b
Common Ratios Used to Evaluate Salespeople
Routledge 2013

13. Common Ratios Used to Evaluate Salespeople
Exhibit 13.2c
Common Ratios Used to Evaluate Salespeople
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14. Summary of Objective Measures
Sales =
Days worked ×
Calls/Days worked
Orders/Calls
Sales/ Orders or
Call rate
Batting avg.
Avg. order size
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15. Summary of Objective Measures
The equations highlight what a salesperson can do to increase sales which include increasing:
Number of days worked
Calls made per day
Level of success in securing an order on a given call
Size of the orders
Two essential points regarding objective measures:
Measuring straight sales volume and profit have advantages and disadvantages for evaluating salespeople
All the indexes are an aid to judgment not a substitute
Routledge 2013

16. Subjective Measures
Qualitative measures reflect behaviors or process aspects of what they do and how well they do it
It is more difficult to assess quality rather than quantity of salesperson’s performance
Bias – refers to performance evaluations that differ from objective reality, usually based on errors by the evaluator
Routledge 2013

17. Typical Attributes on Appraisal Forms
Sales results – volume performance, sales to new accounts, and selling the full product line
Job knowledge – knowledge of company policies, prices, and products
Management of territory – planning of activities, calls, controlling expenses, reports and records
Customer and company relations – salesperson’s standing with customers, associates, and company
Personal characteristics – initiative, personal appearance, personality, resourcefulness, etc.
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18. Sample Subjective Performance Evaluation Form
Exhibit 13.3a
Sample Subjective Performance Evaluation Form
Routledge 2013

19. Sample Subjective Performance Evaluation Form
Exhibit 13.3b
Sample Subjective Performance Evaluation Form
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20. Sample Subjective Performance Evaluation Form
Exhibit 13.3c
Sample Subjective Performance Evaluation Form
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21. Sample Subjective Performance Evaluation Form
Exhibit 13.3d
Sample Subjective Performance Evaluation Form
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22. Problems with Subjective Performance Measurement
Lack of an outcome focus
Ill-defined personality traits
Halo effect
Leniency or harshness
Central tendency
Interpersonal bias
Organizational uses influence
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23. Sample of a Poorly Constructed Subjective Performance Evaluation Form
Exhibit 13.4
Sample of a Poorly Constructed Subjective Performance Evaluation Form
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24. Avoiding Errors in Performance Evaluation
Read definition of each attribute thoroughly before rating
Guard against tendency to overrate
Be as objective as possible
Do not permit your evaluation of one factor to influence your evaluation of another
Base your rating on observed performance, not potential abilities
Rate an employee on general success or failure over the whole period
Have sound reasons for your ratings
Routledge 2013

25. Leadership: Outcome Bias in Evaluations
Sometimes outcomes and processes leading to outcomes match, sometimes they do not
Evaluators tend to overlook process and rate performers based on outcomes
Relationship selling requires attention to behaviors that may or may not influence the bottom line for some time
Most modern sales organizations understand the threat of the outcome bias and work to integrate multiple aspects of performance into the evaluation process
Routledge 2013

26. BARS Systems
Behaviorally anchored rating scale (BARS) system concentrates on criteria the individual can control
Process of developing a BARS system:
Key behaviors with respect to performance are identified using critical incidents
The group of critical incidents is presented to a group of sales personnel who are asked to assign each critical incident to an appropriate performance dimension
Key advantage of BARS system is that it requires sales manager to consider a wide range of components of a salesperson’s job performance
Job-specific nature of scales suggest they are most effective in evaluating salespeople performing similar functions
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27. Exhibit 13.5
A BARS scale with behavioral anchors for the attribute “promptness in meeting deadlines”
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28. 360-Degree Performance Feedback
Integrates feedback from external customers, internal customers, other members of the selling team, the sales manager, and the salesperson
Provides the impetus for a more productive dialogue between the sales manager and salesperson at performance review time
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29. Performance Management System
Requires a commitment to integrating all the elements of feedback on the process of serving customers
Results in performance information that is timely, accurate, and relevant to the firm’s customer management initiative
Salespeople take the lead in goal setting, performance measurement, and adjustment of their own performance
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30. Innovation: Effective Appraisals
Preparation
Reps rate themselves
Focus on their impact, needs, and goals
Appraisal interview
Discuss salary separately
Focus on own and rep’s preparation answers
Post-appraisal
Share formal review documents
Connect salary to appraisal issues
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31. Routledge 2013