Chapter 16

1. Chapter 16 Evaluating a Salesperson’sPerformance

2. Learning Objectives • Nature and the importance of performance evaluation • Procedure for evaluating salespeople

3. Concept of evaluation and performance • Strengths and weaknesses • Basis for self-development • Always try to improve their performance (e.g., new order receive, customer satisfaction)

4. Importance of Performance Evaluation A good performance review can be a major aid in sales force management tasks: • Promotions and pay increases • Identify sales techniques • Uncover needs for improvements in the compensation plans • increase morale (e.g., you know what is expected).

5. Procedure for Evaluating Salespeople(Fig. 16-1) 1. Establish basic policies 2. Select evaluation bases 3. Set performance standards 4. Compare performances standards 5. Discuss results with salespeople

6. Difficulties Involved in Evaluating Performance Many duties cannot be measured objectively, and some task are difficult to evaluate (e.g., to build goodwill with customers) Some tasks can only be evaluated subjectively.

7. Frequency of Performance Evaluations (Fig. 16-2)

8. Output Factors Used as Evaluation Bases (Fig. 16-3) • 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 • 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

9. Quantitative Input Factors Used as Evaluation Bases (Fig. 16-4) • Calls per day (call rate) • Days worked • Selling time versus non selling time • Direct selling expense • In total • As percentage of sales volume • As percentage of quota • Non selling activities • Advertising displays set up • E-mails/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

10. Qualitative Input Factors Used as Evaluation Bases (Fig. 16-5) • 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

11. Sales = Days worked X Days worked X Call rate X Batting average X Average order Calls Days worked Orders Calls Sales Orders X X Ratio Measures

12. Rating Numeric Description 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. A Behaviorally Anchored Rating Scale for Evaluating Team Participation (Fig. 16-6)

13. Joe Jackson Gus Dean Product Line: Equipment Clothing Total Equipment Clothing Total Total sales (000) $480 $720 $ 1,200 $220 $460 $   680   Sporting goods stores 320 440 760 160 320 480   Ski shops 160 280 440 60 140 200 Total calls made 700 900   Sporting goods stores 300 500   Ski shops 400 400 Total orders taken 500 600   Sporting goods stores 150 450   Ski shops 350 150 Days worked 220 240 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)   Sporting goods stores 1.60 2.40 4.00 0.80 1.60 2.40   Ski shops 0.40 1.60 2.00 0.40 0.80 1.20 Sporting Sporting 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 0.500 0.875 0.714 0.900 0.375 0.666 Calls per day 3.18 3.75 Miles per call 86 50 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 Equipment Clothing Total Equipment Clothing Total Total percent of market 24.0% 18.0% 20.0% 18.3% 19.0% 19.0%   Sporting 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% Evaluation of Sales Reps’ Performance(Fig. 16-7)

14. Paula Burns Total Product Line: Equipment Clothing Total Equipment Clothing Total Total sales (000) $240 $280 $   520 $940 $1,460 $  2,400   Sporting goods stores 100 160 260 580 920 1,500   Ski shops 140 120 260 360 540 900 Total calls made 1,100 2,700   Sporting goods stores 500 1,300   Ski shops 600 1,400 Total orders taken 850 1,950   Sporting goods stores 400 1,000   Ski shops 450 950 Days worked 230 690 Expenses $36,000 $124,000 Miles traveled 35,000 140,000 Total market potential   (millions) $1.20 $1.20 $  2.40 $4.40 $ 7.60 $  12.00   Sporting goods stores 0.72 0.64 1.36 3.12 4.64 7.76   Ski shops 0.48 0.56 1.04 1.28 2.96 4.24 Sporting Sporting Goods Ski Goods Stores Shops Total Stores Ski Shops Total Average order $  650 $  578 $  612 $1,500.00 $947.00 $1,231.00 Batting average 0.800 0.750 0.773 0.679 0.769 0.722 Calls per day 4.8 3.9 Miles per call 32 52 Expense per sales dollar 6.90% 5.20% Cost per call, excluding $32.72 $   45.92 commission Cost per order, excluding $42.23 $   63.59 commission Equipment Clothing Total Equipment Clothing Total Total percent of market 20.0% 23.3% 21.7% 21.4% 19.2% 20.0%   Sporting 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% Evaluation of Sales Reps’ Performance(Fig. 16-7)(continued)

15. Group Project Question • Identify a product that you want to sell and who is your target market – describe in detail the product characteristics and the target market characteristics • Select your marketing strategies (i.e., the 4’Ps and the promotional mix) • Describe what selling techniques are appropriate for your product.

16. Group Project Format • Font – Arial 11, pg. 15-20 • Should have the followings: • Title page • Contents • Details of report ( Introduction, body and conclusion, recommendations) • References (APA format) • Due Date: 22 December 2011