Evaluation of Salesperson

Sales Management: Shaping Future Sales Leaders
Assessing the Performance

of the Sales Force and the
People Who Comprise It
Chapter 14
14-1
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Three Most Common Forms of Sales
Team Analysis
Sales Costs Profitability
14-2
Sales Analysis
 Gathering, sorting,
assessing, and making
decisions based upon
sales revenue
 Sales manager must
organize sales data so
market and salesperson
deviations are apparent
 For consistent evaluation,
it’s important to analyze
both sales revenues and
number of units sold
14-3
Analyzing Overall Sales Individual
14-4
Cost Analysis
 Determine the relationship between sales
generated during a given period and costs
incurred to make those sales
 Can be stated as a % of sales
 Helps assess whether sales-cost relationship remained
constant or if selling costs increased or decreased
relative to sales generated
14-5
Cost Analysis
14-6
Cost Data Assist With
 Determining which market segments are most
expensive to serve
 Identifying inefficient company functions
 Assessing cost of sales call (increasing?
decreasing?)
 Deciding when to modify commission rates for
reps
14-7
Product Expense Analysis
 Gauges level of profits each product line is
contributing and how much it costs to sell the
product
Expense Analysis by Product Line
14-8
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.
14-9
Profitability Analysis by Product Line
14-10
Evaluating Individual Sales
Representatives
Most Popular Metrics Used to Construct Sales Goals
14-11
Comprehensive Performance
Appraisal Areas
Input
Outcomes
Measures
Personal
Profitability
Development
14-12
Leveraging Technology to Manage
Sales Rep Performance
14-13
Input Measures
 Directly controlled by the rep
 Number of days worked
 Sales calls per day, week, or month
 Sales calls per customer
 Service calls
 Dealer meetings
 Customer training sessions
conducted
 Product demonstrations conducted
 Required reports completed
 Letters or phone calls made to
customers
 Advertising displays set up
 How reps allocate their time
14-14
Outcome Measures
 Actual results of rep’s efforts
 Sales revenues generated
 Sales revenues generated per account
 Sales revenue generated as a % of a rep’s territory
potential
 Number of orders generated
 Number of new customers won
 Number of sales to new customers
 Cancelled orders
 Lost accounts
14-15
Output Measures US Firms Use to
Evaluate Their Sale Forces
14-16
Profitability Measures
 A rep can impact firm’s profitability through
specific products sold and final prices negotiated
 Net profit as a percentage of sales
 Net profit contribution
 Net profit dollars
 Return on investment
 Gross margin
14-17
Ratio Measures for Performance
Appraisals
 Ratio measures are computed for individual
performance appraisals by combining various input
and output data
 Sales volume per call assesses a rep’s efficiency
 Revenue generated by rep / number of sales calls by rep
 Order per call “batting average”
 Number of sales closed / number of calls made
 Average cost per call efficiency and profitability
 Sales expenses / number of calls
14-18
Profitability Analysis
 Close rate shows how well rep can close once she has attempted to
“seal the deal” by giving price quotes
Number of Orders
Close Rate =
Number of Quotations
 Profit per call can indicate if rep is offering too

many discounts to customers
Total Profit
Profit Per Call =
Number of Calls Made
14-19
The Four-Factor Model of Evaluation
Sales =
Days Worked X Call Rate X Batting Avg X Avg
Order Size
14-20
Qualitative Performance Measures
 Judgments made by supervisors about rep’s
performance or abilities
 Rep’s job knowledge
 Problem-solving skills
 Creativity
 Attitude and morale
 Internal and external relationships
 Initiative and judgment
 Communications with management
 Timeliness in completing reports
 Companies evaluate company, product, market
knowledge, personal appearance, and motivation
against that of an ideal rep
14-21
Tools and Methods to Perform
Qualitative Measurements
The Essay  Brief statement written by the sales mgr to describe
Technique rep’s overall performance level
Rating  Uses phrases or terms as anchors that describe

Scales characteristics or performance
Force  Each rep’s performance is ordered from “highest” to

Ranking “lowest” within a district or region
Management  Goal setting and evaluative process resulting in

by Objectives mutually agreed-upon performance measures
Behaviorally  Set of scaled statements describing performance

Anchored rep received in terms of various job behaviors
Rating Scale
14-22
Behaviorally Anchored Rating Scale
14-23
More Immediate Qualitative and
Quantitative Goals
Qualitative goals Quantitative (output) goals
 Counseling  Establishing compensation
 Training  Establishing raises
 Developing salespeople  Promoting or terminating
reps
14-24
Global Sales Management:
Evaluating Reps Working Overseas
 Additional factors
E llesm ere Islan d S evernaya Z em ly a
A rc tic O ce an A rc tic O ce an F ranz Jo sef L and
A rcN ewticS iberian
O ceIslands
an
G re e n la n d (D e n .) S valb ard (N or.)
B anks Islan d Jan M ay en (N or.) N o vaya Z em ly a W rangel Island
Victoria Island B affin Island
 Rep’s ability to adjust to living conditions

U .S .A .
C an a d a
R u ssia and culture Ic e la n d
F aroe Is. (D en.) N o rw a y
U n ited K in gdo m
D en.
Sw eden
F in la n d
E ston ia
L atv ia
60°
A leu tian Islands (U S A )
L ithu ania
 Technical ability
Ireland N eth . B elarus
G erm any P olan d
B el.
Islan d o f N ew fou ndlan d C zech . U k raine K u ril Island s
S lo vak.
A u s. H u ng. M old ov a K a z a k h s ta n
F rance S w itz. S lo v. M o n g o lia
C ro. Yu go. R om ania
B os. U zbekistan
N o rth A tlan tic O ce an B ulgaria G eorgia

Italy
Cultural empathy
M ac. K y rgy zstan
U n ite d S tates o f A m e ric a P ortu gal
S pain A lbania
G reece T u rk e y
A rm enia A zerbaijan
Tu rkm enistan Tajik istan
N . K orea
S . K o rea Ja p a n
N o rth P ac ific O c ea n C yp. L eb. S yria N o rth P ac ific O c ea n
M o ro c c o
Tu nisia
Israel Iraq Ira n
A fgh anistan
C h in a
C anary Islands (S p.)

Jo rdan
Adaptability
K u w ait P akistan N epal
A lg e ria L ib y a B hu.
T h e B ah am as Egypt
W estern S ah ara (M or.) Q atar
M e x ic o C uba B ang. Taiw an
H aw aiian Islan d s D o m inican R ep ublic Saudi A ra
U .bAia. E .
In d ia M yanm ar (B urm a)
O m an L aos
U. S. A. M a u rita n ia M a li

Jam . N ig e r
Flexibility
B elize H aiti P uerto R ico (U S ) D o m inica E ritrea
H o nduras S enegal Sudan Ye m e n T h ailand P hilip pines
G u atem ala
T h e G am b ia B urkina F aso
C had Vietnam
E l S alvado r N icaragu a B arb ados
D jibo uti C am b odia
A n dam an Islan ds (In dia)
G u inea-B issau G u inea B enin
Trinid ad and Tob ago M arshall Islands
C osta R ica C ôte D ’Ivoire N igeria S ri L anka F ederated S tates of M icron esia
Ve n e z u e la G u yana S ierra L eon e E th io p ia
P anam a S urin am e C. A. R. B runei G u am (U S A )
M aldives
 Diplomacy
F rench G u iana (F r.) L iberia C am eroo n
G h an a Togo S o m a lia M a la y sia
C o lo m b ia E q . G u inea U ganda
S in gapore
G abon R w anda K enya K iribati
G alap agos Islan ds (E cu ador) E cuador S ao To m e & P rincipe In d o n e sia
Z a ire B u ru n d i P apua N ew G uinea
S olom on Islands

C ongo Ta n z a n ia
Language skills
S eychelles
M a la w i
P e ru
B ra zil A n g o la
Z a m b ia M o z a m b iq u e
B o liv ia M a d a g a sc a r
N a m ib ia Z im b a b w e F iji
F re n c h P o ly n e sia (F r.) N ew C aled onia
B o tsw a n a
M auritius In d ia n O cean
 Cultural skills often more

P a ra g u a y
S w a z ila n d
A u stralia
S o u th A fricLae so th o
U ru g u a y
S o u th P ac ific O c ea n S o u th A tlan tic O ce an
important than technical

C h ile A rg e n tin a N ew Z ealand
Tasm ania
F alkland Island s (Islas M alvinas) (adm . by U K , claim ed by A rgentina)
capabilities
Îles C ro zet (F ran ce)
S ou th G eorg ia (adm . by U K , claim ed b y A rg entina)
Source: Based on Money, R. Bruce, and John L. Graham (1999).

“Salesperson Performance, Pay, and Job Satisfaction: Tests
A n of a Model
tarctica
Using Data Collected in the U.S. and Japan,” Journal of
International Business Studies 30(1): 149–172.
14-25
The Problem of Evaluation Bias
 Systematic tendency toward a lack of objectivity,
fairness, or impartiality on the part of the
evaluator that is based upon personal
preferences and beliefs
 Or a systematic error in the assessment
instrument and procedures or in the
interpretation and evaluation process
14-26
5 Types of Evaluation Bias
 1 or more evaluation categories influence the overall
Halo Effect assessment of the rep
Leniency or
Harshness  Occurs when rep is rated at the extremes
Tendency
Central  Manager’s tendency to rate in the center of the scale

Tendency Bias
Interpersonal  Occurs when performance ratings are influenced by

Bias how much manager likes or dislikes rep
Outcome  Allowing results of an action to influence mgr’s

Bias assessment (e.g., rep closes large important sale)
14-27
Discussion Questions
 Why is it important to understand and work to
minimize evaluation process biases?
 What happens when a sales manager falls into
the trap of leniency/harshness or central
tendency bias?
 What “noise” does evaluation bias throw into
evaluation accuracy?
 Can managers be truly bias free?
 What should the goal of all managers be in
regard to evaluation bias?
14-28
Informal Evaluations
 Highly biased
 Unable to evaluate sales force either consistently
or comparatively
 Result in sales managers assessing differing
amounts and quality of information about each rep
 Formal evaluation systems are more likely to
produce objective appraisals
 Minimize number of demoralized sales reps that
ultimately leave the firm or file suit claiming appraisals
were biased
14-29
Reducing Sales Management Errors in
Performance Evaluations
1
Be familiar with each trait on evaluation form
2
Don’t allow 1 factor to influence others
3
Base ratings on actual performance, not potential
4
Don’t’ overrate reps – evaluate them objectively
5
Rate rep on performance over entire period
6
List sound reasons for all appraisal ratings
14-30

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Sales Management: Shaping Future Sales Leaders

Assessing the Performance

Sales Costs Profitability

Sales – Costs = Profit

Most Popular Metrics Used to Construct Sales Goals

 Profit per call can indicate if rep is offering too

Rating  Uses phrases or terms as anchors that describe

Force  Each rep’s performance is ordered from “highest” to

Management  Goal setting and evaluative process resulting in

Behaviorally  Set of scaled statements describing performance

 Rep’s ability to adjust to living conditions

 Cultural skills often more

important than technical

S ou th G eorg ia (adm . by U K , claim ed b y A rg entina)

Source: Based on Money, R. Bruce, and John L. Graham (1999).

Central  Manager’s tendency to rate in the center of the scale

Interpersonal  Occurs when performance ratings are influenced by

Outcome  Allowing results of an action to influence mgr’s

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