Salesforce Evaluation

Topic Introduction:

Salesforce evaluation is the comparison of salesforce objectives with results.

Topic Overview:

1.  Model of Salesforce Evaluation

A model of the evaluation process is shown in figure below. It begins with the setting of salesforce objectives which may be financial, such as sales revenues, profits and expenses; market-orientated, such as market share; or customer-based such as customer satisfaction and service levels. Then, the sales strategy must be decided to show how the objectives are to be achieved. Next, performance standards should be set for the overall company, regions, products, salespeople and accounts. Results are then measured and compared with performance standards. Reasons for differences are assessed and action taken to improve performance.

[Figure: The salesforce evaluation process]

2.  The Purpose of Evaluation

The prime reason for evaluation is to attempt to attain company objectives. By measuring actual performance against objectives, shortfalls can be identified and appropriate action taken to improve performance. However, evaluation has other benefits. Evaluation can help improve an individual’s motivation and skills. Motivation is affected since an evaluation programme will identify what is expected and what is considered good performance. Second, it provides the opportunity for the recognition of above-average standards of work performance, which improves confidence and motivation. Skills are affected since carefully constructed evaluation allows areas of weakness to be identified and effort to be directed to the improvement of skills in those areas.

Thus, evaluation is an important ingredient in an effective training programme. Further, evaluation may show weaknesses, perhaps in not devoting enough attention to selling certain product lines, which span most or all of the sales team.

Evaluation provides information which affects key decision areas within the sales management function. Training, compensation, motivation and objective setting are dependent on the information derived from evaluation, as illustrated in figure below. It is important, then, that sales management develops a system of information collection which allows fair and accurate evaluation to occur.

[Figure: The central role of evaluation in sales management]

3.  Setting Standards of Performance

Evaluation implies the setting of standards of performance along certain lines which are believed to be important for sales success. The control process is based upon the collection of information on performance so that actual results can be compared against those standards. For the sales team as a whole the sales budget will be the standard against which actual performance will be evaluated. This measure will be used to evaluate sales management as well as individual salespeople. For each salesperson, his or her sales quota will be a prime standard of sales success.

Standards provide a method of fairly assessing and comparing individual salespeople. Simply comparing levels of sales achieved by individual salespeople is unlikely to be fair since territories often have differing levels of sales potential and varying degrees of workload.

4.  Gathering Information

The individual salesperson will provide much of the information upon which evaluation will take place. S/he will provide head office with data relating to sales achieved by product/brand and customer, a daily or weekly report of the names of customers called on and problems and opportunities revealed, together with expense claims.

Such information will be supplemented by sales management during field visits. These are important in providing more qualitative information on how the salesperson performs in front of customers as well as giving indications of general attitudes, work habits and degree of organizational ability, all of which supplement the more quantitative information provided by the salesperson.

Market research projects can also provide information on the sales team from customers themselves. A specific project, or a more general one which focuses on the full range of customer–seller relationships, e.g. delivery, product reliability, etc., can provide information on salespeople’s performance.

5.  Measures of Performance

5.1    Quantitative Measures of Performance

Assessment using qualitative performance measures falls into two groups. For both groups, management may wish to set targets for their sales team. One group is a set of input measures which are essentially diagnostic in nature – they help to provide indications of why performance is below standard. Key output measures relate to sales and profit performance. Most companies use a combination of input (behavioural) and output measures to evaluate their salesforces. Specific output measures for individual salespeople include the following:

·         Sales revenue achieved

·         Profits generated

·         Percentage gross profit margin achieved

·         Sales per potential account

·         Sales per active account

·         Sales revenue as a percentage of sales potential

·         Number of orders

·         Sales to new customers

·         Number of new customers

All of these measures relate to output.

The second group of measures relates to input and includes:

·         Number of calls made

·         Calls per potential account

·         Calls per active account

·         Number of quotations (in part, an output measure also)

·         Number of calls on prospects

5.2    Qualitative Measures of Performance

Assessment along qualitative lines will necessarily be more subjective and take place in the main during field visits. The usual dimensions which are applied are given in the following list:

·         Sales skills - These may be rated using a number of sub-factors:

®     Handling the opening and developing rapport.

®     Identification of customer needs, questioning ability.

®     Quality of sales presentation.

®     Use of visual aids.

®     Ability to overcome objections.

®     Ability to close the sale.

·         Customer relationships:

®     How well received is the salesperson?

®     Are customers well satisfied with the service, advice, reliability of the salesperson, or are there frequent grumbles and complaints?

·         Self-organisation: How well does the salesperson carry out the following?

®     Prepare calls.

®     Organize routing to minimize unproductive travelling.

®     Keep customer records up to date.

®     Provide market information to headquarters.

®     Conduct self-analysis of performance in order to improve weaknesses.

·         Product knowledge: How well informed is the salesperson regarding the following?

®     His or her own products and their customer benefits and applications.

®     Competitive products and their benefits and applications.

®     Relative strengths and weaknesses between his or her own and competitive offerings.

·         Co-operation and attitudes: To what extent will the salesperson do the following?

®     Respond to the objectives determined by management in order to improve performance, e.g. increase prospecting rate.

®     Co-operate with suggestions made during field training for improved sales technique.

®     Use his or her own initiative.

·         What are his or her attitudes towards the following?

®     The company and its products.

®     Hard work.

An increasing number of companies are measuring their salespeople on the basis of the achievement of customer satisfaction. As Richard Harrison, a senior sales manager at IBM, states: ‘Our sales team is compensated based on how quickly and how efficiently they achieve customer satisfaction’.

Sales management response to the results of carrying out salesforce evaluation is shown in figure below. Lynch suggests four scenarios with varying implications:

·         Good quantitative/good qualitative evaluation: The appropriate response would be praise and monetary reward. For suitable candidates promotion would follow.

·         Good quantitative/poor qualitative evaluation: The good quantitative results suggest that performance in front of customers is good, but certain aspects of qualitative evaluation, e.g. attitudes, report writing and market feedback, may warrant advice and education regarding company standards and requirements.

·         Poor quantitative/good qualitative evaluation: Good qualitative input is failing to be reflected in quantitative success. The specific causes need to be identified and training and guidance provided. Lack of persistence, poor closing technique or too many/too few calls might be possible causes of poor sales results.

·         Poor quantitative/poor qualitative evaluation: Critical discussion is required to agree problem areas. Training is required to improve standards. In other situations, punishment may be required or even dismissal.

[Figure: Salesperson evaluation matrix]

For an evaluation and control system to work efficiently, it is important for the sales team to understand its purpose. For them to view it simply as a means for management to catch them out and criticize performance is likely to breed resentment. It should be used, and be perceived, as a means of assisting salespeople in improving performance. Indeed, the quantitative output measures can be used as a basis for rewarding performance when targets are met. In essence, controls should be viewed in a positive manner, not a negative one.

5.3    Winning or Losing Major Orders

A key qualitative evaluation question that sales managers have to ask is: ‘Does it appear that we are going to win or lose this order?’ This is particularly important for major sales. For example, a sales manager may be asked by the managing director: ‘Will you find out whether the Saudis are really going to place that new big aero engine order? I have to tell the board next week so that we can decide whether we will have to expand our plant.’

The obvious response would be to ask the salesperson in charge of the sale directly. The problem is that many salespeople delude themselves into believing they are going to be successful. How do you come to terms with the fact that you are going to lose an order worth £5 million? Asking the direct question ‘Bill, are we going to win this one?’ is likely to get the answer ‘Yes, the customer loves us!’ What the salesperson really means is that the customer likes the salesperson, not necessarily the product.

Consequently the sales manager needs to probe much more deeply in order to assess the situation more accurately. This involves asking a series of who, when, where, why and how questions. It also means that the sales manager needs to work out what would be considered acceptable (winning) answers, and what would be thought of as unacceptable (losing) responses. Table below gives an example of the use of this procedure in connection with a £10 million computer sale. The losing answers are thin and unconvincing (e.g. the director of MIS would not have the power to authorize an order of this size).

[Table: Winning and losing orders]

The salesperson is deluding him- or herself and misleading the sales manager. The winning answer is much more assured and provides clear, credible answers to all of the questions (e.g. an executive director is likely to have the power to authorize a purchase of this magnitude).

If the outcome is a losing answer, the sales manager has to decide how important the sale is and how important the salesperson is. If they both have high potential, the sales manager, sales trainer or top salesperson should work with him or her. S/he should be counseled so that they understand why they are being helped and what the sales manager hopes they will learn. In the process, they will also realize that management cares about their development and the success it can bring to both parties.

If the salesperson is viewed as having high potential but the situation has low potential, only a counseling session is needed. Usually it is best done at the end of the day, driving back from a call, using an ‘oh, by the way’ introduction, and avoiding serious eye contact. By these means the salesperson’s ego is not offended. When the salesperson does not have high potential but the sale does, the alternatives are a little nastier. Perhaps the salesperson would be a candidate for redeployment to a more suitable post. When neither the salesperson nor the sale has much potential, the basic question is whether the salesperson is redeployed before or after the sale is lost.

6.  Appraisal Interviewing

Appraisal interviewing can provide the opportunity to identify a salesperson’s weaknesses and to give praise when it is deserved. One method is to ask the salesperson to write down 5–10 expectations that they hope to achieve during the next year, e.g. to go on a presentation skills course, to go on a time management course, to have monthly sales visits from their sales manager, to meet targets, to move into marketing, etc. The sales manager then sits down with the salesperson and goes through this list, breaking it down into quarterly (three-month) sections. At the end of each quarter they have another meeting to see if expectations have been met or shifted in any way. These meetings also provide an opportunity to give or withdraw recognition and acceptance.