Evaluation 19th lec

Subject: Sales and Distribution Management BATCH: SPRING SUMMER/2010-2013 Book Recommended : P. Venugopal By Sunny Mehta (Inspirational Trainer) :

Subject: Sales and Distribution Management BATCH : SPRING SUMMER/2010-2013 Book Recommended : P. Venugopal By Sunny Mehta (Inspirational Trainer) Topic : Evaluation

Rice & Grain Example ….:

Rice & Grain Example ….

SALES FORCE LEADERSHIP:

SALES FORCE LEADERSHIP Evaluating Performance

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Purposes of Salesperson Performance Evaluations I To ensure that compensation and other reward disbursements are consistent with actual salesperson performance To identify salespeople that might be promoted To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination

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Purposes of Salesperson Performance Evaluations II To determine the specific training and counseling needs of individual salespeople and the overall sales force To provide information for effective human resource planning To identify criteria that can be used to recruit and select salespeople in the future

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Purposes of Salesperson Performance Evaluations III To advise salespeople of work expectations To motivate salespeople To help salespeople set career goals To improve salesperson performance

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Salesperson Performance Evaluation Approaches I Most evaluate on an annual basis Most combine input and output criteria which are evaluated using quantitative and qualitative measures When used, performance standards or quotas are set in collaboration with salespeople Many assign weights to different objectives and incorporate territory data. General conclusions:

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Salesperson Performance Evaluation Approaches II Most use multiple sources of information Most are conducted by the field sales manager who supervises the salesperson Most provide a written copy of the review and personal discussion General conclusions:

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Salesperson 360-Degree Feedback System Salesperson is evaluated by multiple raters Helps salespeople better understand their ability to add value to their organization and their customers Internal Customers Evaluation External Customers Evaluation Oneself Evaluation Sales Manager Evaluation Team Members Evaluation

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A Sales Force Evaluation Model Take Corrective Action Measure results against standard Set product performance standards for: Organization Salespeople Regions Accounts Districts Design sales plan Set goals and objectives for sales force, including: Revenues Contribution profits Market share Expense ratios

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Output Measures Used in Sales Force Evaluation Sales Profit Sales volume dollars Net profit Sales volume previous year’s growth Gross margin percentage Sales to quota Return on investment Sales growth Net profit as a percentage of sales Sales volume by product Gross margin dollars Sales volume by customer Margin by product category New account sales Accounts Sales volume in units Number of new accounts Sales volume to potential (market share) Number of accounts lost Orders Number of accounts sold Number of orders Number of accounts buying full line Average order size Batting average (orders/calls) Output Measures Used in Sales Force Evaluation

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Output Measures Used in Sales Force Evaluation Performance Measure Percent Using Performance Measure Percent Using Sales Sales volume dollars Sales volume previous year’s sales Sales to quota Sales growth Sales volume by product Sales volume by customer New account sales Sales volume in units Sales volume to potential Accounts Number of new accounts Number of accounts lost Number of accounts buying full line 79% 76 65 55 48 44 42 35 27 69 33 27 Profit Net profit Gross margin percentage Return on investment Net profit as a percentage of sales Margin by product category Gross margin dollars Orders Number of orders Average size of order 69% 34 33 32 28 25 47 22

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Input or Behavior Measures Used in Sales Force Evaluation Expenses Effort Total expenses Number of calls Selling expenses to budget Number of calls per day Selling expenses as a percentage of sales Number of calls to quota Nonselling Activities Number of days worked Advertising displays set up Number of reports turned in Number of service calls Number of prospecting phone calls Number of customer complaints Selling time vs. non-selling time Input or Behavior Bases Used in Sales Force Evaluation

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Input or Behavior Bases Used in Sales Force Evaluation

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Qualitative Bases Used in Sales Force Evaluation Qualitative Bases Used in Sales Force Evaluation Attitudinal and Personality Factors Time management Attitude Ability to plan Enthusiasm Appearance and manner Cooperation Knowledge Creativity and resourcefulness Product knowledge Initiative and aggressiveness Pricing knowledge Motivation Knowledge of competition Selling Skills Ethical and moral behavior Communication Skills Team player

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Qualitative Bases Used in Sales Force Evaluation

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A Model of Salesperson Evaluation Input-based System Results Sales revenues Sales growth Sales/quota Sales/potential New accounts Contribution margins Contribution percentage Output-based System Salesperson Evaluation Behavior Calls Reports Complaints Demonstrations Dealer meetings Display set up Travel/entertainment expenses

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Ranking Salespeople on 10 Input/Output Factors Performance factors Pete Jones Ann Smith Sales (annual) $1,400,000 $1,100,000 Days worked 210 225 Calls 1,200 1,500 Orders 480 750 Expenses $19,000 $14,900 Calls per day 5.7 6.7 Batting average (orders per calls) 40% 50% Sales per order $2,916 $1,466 Expenses per call $15.83 $9.93 Expenses per order $39.58 $19.86 Expenses as % of sales 1.35% 1.35%

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Ranking Salespeople on 10 Input/Output Factors 3.87 3.66 3.44 3.23 3.02 2.80 2.59 2.38 2.16 1.95 1.74 1.53 1.31 1.10 Millions $ Contribution Margin (%) 34.8 35.1 36.0 36.6 37.2 37.8 38.7 SALES YR 2 Avg Sales $3.17 Avg contribution $1.13 Avg contribution % 35.8 Age 45 Calls 1122 Number of salespeople 18 COMPROMISERS Avg Sales 2.91 Avg contribution 1.09 Avg contribution % 37.4 Age 37 Calls 888 Number of salespeople 11 STARS Avg Sales 1.78 Avg contribution 0.64 Avg contribution % 35.8 Age 44 Calls 958 Number of salespeople 11 LAGGARDS Avg Sales 2.03 Avg contribution 0.75 Avg contribution % 37.1 Age 35 Calls 921 Number of salespeople 16 SLOWPOKES

Conditions when Outcome versus Behavioral Systems are preferred:

Conditions when Outcome versus Behavioral Systems are preferred Outcome Systems(OS) Customers need information Customers trust the salesperson There are ways to close the deal Sales environment is competitive Behavioral System(BS) Salespeople lack experience No need to protect the brand image Nonselling behaviors are a priority Difficult to assign sales credit

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Expense to Sales = Expenses Sales Growth Ratio = # New Accounts Total # Accounts Account Success = Accounts Sold Total # Accounts Account Related Ratios

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Widely used, simple to use, easy to understand Add ranks for overall performance measure Alternatives to sales/salesperson Sales to potential -- good coverage of (limited) market Sales to quota -- ability to increase revenue Sales per order -- profitability relative to size of customer Batting average -- efficiency of calls Gross margin percentage -- ability to control price selling best mix of products Variation -- weight importance of each criterion Models Combining Input & Output Controls: Ranking Procedures

Feel free to mail me at: sunny.idiscoveri@gmail.com Join the Group On Fb : Creating Miracles in Sales-Connection wid Philosophies of Lyf(A Brain Game):

Feel free to mail me at: sunny.idiscoveri@gmail.com Join the Group On Fb : Creating Miracles in Sales-Connection wid Philosophies of Lyf (A Brain Game)