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Lecture Notes

Welcome to Lesson 8. As you have learned, sales managers are responsible for planning, implementing, and controlling a firm’s sales activities. To control the sales effort so that the firm’s goals are accomplished, sales managers must continually monitor and evaluate the performance levels of both the individuals who comprise the salesforce and the salesforce as a whole. A sales analysis must be conducted on a regular basis, looking at the sales by region, territory, salesperson, or product and breaking them down into total volume, profit, and percent achieved toward goal. A

cost analysis

is another tool, which looks at how much it costs to sell the total volume for each salesperson or product. They’re both important, and together as a

profitability analysis,

they give a good idea of the true value of a salesperson to the firm.

I’m sure you’re aware of times when a salesperson worked hard and yet was criticized by a manager who didn’t understand how hard he or she worked even though things didn’t go well. The question is: Should evaluations focus on how hard someone works or on what he or she is able to accomplish? For the hard-working yet nonproductive salesperson, should the boss try to figure out why he or she worked hard but was unable to accomplish the goal? The sales manager’s challenge is to evaluate the salesforce based on how hard the salesperson works (inputs), what he or she accomplishes (results) and, even more important, how much profitability he or she generates.

If salespeople don’t hit their goals, it’s probably due to a combination of factors. A manager has to consider that the salesperson may need more training to develop skills, that the sales forecast might be bad, that the pricing isn’t competitive, that a competitor has entered the market, that the products are having quality or delivery problems, and other factors. For example, managers can tell by looking at input measures what the salesperson’s strategy is, based on where the salesperson is doing more activity. A manager can tell whether salespeople are focusing on making deeper relationships with a few customers or on talking to as many as possible.

The use of

behavior-based criteria

will facilitate the development of a professional, customer oriented, committed, and motivated salesforce. By emphasizing to salespeople that behavior associated with ancillary activities, such as setting up advertising displays or handling customer complaints, will be included in the performance evaluation, the sales organization is signaling that these activities are important to them. Salespeople have the most control over what they do, so evaluations of their performance should include some assessment of these types of behavior.

Different types of quotas used in performance evaluation are also referred to as

objectives or goals

; one example of their use is the popular

management by objective (MBO)

method. The use of quotas is a very good way of setting performance standards for individual salespeople. Quotas can be set for behavioral, professional development, results, and profitability criteria. Benchmark quotas can be established for each salesperson and can provide a way to control for differences in the territorial situations for each salesperson. Each type of quota represents a specific objective for a salesperson to achieve during a given time period.

By using quotas for many different types of behavior, the sales manager can measure individual effort characterized by total achievement and level of improvement in many categories. The manager may also develop a performance index for each criterion being evaluated. The individual performance indices can then be weighted to reflect their relative importance and combined to produce an overall performance index for each salesperson. This overall performance index for each salesperson is then comparable to that of other salespeople. The use of quotas provides an extremely useful method for evaluating salesperson performance and highlighting specific areas where performance is especially good or especially poor.

So why is it important to evaluate salespeople? Evaluation of salespeople tells management whether all of their planning efforts (in hiring, training, making forecasts, and setting goals) were valuable. Without evaluation, there’s no way to know if the planning was beneficial or a waste of time.

Culture and Sales Performance

Culture—both internal and external to the firm?impacts the way salesforces operate and how people’s cultural beliefs and practices influence their alliances, customer relationships, and management practices. External to the firm are low-performance and high-performance cultures.

Low-performance cultures

are characterized by insular thinking, resistance to change, politicized internal environment, and unhealthy promotion practices.

High-performance cultures

are characterized by people orientation, results orientation, stressing achievement and excellence, and reinforcing cultural beliefs. Different cultures also see actions in different lights and as different parts of a system. In Japan for example, a seller gives a buyer a gift to establish a relationship and this is thought of as polite and well-mannered. For Americans, giving a gift to establish a relationship is a bribe and is unethical.

Corporate culture

is internal to the firm and refers to the beliefs, attitudes, values, assumptions, and ways of doing things that the company’s members share and communicate to new members. If strategy and culture aren’t in alignment, one or the other must change. For example, sales and marketing departments may be misaligned by economics and culture. They compete over budgetary money, they have different job cultures, their performances are judged differently from each other, and each group may feel that its contributions are more significant than the contributions of the other group. A manager can help to change a culture that doesn’t support a good strategy by making substantive change and promoting change in the salesforce.

“The sales culture that develops in your organization cannot be controlled, but you can influence it dramatically. Your culture will be known for a theme, for its character, for its composure, for its courage and yes … for its care for people. You must deliver results, but how you go about delivering those results will define your culture.” (Deming, 2016)

From Salesperson to Sales Manager

Making the transition from the responsibilities of a salesperson to the responsibilities of a sales manager is one of the most difficult challenges in the sales arena. The myth is that a manager gets to control followers and exert his or her own vision of how things should go. The reality is that managing requires compromise, keeping employees happy, and mediating between conflicting needs. Salespeople feel that sales managers should be flexible, good at communicating, dedicated to the good of the team, trustworthy, and a good motivator and leader. More so than in the past, the ability to work with a sales team in different physical locations is also becoming a critical skill.

A salesforce that’s evaluated according to an outcome-based perspective would be likely to focus on the short-term outcomes that are being evaluated. There would be more time spent on sales-generating activities and much less emphasis on customer service aspects of the job. This salesforce will tend to perform well on traditional output measures of individual performance, such as meeting sales quotas. This salesforce is unlikely to feel any strong commitment to the sales organization, and many salespeople may dislike accepting both the authority of the sales manager and the evaluation procedure. This salesforce is more likely to be motivated by extrinsic rewards and may lack adequate product knowledge, company knowledge, and integrated sales expertise. Risk-averse salespeople won’t last long in this type of salesforce as sales managers won’t be likely to nurture these individuals and build their confidence. Additionally, sales managers won’t spend much time actively monitoring and providing managerial direction to their salespeople.

In recent years, marketing research and practice have (also) recognized the importance of managing frontline employees’ identification. However, investigations so far have focused on identification at the collective level of the self, such as organizational identification, thereby largely neglecting important interpersonal identification processes at the relational level. Using a large-scale dataset comprising information from sales managers and salespeople as well as company data on customer satisfaction and sales performance, Ahearne, M., Haumann, Kraus, & Wieseke (2013) make a first attempt to address this neglect by exploring important phenomena of interpersonal identification in the sales manager-salesperson dyad. Results show that initial increases in the level of identification congruence between sales managers and their respective salespeople yield positive incremental effects on sales performance and customer satisfaction. (p. 625)

These changes in the salesforce have resulted in a shift in thought about roles of managers and leaders in recent years. Businesses have migrated from a

transactional

style of leadership, in which leaders exchange things to followers for good performance, to a

transformational

style of leadership, in which leaders focus on their followers as people and try to help them reach their potential. Today’s leaders must have

emotional intelligence,

the capacity for recognizing our own feelings and those of others, to get along well with and inspire people. A sales manager also needs to be a good coach and mentor. To

coach

means discussing performance, offering feedback and advice, helping with practice, and setting goals. Salespeople who are coached have someone dedicated to helping them improve their performance. Mentoring is a long-term relationship in which a senior person helps the personal and professional development of a junior person. Coaching is active and task-specific, while mentoring is general and may include nonspecific support. Both are critical success factors.

References

Ahearne, M., Haumann, T. Kraus, F. and Wieseke, J. (Nov 2013). It’s a Matter of Congruence: How Interpersonal Identification Between Sales Managers and Salespersons Shapes Sales Success.

Academy of Marketing Science. Journal,

41.6, 625-648.

Deming, G. (2016). Sales Cultures, Is Yours Heart Healthy?

Peak Sales Performance.

http://peaksalesperformance.wordpress.com/2009/05/…

Ingram, T., LaForge, R., Avila, R., Schwepker, Jr., C., and Williams, M. (2020).

Sales Management: Analysis and Decision Making

(10th ed.). Routledge

ASSIGNMENT 08
BM410 Sales Management and Practices
Directions: Be sure to save an electronic copy of your answer before submitting it to
Ashworth College for grading. Unless otherwise stated, answer in complete sentences,
and be sure to use correct English, spelling and grammar. Sources must be cited in APA
format. Your response should be four (4) double-spaced pages; refer to the “Assignment
Format” page located on the Course Home page for specific format requirements.
Part A: Fully describe three (3) measures for assessing the effectiveness of a salesforce
as a whole. Explain why they’re important, what they determine, and how sales managers
apply these criteria to sales force performance evaluations.
Part B: Discuss ten (10) different purposes of an evaluation of salesperson performance
and how each purpose affects the performance evaluation process.
Chapter 10
Evaluating the
Performance of Salespeople
Learning Objectives
1.
Discuss the different purposes of salesperson performance
evaluations.
2.
Differentiate between an outcome-based and a behaviorbased perspective for evaluating and controlling
salesperson performance.
3.
Describe the different types of criteria necessary for
comprehensive evaluations of salesperson performance.
Learning Objectives
4.
Compare the advantages and disadvantages of different
methods of salesperson performance evaluations.
5.
Explain how salesperson performance information can be
used to identify problems, determine their causes, and
suggests sales management actions to solve them.
6.
Discuss the measurement Importance of salesperson job
satisfaction.
Purposes of Salesperson
Performance Evaluations
1.
To ensure that compensation and other reward
disbursements are consistent with actual salesperson
performance.
2.
To identify salespeople that might be promoted.
3.
To identify salespeople whose employment should be
terminated and to supply
evidence to support the need for
termination.
Source: https://www.amsterdamprinting.com
Purposes of Salesperson
Performance Evaluations
4. To determine the specific training and counseling needs
of individual salespeople and the overall salesforce.
5. To provide information for effective human resource
planning.
6. To identify criteria that can be used to recruit and select
salespeople in the future.
7. To advise salespeople of work
expectations.
Source: https://www.amsterdamprinting.com
Purposes of Salesperson
Performance Evaluations
8. To motivate salespeople.
9. To help salespeople set career goals.
10. To relate salesperson performance to sales
organization goals.
11. To enhance communications between salesperson and
sales manager.
12. To improve salesperson
performance.
Source: https://www.amsterdamprinting.com
Salesperson Performance
Evaluation Approaches
1. Most evaluate on an annual basis.
2. Most combine input and output criteria which are
evaluated using quantitative and qualitative measures.
3. When used, performance standards or quotas are set in
collaboration with salespeople.
4. Many assign weights to
different objectives and
incorporate territory data.
Salesperson Performance
Evaluation Approaches
5.
Most use multiple sources of information.
6.
Most are conducted by the field sales manager who
supervises the salesperson.
7.
Most provide a written
copy of the review and
personal discussion.
Source: https://work.chron.com
360-Degree Feedback
Click on image to view the video.
360-Degree Feedback System
• Helps salespeople
better understand
their ability to add
value to their
organization and their
customers.
Sales Manager
Evaluation
• Salesperson is
evaluated by multiple
raters.
Salesperson
Key Issues in Evaluating and
Controlling Salesperson Performance
Perspectives on Salesperson
Performance Evaluation
Dimensions of Salesperson
Performance Evaluation
Behavioral
Results
Salesperson
Performance
Professional
Development
Profitability
Criteria for Performance Evaluation
Criteria for Performance Evaluation
Criteria for Performance Evaluation
.
.
.
Created by Iconicbestiary – Freepik.com
Elements Important in
Assigning Sales Quotas
• Concentration of businesses within the territory.
• Commitment by the sales manager to assist the sales
representative.
• Growth of businesses within the
territory.
• Geographic size of the territory.
• Complexity of products sold.
Source: https://salesmanagement.org
Elements Important in
Assigning Sales Quotas
• Sales representative’s past sales performance.
• Extent of product line.
• Financial support (e.g., compensation) a firm provides.
• Relationship of product line.
• Amount of clerical support.
Source: https://accent-technologies.com
Is This How to Set Quota?
•

Use Ctrl and click on the web
address to view the video.
Created by Ijeab – Freepik.com
Criteria for Performance Evaluation
Performance Evaluation Methods
Source: http://jeffnielsen.com
Performance Evaluation Methods
Graphic Rating Scale
Example of a Graphic Rating Scale
Performance Evaluation Methods
.
.
.
.
Created by Brgfx – Freepik.com
Ranking Method
Example of the Ranking Method
Performance Evaluation Methods
Quota Evaluation Example
Performance Evaluation Methods
• Links behaviors to specific results.
• Salespeople are use to develop performance results
and critical behaviors.
• Positive feedback about behaviors may have more
impact on behavior that positive output feedback.
BARS Evaluation Example
Comparison of Performance
Evaluation Methods
Effective Performance Evaluation?
• https://www.youtube.com/watch?v=_p8cxmZLgsA
Use Ctrl and click on the web
address to view the video.
Source: Andrew Genn via Getty Images
Performance Evaluation Bias
• Occurs when a manager’s evaluation of a salesperson is
affected by considerations other
than the specified criteria.
• Common sources of bias:
• Personal relationships
• Perceived difficulty of territory
• Outcomes (i.e., ends justify
the means)
Evaluating Team Performance
• Consider the criteria on which members will be evaluated
and the methods used to evaluate performance.
• Establish a link between team
performance and positive outcomes
to promote individual and team effort.
• It may be beneficial to allow the
team to help develop goals and
evaluation criteria.
Created by Pressfoto – Freepik.com
Measuring Team Performance
Steps for Measuring Team Performance
Framework for Using
Performance Information
Compare Salesperson Evaluations to
Identify Problem Areas
Salesperson Job Satisfaction
• Job satisfaction is related to turnover, absenteeism,
motivation, and organizational commitment.
• Job satisfaction may be related to performance (direction
of relationship is uncertain).
• INDSALES may be used to
measure job satisfaction.
• Results may identify areas
where manager may
intervene to improve job
satisfaction.
Created by Pressfoto – Freepik.com

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