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Sales Force Performance Measurement

Seminar Paper 2007 10 Pages

Business economics - Controlling

Excerpt

Table of contents

1 Introduction

2 Process of measuring sales force performance
2.1 Establish some basic policies
2.2 Select bases for evaluation
2.2.1 Output measures
2.2.2 Input measures
2.3 Set performance standards
2.4 Compare performance with standards
2.4.1 Evaluating performance by means of quantitative factors
2.4.2 Evaluating performance by means of qualitative factors
2.5 Discuss the evaluation with the salesperson

3 Importance of performance measurement within sales management

4 Conclusion

Bibliography

1 Introduction

A very important part of managerial tasks is to measure the performance of their employees. The evaluation is necessary to attain the objectives of the company as possible deficits can be identified and steps can be taken against them (Jobber and Lancaster, 2003: 489). The performance measurement means to discover the strengths and weaknesses of the employees with the aim to improve their performance. The evaluation should also recognize and reward the success of the person evaluated and give him/her a clear feedback about the performance in order to support his/her development (Spiro, Stanton and Rich, 2003: 445). This study will focus on the performance measurement of the sales force, as the success of the sales department is decisive of the company’s overall performance. In order to get motivated and qualified salespeople sales managers must not just analyze statistics but also need to give directions and the possibility of self-development (Spiro, Stanton and Rich, 2003: 441-442). Following, a process of measuring sales force performance will be pointed out which leads the sales manager through the evaluation. Afterwards, the importance of performance measurement within sales management will be shown and a conclusion will be drawn.

2 Process of measuring sales force performance

The process that will be explained in the following paragraphs describes a five-step program for measuring performance.

illustration not visible in this excerpt

Source: Spiro, Stanton and Rich, 2003: 444.

2.1 Establish some basic policies

First of all, some basic rules about the general conditions should be set. Among other things, it has to be defined who is involved in the evaluation process. Usually the immediate superior of the salesperson and his boss participate in the evaluation. Another alternative that is used by over 25 percent of companies is the so-called 360-degree feedback. With this technique all direct contact people (peers, subordinates, superiors and clients) of the salesperson are evaluating his/her performance. It also has to be defined to which degree the salespeople participate actively in their evaluation. One possible method is management of objectives, which means that managers set the objectives for the upcoming period together with the salespeople. The advantage of this method is that salespeople feel more responsible and committed. Last, it has to be decided on the frequency of evaluation. Measurements can take place either annually, quarterly, monthly, or weekly (Spiro, Stanton and Rich, 2003: 444-445).

2.2 Select bases for evaluation

The second step involves the selection of bases for the evaluation. It is important to define as many different criteria as possible in order to get an overall impression of the salesperson’s performance (Spiro, Stanton and Rich, 2003: 445). For instance a sales manager can be mislead by only evaluating the achieved sales volume of his/her sales force. A high sales volume does not indicate the generated profit, as expenses have to be considered as well (http://www.cbsc.org/servlet/ContentServer?cid=1081945276291
&pagename=CBSC_ON%2Fdisplay&lang=en&c=GuideFactSheet, Accessed 26 Octo-ber 2006). The bases should be selected together with the sales force and also clearly communicated to them. There are two general categories of bases, which are output measures and input measures. The ratio of output to input measures shows the efficiency of the company’s selling effort, for instance order/calls (Spiro, Stanton and Rich, 2003: 450).

2.2.1 Output measures

The output measures are quantitative bases. They are easy to measure as they only consider the salesperson’s results (Spiro, Stanton and Rich, 2003: 446).

According to Jobber and Lancaster (2003: 492), there are among others following output measures:

- Sales revenue achieved
- Profits generated
- 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

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Details

Pages
10
Year
2007
ISBN (eBook)
9783640270583
File size
355 KB
Language
English
Catalog Number
v122193
Institution / College
Heilbronn University of Applied Sciences
Grade
2,0
Tags
Sales Force Performance Measurement

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