Chapter Summary

A fair and accurate evaluation of the company’s sales force is a critical and difficult task. The manager’s appraisal of the salespeople is important not only because pay and promotions should be based on such rating, but also because good supervision and training should be based on an objective evaluation of the sales rep’s performance. However, the task is difficult. Subjective methods leave much to be desired, as managerial biases may distort the ratings.

The factors affecting a person’s performance are many and varied. Moreover, many of those factors are beyond the person’s control. It is critical that a person be evaluated only on factors over which he or she has control.

First, management should set some basic policies on the evaluation of the sales personnel. It should establish who will do the rating, when and how often it will be done, how the results will be used, and on what bases people will be rated. Both output and input factors should be measured in the process. Output factors include measures such as sales, orders taken, gross margins realized, new accounts, and lost accounts. They are all quantitative. The input factors are both quantitative and qualitative.

Calls per day and days worked are examples of quantitative measures. Sales presentation quality, product knowledge, and customer relations are examples of qualitative factors.

By comparing the quantitative input and output measures, various efficiency ratings can be developed. The basic performance equation is

Sales 5 Days worked 3 Call rate 3 Batting average 3 Average order

By factoring each element in the equation, the sales manager can obtain a good picture of what each rep is doing and why he or she is successful or unsuccessful. Company records are the basic source of information needed for such evaluations.

The qualitative factors are more difficult to measure. The evaluator’s subjective biases may influence his or her ratings of these factors. The use of a well-designed merit rating form can help in the measurement of these factors.

Next, some standards must be developed. Relative standards such as what other groups are doing are widely used. However, there is a place for some absolute standards such as total selling costs and days worked.

Finally, performance must be compared with the standards and the evaluation must be discussed with the salesperson.