Evaluation and Control of Sales Performance

Principal, PhD Guide um Guru Nanak School and Junior College
27. Dec 2020

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Evaluation and Control of Sales Performance

  1. UNIT 4 A. Evaluation and Control of Sales Performance Sales Performance Methods of Supervision and Control of Sales force Sales Performance Evaluation Criteria Sales Performance Review Sales Management Audit B.Measuring Distribution Channel Performance Evaluating Channels Control of Channel C.Ethics in Sales Management D. New Trends in Sales and Distribution Management
  2. Evaluation and Control of Sales Performance The evaluation and control of the sales management system is a step-by-step or sequential process: 1. Setting performance targets, standards and tolerance limits for the sales strategy, implementation and achievements. 2. Measuring the actual performance position in relation to the targets at a particular point of time. 3. Identifying/ diagnosing deviations from the prescribed targets. 4. Analyzing/ measuring deviations from targets and given tolerance limits. 5. Incorporating modifications, if and as necessary, to revise targets/ objectives, plan, strategy and the implementation process
  3. Methods of Supervision and Control Supervision refers to the time spent working with employees to be certain that they are aware of the responsibilities of their job and how to perform them correctly. Supervision is a part of leadership, and it includes directing and controlling of the day-to-day activities of salespeople. There are variations on how closely sales managers should supervise salespeople. Usually salespeople who are on commission basis receive less supervision, in comparison with salespeople who are compensated by salaries.
  4. Methods of Supervision and Control Direct Telecommunication Sales Meeting Personal Contact Coaching Indirect Sales Report Compensation Plan Sales Analysis Expense Accounts
  5. Direct Supervisory Methods 1. Telecommunication - Many sales managers use telephone, e-mail, voice mail, fax messages, and computer-based support systems. 2. Sales Meetings – Formal/ Informal sales meetings may be held by the sales managers to supply information on any change in policies and procedures, to arrange for training programmes, and to inspire or motivate salespeople to achieve sales quotas. 3. Personal Contacts - Sales manager may visit customers with each salesperson for various reasons such as, calling on a specific customer to handle a particular problem, training a salesperson, team selling effort, and getting market information. 4. Coaching - Intensively training a salesperson on-the- job through instruction, demonstration, and practice.
  6. Indirect Supervisory Methods 1. Sales Reports - Includes information about the calls made, orders obtained, new customers, competitive activities, customer problems and needs etc. 2. Compensation Plan - Encourages salespeople to carry out those activities that will maximize their income. 3. Sales Analysis - By using the sales analysis report, the sales manager can evaluate the performance of each salesperson by comparing what was sold and how much was sold with the sales quotas. 4. Expense Accounts / Reports - Indicate how much money was spent by salespeople on travelling, lodging, meals, entertainment, as compared to the company policies on various expenses. It helps to keep control on selling expenses.
  7. Control of Salesforce Control keeps sales people alert, active, creative, and regular in their efforts. Suitable controlling system is essential to both, company and salesmen. After analysis of the nature of sales people, type of work, degree of cooperation, and other relevant variables, an appropriate controlling system should be designed. It should be noted that control is not for fault-finding or punishing others, but is meant for help them move in the right direction. Sales force control includes verifying sales force performance and taking corrective actions, if needed.
  8. Salesforce Controlling Methods • Establishing sales territories. • Allocating of sales quota. • Maintaining continuous contact with salesmen. • Determining authorities and rights of salesmen. • Routing and scheduling sales personnel. • Salesmen’s reporting. • Complaint and objection notes. • Analyzing sales expenses. • Observation and visits
  9. Purpose of Supervision and Control Training Improving Efficiency Attainment of Objectives Coordination Compensation Guidance Evaluation Motivation Purpose of Supervision and Control
  10. Sales force Evaluation
  11. Case Study Dynasty Ltd is a radio paging service that has operated since the mid-1970s when radio pagers took Hong Kong by storm. Hong Kong still has the world’s highest concentration of population carrying radio pagers, currently estimated at around 2 million. When the Hong Kong government decided to introduce a new telecommunications technology called CT2 (cordless telephone generation two), Dynasty jumped on the bandwagon of contenders in pursuit of a licence. After some negotiation it was awarded one of the four licences to operate a CT2 network in Hong Kong. The company is about to launch this service. Dynasty’s sales manager was charged with the task of setting up a salesforce for the market.
  12. Case Study While CT2 is a sophisticated technology, the sales manager felt that a deep understanding of the technology was not a prerequisite for her salespeople. Instead, how to deal with customers, who tend to be very time conscious and results orientated, was considered more important. It was felt that CT2 is a personal product. The new recruits should have experience in selling products to end-users and must have broad social contacts. When reviewing his recruitment plan with her sales director it became apparent that the sales director had different ideas. The sale director was a strong advocate that new recruits must be familiar with the product and its technology since that is what they were selling.
  13. Case Study An inside knowledge of these new products would also impress would-be customers and give the salespeople an edge over the competition. The sales director favoured recruiting from within the telecommunications industry, since such people are familiar with the developments of the technology. Apart from that, they were likely to talk the same language as people working in engineering, technical support and service.
  14. Discussion Questions 1. Justify what general factors you consider should be taken into account when recruiting salespeople for the positions described in the exercise. In particular, suggest how the performance of such salespersons could be evaluated? 2. State whether you agree with the sales manager or the sales director or neither. 3 Suggest and justify the kind of commission structure that you would put into place
  15. Sales Performance Evaluation Criteria • The sales performance evaluation criteria should focus on results, and also involve identification of key result areas (KRAs). • KRAs are those factors or aspects of sales plan, strategy and implementation in which a salesperson or a company must excel to outperform competitors. • The salesperson and the company should possess underlying competences or capabilities which should be connected with the KRAs. • KRA analysis highlights the important relationship between resources, competencies and choice of sales plan and strategy which is important for assessing performance.
  16. Sales Performance Evaluation Criteria • KRAs are similar to critical success factors (CSFs) or key success factors (KSFs) commonly used as a tool in strategic management for assessing organizational performance. • Some of the key result areas, that are the quantitative indicators, form the basis of an effective evaluation and control system for most of the sales forces.
  17. Sales Performance Evaluation Criteria Some of the KRAs are: • Appointments to enquiries/proposals. • Enquiries/proposals to sales. • Orders to sales calls (strike rate). • Sales revenue per order. • Sales per hour of selling time. • Sales to cost of sales. • Gross profit or margin to sales etc. Sales management of a particular company may select or modify some of these KRAs or add new KRAs according to their policy, choice or suitability or appropriateness. In fact, each company should establish its own KRAs relating input (effort) to output (result).
  18. Sales Performance Evaluation Criteria A combination of qualitative and quantitative evaluation criteria may produce different outcomes and recommended reward or punishment and remedial actions. Qualitative criteria range from personal characteristics of salespeople to self-management. The Qualitative criteria can be classified under four heads: i) Personal Characteristics - Attitude, initiative, creativity, aggressiveness. ii) Knowledge - Knowledge of product, markets, company policy. iii) Skills - Selling skills, communication skills. iv) Self – management - Planning ability, decision – making ability, time management.
  19. Sales Performance Review Sales performance at the organizational level should be evaluated from different perspectives so that the evaluation process helps to identify the drawbacks or shortfalls in the strategy formulation and implementation system and appropriate remedial or corrective measures may be undertaken. A detailed sales review can be done in two major ways/forms : • By the level in the organization - national, and, then, regional, branch etc. • By the type of sale - product, customer etc. The evaluation of sales performance can be done against predetermined standards or benchmarks.
  20. Sales Performance Review The evaluation should be on relative or comparative basis to reveal the real performance of a company. A comparative assessment of sales performance of a company may be made in four different ways or forms with different bases of comparison: i.Actual sales (total) in relation to target. ii.Sales growth (or decline) relative to last year. iii.Sales growth (or decline) in comparison to industry growth (decline). iv.Sales level compared to that of major competitors.
  21. Sales Management Audit Sales management audit is a systematic, diagnostic and prescriptive tool for analyzing, reviewing and controlling sales operations or the sales management process. The objective of sales management audit is to assess whether a firm's sales management process is adequate, to give direction for performance improvement, and to recommend the needed changes. Sales management audit is a step-by-step process: 1. Planning sales and course of operation during the year 2. Measure the performance 3. Deviations from the planned course of action 4. Ascertain reasons for deviation 5. Course correction
  22. Ethics in Sales Management Sales managers are not only responsible for their actions but also the actions of their salespeople. Salespeople are considered boundary spanners because they work in the "boundary" between customers and the organization. As such, they perform actions that link the customer to the firm. In this position, the salesperson often faces an ethical dilemma involving the fair treatment of customers, the organization, or both. Sales managers are also responsible in establishing, communicating and enforcing the ethical standards of their sales people. Ethical dilemmas are faced by sales managers in carrying out various sales management tasks.
  23. Ethics in Sales Management Salespeople should be honest in their dealings with customers and be informed of relevant laws governing their business situation. Unethical sales behaviour include : • Exaggerating features and benefits. • Lies about availability of product/ service. • Giving false answers to questions. • Falsifying product testimonials. • Misrepresent warranties and guarantees. • Make nonbinding oral promises. • Bending company rules. • Selling dangerous or hazardous products without the knowledge of customers
  24. Ethics in Sales Management Sales managers have to set certain code of ethics to be followed by salespeople in the organization: 1.Company codes that define ethical boundaries for employees. 2.Professional codes that define ethical boundaries for occupational groups such as advertisers, marketing researchers, sales representatives, doctors, lawyers, accountants, and so on. 3.Business association codes that define ethical boundaries for people engaged in the same line of business. 4.Advisory group codes suggested by government agencies or other special interest groups.
  25. New Trends in Sales and Distribution • Global Perspective • Salesforce Diversity • E-selling • Technology Revolution • E–Customer Relationship Management • Team Selling Approach • Managing Multi-channels • Handling Ethical Issues • Sales Professionalism • Zero Contact Delivery • Online Payment System
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