This chapter presents the following content: Goals of a sales force reward system, the customer-product matrix, compensating salespeople, aligning pay with strategy, use of compensation plans, advantages of frequent vs. infrequent incentive payments,. | Part V SALES FORCE LEADERSHIP Chapter 13: Evaluating Performance Why Evaluate Salespeople? To link compensation and rewards to performance. To identify salespeople capable of promotion. To identify training and counseling needs. To identify criteria for recruitment and selection. To clarify work expectations. To motivate salespeople. To help salespeople set career goals. 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 Table 13-1 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 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 | Part V SALES FORCE LEADERSHIP Chapter 13: Evaluating Performance Why Evaluate Salespeople? To link compensation and rewards to performance. To identify salespeople capable of promotion. To identify training and counseling needs. To identify criteria for recruitment and selection. To clarify work expectations. To motivate salespeople. To help salespeople set career goals. 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 Table 13-1 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
