Chapter 13 – Evaluating Salesperson Performance
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Chapter 13
Evaluating Salesperson Performance
Learning Objectives for Chapter 13
• Explain the difference between performance and effectiveness.
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• Attribution theory
o Theory of motivation attributing causes of a salesperson’s performance in
management’s performance evaluation. This theory is further defined in
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o Refers to the degree to which performance evaluations differ from objective
reality, usually based on errors by the evaluator (in our case, the sales
manager).
• Outcome bias
o Occurs when a sales manager allows the outcome of a decision or a series of
decisions made by a salesperson to overly influence the performance ratings
made by the manager.
• BARS—behaviorally anchored rating scale
o Attempts to concentrate on the behaviors and other performance criteria that
can be controlled by the individual.
• 360-degree performance feedback
o Rather than relying on purely objective measures or on subjective measures
generated by one person (the sales manager), information for performance
evaluation may come from multiple sources simultaneously (external
customers, internal customers, members of salesperson’s selling team and sales
manager.)
• Internal customers
o Internal organization members who serve as resources in serving external
customers.
• Self-evaluation
o Preparation of an honest assessment of a salesperson’s own performance
against the established objective and subjective performance criteria, which
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should be prepared prior to the formal performance review session with the
sales manager.
• Performance management system
o Integration of all the elements of feedback on the process of serving customers
so that performance information is timely, accurate, and relevant to the
customer management aspects of the firm.
Chapter Outline
I. Performance versus Effectiveness
II. Objective Measures
A. Output Measures
a. Orders
b. Accounts
B. Input Measures
a. Calls
b. Time and Time Utilization
c. Expenses
d. Nonselling Activities
C. Ratio Measures
a. Account Development and Servicing Ratios
b. Call Activity or Productivity Ratios
III. Summary of Objective Measures
IV. Subjective Measures
A. Forms Used for Subjective Measurement
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a. Problems with Subjective Performance Measurement
B. Avoiding Errors in Performance Evaluation
C. Using a BARS System
V. 360-Degree Feedback in Performance Evaluation
VI. Summary
VII. Key Terms
VIII. Breakout Questions
IX. Leadership Challenge: Understanding Salesperson Performance
X. Role-Play: Harvey Insurance Agency
XI. Minicase: West Midlands Restaurant Appliances
PowerPoint Program—each chapter of the text has been captured in animated PowerPoint
slides.
Chapter Outline with Suggestions
• The Case for a Focus on Sales Force Performance Management Systems
Suggestion: The PowerPoint can be used to introduce the concepts in Chapter 13, including
performance versus effectiveness.
First, briefly review sales and cost analyses, stressing that quantitative analysis of
performance conceals qualitative features. Point out that both quantitative and qualitative
analyses of performance are needed and that they usually complement each other.
• Performance versus Effectiveness
Suggestion: Review the problems associated with too much reliance on quotas as a measure
of salesperson performance. One major corporation uses quota performance as the major
indicator of performance. One executive said:
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“Making quota here at ________________ is the same thing as survival.
Over a five-year period, you’d better make quota three years or you’re out.”
Use this to spark a discussion about over-reliance on objective measures of salesperson
performance.
Suggestion: Discuss evaluation measurements.
• Objective Measures
Suggestion: Identify commonly used output measures that go beyond strict quota evaluation
as well as input measures.
o Output Measures
o Input Measures
Suggestion: Review the ratios.
o Ratio Measures
• Summary of Objective Measures
Suggestion: Refer back to Chapter 11 where customer satisfaction and its role in sales
compensation are discussed. Companies that have adopted the Total Quality Management
concept (TQM) evaluate performance based on improvements in customer satisfaction.
Subsequent bonuses are based on this outcome.
Discuss the application of subjective measures of sales performance. Exhibits 13.3 and
13.4 show examples of both well-designed and poorly designed evaluation forms.
Describe the problems associated with the use of simple checklist rating forms.
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Suggestion: Present ideas on how to avoid errors in performance evaluations.
1. The buyer citing “personality differences” as the reason for switching vendors is
obviously using this excuse as a smoke screen for his real desire—for Kevin to keep up the
practice of taking him to topless bars like his predecessor had done. The situation accentuates
the fact that in the short run, such entertaining may lead to sales and, of course, to
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2. In order to have noticed the discrepancy, the corporation had to have already
undertaken the standard sales and cost analysis evaluation. The corporation might wish to
undertake additional evaluation measures to supplement the sales and cost evaluations and
3. One could come up with the following conclusions for the three representatives:
a. Representative 1 seems to be doing well in all areas. Inability to achieve quota
is most probably due to an unrealistic quota, a change in environmental
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4. There is truth to the belief. However, the assumption that has to be true for this to
work is that the quality of calls does not change. Improve the quality of calls, either by doing
5. The maverick salesperson is a subject that receives attention on a fairly frequent basis.
One school of thought holds that good sales managers will recognize that their job is not
always to discipline mavericks, but rather to shield them from a system that’s likely to crimp
their creativity and productivity. Fortunately or unfortunately, most sales units can afford to
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would not really do anything to accentuate the problems he needs to overcome. Moreover,
Brad cannot be made to feel that the evaluation of him is biased or a personal attack against
him, so it must be fair and it professionally handled.
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measures. These measures are certainly valid measures of salesperson performance, however,
other measures, as noted in the Challenge may need to be added over time to accommodate
changes in salesperson activities or corporate focus (increased emphasis on customer service).
The Challenge provides the backdrop for a good discussion on what really needs to be
measured in sales person evaluation. While the specifics vary by company, the general
consensus will often include the kinds of measures that Market First Distributors use at the
present time. If not brought out in the discussion, a good follow up is how a company knows
their salespeople are in fact doing a good job servicing customers (of course this assumes that
customer service is important to the company)? Waiting for customer complaints is not an
1. There are really two separate issues in the question. The first is territory management.
There are a number of measures a company could use to measure territory management such
as: call efficiency (calls per week divided by number of customers in the territory), call
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2. Here is an outline of what one could say to Mike:
Strengths—Objective
• Quantified measure that fall into three categories: Outputs measures that present
the results of efforts expended by the salesperson, Input measure focus on the
efforts of sales people and not necessarily on the results of those efforts, and ratio
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This list is not meant to be exhaustive, but rather a discussion starter for a discussion
on objective versus subjective measures. After reading the chapter students will have ideas
about what measures work best in different situations. The most comprehensive performance
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and coming to a short list of recommendations to take to the later meeting with
Leslie.
• Encourage students to start with a set of clear goals about what Harvey Insurance
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1. Using (current sales-previous sales)/previous sales to calculate sales growth and
(current sales-current quota)/current quota to calculate sales to quota along with the formulas
provided in Exhibit 13.2, the performance ratios can be calculated as follows:
Name
Sales
Growth
Sales to
Quota
Sales per
Account
Average
Order
Size
Sales
Expense
Orders
per Call
Derek
.21%
-16.35%
$437.27
$616.67
$.019
.600
Johnny
17.73%
5.75%
551.88
448.22
.014
1.094
Daphne
6.42%
-6.70%
533.04
600.98
.012
.618
Robert
14.36%
.24%
631.11
516.36
.013
.971
Jennifer
12.42%
1.18%
661.54
497.11
.013
.989
Manuel
13.61%
1.21%
596.43
466.48
.014
1.023
Samantha
.75%
-6.94%
418.75
697.92
.016
.619
Erin
19.36%
5.71%
544.12
484.29
.014
1.032
Rank ordering all of the sales representatives in each category, then summing the rank orders
2. As long as WMRA continues to use its current method of sales force evaluation,
Epstein’s advice to his bottom group of performers is simply that they need to sell more. In
Chapter 13 – Evaluating Salesperson Performance
not be spending enough to generate the sales she needs to increase her sales performance.
3. One of the limitations is illustrated by what happened with Robert. He has been with
the company for just a little over one year and his territory has a smaller business density.
Therefore, he is still learning on-the-job, and as a result his numbers are lower. This is even