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Evaluation of Sales Performance
A sales manager is responsible for the evaluation of the sales performance of its salesforce/sales personnel. He should evaluate sales performance periodically.
In fact, sales performance evaluation is an effective way to bridge the gap between actual performance and expected performance of sales personnel. It is a means to push the performance that does not meet the standard (expected) performance.
An effective sales performance evaluation system is necessary to systematically evaluate the salesforce and further encourage them to get the desired level of results.
Here, we will understand, how to evaluate salesforce sales performance in four easy steps. They are:
Establishing Sales Performance Standard
In this first step to evaluate sales performance, the responsible body/sales manager sets the sales performance standard for each criterion on which the salesforce is to be evaluated – whether the criterion is quantitative or qualitative.
When it comes to establishing such a standard, the setter must first evaluate the nature of the selling job, as that job dictates employment objectives, tasks and obligations, and other factors. And the selling approach directs these job-demanding contents.
Performance standards are used to measure the most critical performance tasks for an organization. Setting sales performance requirements necessitates a thorough understanding of the market, as it is necessary to understand the entire sales potential as well as the portion that a sales area is capable of creating. The sales manager requires an assessment of customers and prospects in terms of prospective profitability for each class and account size.
In addition, the company’s marketing staff must assess the competitors’ strengths, weaknesses, procedures, and policies. The company’s sales plan for achieving sales standards should be established based on these principles. Sales management, on the other hand, should not overlook the sales planning situations.
Obtaining Actual Sales Performance
This is the step in which the sales manager gathers data on the salesforce’s actual performance from various sales units. There are two types of sources used for it. The standard is based on sales and expense data, as well as reports of other evaluation criteria.
Sales and spending data are then used to determine and measure real performance in the following stage. The methods of obtaining needed information depend upon the sources which are mentioned earlier.
Comparing Actual Sales Performance with Performance Standard
This activity is very difficult because evaluation requires judgment. It also becomes difficult because the same standard cannot be applied to all sales personnel. There are differences in individual territories, their sales potentials, and the impact of competition, the personalities of sales personnel and their customers.
The question arises of how to adjust fully to differences in the personalities? However, an attempt must be made to be fair as much as possible.
Salespeople are evaluated on both quantitative and qualitative performance factors at this step. This is due to the fact that an individual’s qualitative performance may be average while his or her quantitative performance is exceptional. The evaluation report should be based on a weighted average of these results.
Controlling Sales Performance
In case the company finds standard meeting performance of sales personnel after the comparison of actual performance with set standards (quantitative and qualitative), it continues the previous sales strategies with more attention, care and precaution.
If there is a difference in the acceptable ranges of sales performance, the company adjusts the previous standard and continues with the old sales programs. In general, there are three choices for such standard adjustments.
- Adjust performance to the standard increasing the degree of attainment of objectives.
- Revise the policy and/or plan or the strategies to fit better achievement of objectives; and
- Lower or raise the objectives or the standards and criteria used in measuring the degree of attainment, and make the evaluation more realistic.
In addition, at this last step, the sales manager is responsible to continue the meeting standards performance and revising the lacking standards, to fully set the sales personnel on the desired track and again make them work in a more fruitful way.