What is Sales Personnel Performance Appraisal?
Sales personnel performance appraisal is a systematic, periodic and so far as humanly possible and impartial rating of sales personnel’s excellence in matters pertaining to his/her present job and to his/her potentialities for a better job.
It is the systematic evaluation of individuals with respect to their performance on-the-job and their potential for development. Performance appraisal has become a significant part of the selling organization to get to know their salespeople’s actual position.
It is a great tool to give feedback to salespeople, such as where they are, how they are doing, what they lack, and how they develop their fullest potential. In fact, most salespeople do their appraisals on their own, and others love to know from the sales managers where their position in the sales organization.
The main objective of sales personnel performance appraisal is to best know the actual performance of salespeople and give suggestions on how they can make better performance, if any lack ness found, and improve the overall performance of the firm.
Purpose of Sales Personnel Performance Appraisal
Since “performance” denotes “accomplishments/achievements” and “appraisal” refers to “finding the worth or value”, the question of sales personnel’s performance appraisal comes only after their conduct by them.
It is, in essence, a process of determining one’s level of accomplishments. Although job descriptions and people requirements are used to evaluate individuals during the selection and recruitment process, it is not always the case that their performance will match the tested specifications in the real world. Not only that, but their performance may not be consistent over time.
As a result, periodic evaluations of one’s conduct, result, or performance have become a necessity in a real sense. Selling companies want to learn about their own strengths and weaknesses, on the one hand, in order to compete with their competitors, and sales personnel want to know how they are doing, what they need to improve, where they stand in terms of recognition by their companies, and what their personal value is, on the another.
As a result, performance evaluation is seen as an integral aspect of the overall structure of a company. It is the act of providing salespeople with feedback on their performance. Because salespeople’s potential development allows organizations to expand and apply current techniques, it can be considered a systematic procedure of measuring their worth in terms of the company’s prospective development.
Regardless of their immediate bosses, colleagues, or subordinates, salespeople can evaluate themselves. However, in a major selling organization, there must be official evaluation systems in place at all levels, including executives. Using standardized evaluation forms, even a group of evaluators can evaluate an individual.
All the synonymously used terms such as salesforce/sales personnel performance evaluation, merit rating, personnel rating performance review stand for the following purposes.
- To provide systematic judgments to back up salary and compensation, transfers, demotions, promotions, terminations, etc. because strengths and weaknesses of each individual become a matter of permanent record of a structured selling company.
- To tell an individual sales personnel how he/she is doing, and to suggest needed changes in his/her behavior, attitudes, skills, or job know-how. This means, to let him/her know where he/she stands with the boss and the company.
- To coach and counsel the needed individual and thereby increase the evaluation strengths at finding out the difference between one individual to another.
- To enable a selling company to maintain an inventory of the number and quality of all sales managers to identify and meet their training needs and aspirations.
- To improve the selection process, getting feedback from the evaluation by correlations between ratings and earlier selection tests given to the sales personnel.
- To improve the overall performance of the sales organization (sales and profits) by improving the performance of the sales personnel.
How To Conduct A Performance Appraisal of Sales Personnel?
Sales personnel performance appraisal is the three-step process that consists of the development of appraisal criteria, determining performance rating scales; and conducting an appraisal.
Development of Performance Appraisal Criteria
The appraisal criteria differ from one selling company to the next. They also differ depending upon the nature of the job that a sales personnel does. But in general, companies develop these two categories of criteria for serving the purpose of appraising.
i. Quantitative Approach: This approach focuses mostly on these criteria.
- Output Criteria
- Profits generated
- Sales revenue achieved
- Percentage gross profit margin achieved
- Sales per potential account
- Sales per active account
- Sales revenue as a percentage of sales potential
- Number of orders received
- Sales to new customers
- Number of new customers
- Input Criteria
- A number of calls made
- Calls per potential account
- Calls per active account
- Number of quotations
- A number of calls on prospects.
These input and output criteria help in determining the number of hybrid rations such as:
- Strike rate
- Sales revenue per call ratio
- Profit per call ratio
- Order per call ratio
- Average order value
- Prospecting success ratio
- Average profit contribution per order
ii. Qualitative Approach: Qualitative performance appraisal criteria are more subjective in nature. They take place during field visits. Basically, they consist of the following:
Sales Skills: Sales skills include:
- Opening and reporting skills
- Customer needs identifying and questioning skills
- Quality sales presentation skills
- Ability to handle objections
- Skills in making proper use of visual aids, and
- Ability to close the sale.
Customer Relationships Skills:
- Properly receiving customers
- Making customers well satisfied with the service, advice, reliability, etc.
Self Organisation: By self-organization skills, we mean the ability of,
- Preparing calls
- Organizing routine to minimize unproductive traveling
- Keeping customers up-to-date
- Providing market information to headquarters, and
- Making self-appraising to remove weaknesses.
Product Knowledge: Product knowledge of salespeople should be,
- About their own products, their customer benefits, and applications.
- About competitive products, their customer benefits, and application.
- About relative strengths and weaknesses between their own and competitive offerings.
Co-operation and Attitudes: Co-operation and attitudes of salespersons should always be positive in terms of,
- Responses to management’s objectives for improving sales performance.
- Co-operation with suggestions during field training for improved techniques.
- Use of their own initiative.
- Attitudes toward their company and its procedure, and
- Hardworking to increase sales.
Determination of Rating Scales
There are two types of rating scales that a selling company can use in an alternative way for appraising sales personnel/persons. They may be:
- Graphic Rating Scales; and
- Behaviorally Anchored Rating Scales
These rating scales are used to assess/appraise both quantitative and qualitative criteria/factors mentioned earlier in sales personnel performance appraisal.
i. Graphic Rating Scales:
It consists of performance criteria with different ratings for appraisal purposes. For each rating scale, a box is assigned. The appraiser ticks in the box of the scale that he/ she assumes is the appropriate degree of salesperson’s performance. It can be developed in the format given below.
ii. Behaviorally Anchored Rating Scales:
By using these scales, the appraiser rates the salespersons/personnel based on items/criteria along a continuum, but the points reflect actual behavior on the given sales job rather than general descriptions or traits.
BARS develop beliefs that the use of specific behavior, derived from each job, should produce relatively error-free and reliable ratings. These rating scales specify the definite, observable, and measurable job behavior of salespersons.
The levels of performance are categorized in the form of descriptions on the basis of questions developed. Each question statement carries certain points ranging from 1-9 that move up from the bottom to the top order. Better performance earns a higher point value.
Conduct An Appraisal
Conducting appraisal is the last step of the sales personnel performance appraisal process. Generally, performance appraisal comes after the assigned jobs or tasks are completed by the salespersons/sales personnel.
In that course, the immediate supervisor rates each individual salesperson/personnel on the basis of the format developed by the selling company. As explained earlier, this format consists of appraisal criteria and the degree of performance of those criteria.
The appraiser/rater/evaluator simply puts a tick into the box in front of the degree of performance statement. The degree of performance is developed on the basis of rating sales explained earlier.
At the end of that evaluation sheet, the rater gives his signature and mentions the date of evaluation. If needed, the evaluator can write descriptive remarks on a particular salesperson. Then he/she submits the ratings to the company.