Sales Force Control

Learning Objectives
• To learn about sales and marketing intelligence system.
• To know criteria and types of salesforce expense plans
• To understand salesforce audit and its evaluation process
• To learn evaluation of effectiveness of a sales organisation
through sales, cost, profitability, and productivity analysis
• To know purposes and procedure for evaluating and
controlling the performance of salespeople
• To understand ethical, social, and legal responsibilities of
sales managers and salespeople
 Sales and Marketing Intelligence System
• It is a part of marketing information system (MIS).
• It supplies happening data to MIS
 Evaluating & Controlling Performance of Salespeople
• Purposes / objectives / importance of performance evaluation
of salespeople are:
• Mainly to find how salespeople have performed
• This information is used for other purposes, such as:
• Improving salespersons’ performance, by identifying
causes of unsatisfactory performance
• Deciding salary increments and incentive payments
• Identifying salespeople for promotion
• Determining training needs
• Motivating salespeople through recognition and reward
• Understanding strengths and weaknesses of salespeople
 Procedure for Evaluating and Controlling
Salesforce Performance
The steps involved in the procedure are:
• Step 1 : Set policies on performance evaluation and control
• Step 2 : Decide bases of salespersons’ performance evaluation
• Step 3 : Establish performance standards
• Step 4 : Compare actual performance with the standards
• Step 5 : Review performance evaluation with salespeople
• Step 6 : Decide sales management actions and control
 Set Policies on Performance Evaluation & Control

Most companies establish basic policies. Examples are:

• Frequency of evaluation. Mostly once a year.
• Who conducts evaluation? Mainly immediate supervisor
• Assessment techniques to be used. E.G. Management by
objectives (MBO)
• Sources of information. Sales analysis, new business
reports, lost business reports, call plans, etc
• Bases of salesforce evaluation. (next slide)
• Conducting performance review sessions with salespeople
 Decide Bases for Salespersons’ Performance Evaluation

• A firm should decide which of the following bases / criteria it would use: (1) result /
outcome based, (2) efforts / behavioural based, or (3) both results & efforts based
• A company selects performance bases or criteria from a list of alternatives, some of
them shown below:

Quantitative results / Quantitative efforts / Qualitative efforts /

outcome bases / criteria behavioural bases / criteria behavioural bases / criteria
• Sales volume • Customer calls • Personal skills
• In value / units  No. of calls per day  Selling skills
•Percentage of quota  No. of calls per  Planning ability
• by products & customer  Team player
segments • Non-selling activities • Personality & Attitudes
• Accounts / customers  overdue payments  Cooperation
 New accounts nos. collected  Enthusiasm
 Lost accounts nos.  No. of reports sent
 Establish Performance Standards
• Performance standards are also called sales goals, targets,
sales quotas, sales objectives
• Performance standards for quantitative results are related to
the company’s sales volume or market share goals
• Performance standards for efforts / behavioural criteria are
difficult to set
• For this, companies do “time and duty analysis” or use
executive judgement
• Performance standards should not be too high or too low
• After establishing standards, salespeople must be informed
 Compare Actual Performance with Standards
• Salesperson’s actual performance is measured and compared
with the performance standards
• For this, sales managers use different methods or forms:
• Ranking

• Companies combine some of the above methods for an

effective evaluation system
 Review Performance Evaluation with Salespeople

• Performance review / appraisal session is conducted, after

evaluation of the salesperson’s performance
• Sales manager should first review high / good ratings, and then
review other ratings
• Both should decide objectives / goals and action plan for future
period
• After the review, sales manager should write about performance
evaluation & objectives for the future
• Guidelines for reviewing performance of salespersons
• First discuss performance standards / criteria / bases
• Ask the salesperson to review his performance
• Sales manager presents his views
• Establish mutual agreement on the performance
 Decide Sales Management Actions and Control
• Many companies combine this step with the previous step – i.e.
performance review
• During performance review meeting with salesperson, sales
manager does the following:
• Identifies the problem areas. E.G. Sales quotas not achieved
• Finds causes. E.G. less sales calls, poor market coverage, or
superior performance of competitors
• Decides sales management actions E.G. train salesperson,
redesign territories, or review company’s sales / marketing
strategies
• If a salesperson’s performance is good, he / she should be
rewarded and recognised
 Salesforce Expense Plans
• Salesforce expenses include travel, meals, lodging, telephone,
and customer entertainment
• Firms have salesforce expense plans to ensure proper spending
• Objectives / Criteria of effective expense plans are:
It should be
• Fair to the salesperson and company
• Simple and economical to administer
• Clear to prevent misunderstanding
• Reimbursed without much delay
• Allowing differences in expenses among different territories
 Salesforce Audit

• Salesforce or sales management audit is a part of marketing audit

• A marketing or salesforce audit is a comprehensive, systematic,
diagnostic, and prescriptive tool, to be used periodically
• Purpose. To assess adequacy of process, improve performance,
recommend changes
• Evaluation process of salesforce audit. It has 3 stages. Company
management should find out:
• What happened by comparing actual performance with goals
• Why it happened by identifying factors contributing to negative
variance. Difficult and time consuming task
• What to do about it by taking corrective actions
 Evaluation of Effectiveness of Sales Organisation
• To know “what happened”, companies analyse their sales,
costs, profits, and productivity
• Effectiveness model of a sales organisation

Sales Analysis

Effectiveness Cost Analysis

of a
Sales
Organisation Profitability Analysis

Productivity Analysis

• We shall examine each of the above factors

 Sales Analysis
• Sales analysis of a company can be done in different ways:
• Different alternatives are shown in a framework below:
National and/or international levels sales organisation
Regional level
All levels
In Sales Branch /district level
Organisation Territory level
Individual level
Sales Analysis

Total sales of the company

By type of products
Different
By type of distribution channels
Type of
Sales By type of customer classifications
By size of orders

Comparisons with sales quotas / targets

Comparisons with previous periods
Different
Comparisons with industry / competitors
Type of Comparisons within sales organisations
Analysis
Comparisons with sales forecasts
 Sales Analysis (Continued)
• Sales analysis is done at all levels of the sales organisation
• Reasons
(1) For evaluation and control: sales analysis needed at different organisation
levels like regional, district, territory
(2) For identifying problems:
Use hierarchical sales analysis. E.G.
• Sales performance at national level below sales volume budget
• Find which regions have problems in achieving sales quotas
• Focus sales analysis of branches reporting to problematic regions
• Do sales analysis of territories under problematic branches
• Further analysis of problematic territories to be done by talking to
salespeople, customers, branch managers
• Corrective actions can then be taken to improve sales
• Extend hierarchical sales analysis to different type of sales
• Out of different type of analysis, comparisons with sales quotas are widely
used