Effectiveness of Organization

Sales Organization Effectiveness:

Sales-force Outcome Performance
Salespersons performance contributes to, but does not completely determine
sales organization effectiveness

Sales-force Characteristics Organizational Factors Environmental Factors

Sales Organization Audit

Sales Organization Environment
Extraorganizational Factors Intraorganizational Factors

Sales Organization Planning System

Objectives Sales Management Program Implementation of the Program

Sales Management Evaluation

Sales-force Management Audit

Sales Management Function

Recruiting, Selecting, Training, Compensating, Supervising, Forecasting, Evaluating.

Adequacy of Sales Management Adequacy of Management Practices

BENCHMARKING
PLAN
Identify what to benchmark Identify comparative companies or sales-force.

GATHER DATA
Determine data collection method and collect data.

ANALYZE and COMMUNICATE

Determine current performance gap. Project future performance levels. Communicate benchmark findings and gain acceptance.

IMPLEMENT and CONTROL TO IMPROVE PERFORMANCE

Organizational Effectiveness Framework

Sales Analysis

Cost Analysis

Profitability Analysis

Sales Organization Effectiveness

Productivity Analysis

Sales Analysis Framework

Organizational level of Analysis
Sales Organization, Zones, Regions, Districts, Territories, Accounts.

Type of Sales
Total Sales, Type of Product Sales, Type of Account Sales, Type of Distribution Sales, Order Size Sales.

Type of Analysis
Comparisons within Sales Organization, with Forecasts, Sales Quotas, between Industry/ Competitors.

Cost Analysis Framework

Costs incurred by Sales Organization. Selling budgets as the benchmarks.

Evaluation - percentage of Sales.

Cost to Serve = Total Cost to serve account

Revenue from the account

Usually decline with revenue Help identify best accounts Downsizing & Profits

Profitability Framework
Income Statement Analysis
Consider different levels and types of sales as different functions Full Cost Approach: allocate the shared costs to individual units based on some type of cost allocation procedure. Contribution Approach: Only Direct costs are included.

Activity-based Costing
Based on factors that cause the cost. Allocates cost to individual units that actually spend.

Return on Assets Managed Analysis

Includes asset investment considerations (inventory, accounts receivables).

Productivity Framework
Sales Force Productivity
Sales / Salesperson Expenses / Salesperson Calls / Salesperson Proposals / Salesperson

Can be compared across the entire organization and other sales organizations Productivity and Profitability are inter-related, Productivity is more managerially oriented.

Evaluating and Controlling Salespeople Why Evaluate Salespeople:

To link Compensation and rewards to performance. To identify salespeople capable of promotion To identify salespeople to be retrenched. 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

Set goals and objectives for sales force, including: Revenues Contribution profits Market share Expense ratios

Design sales plan

Set product performance standards for: Organization Salespeople Regions Accounts Districts

Measure results against standard

Take Corrective Action

Performance Evaluation Methods

Behavior-based Perspective
Considerable monitoring of salespeople. High levels of managerial direction of salespeople. Subjective measures of salespeople characteristics, activities and strategies.

Outcome-based Perspective
Little Monitoring of salespeople. Little Managerial direction of salespeople. Straightforward objective measures of results.

Evaluating Salespeople- Outcome based

Call Productivity Ratios
Calls per day = # Calls # Days worked # Calls # of Accounts # Planned calls Total # Calls # Orders Total # Calls

Calls per account

Planned Call

Batting Average

Evaluating Salespeople- Outcome based

Expense Ratios
Expense to Sales = Expenses Sales

Cost per Call

Total Costs # of Calls

Evaluating Salespeople- Outcome based

Account Related Ratios
Sales to Account = Dollar Sales _ # Accounts Dollar Sales # Orders # New Accounts Total # Accounts Accounts sold_ Total # Accounts

Average Order Size

Growth Ratio

Account Success

Evaluating and Controlling Salespeople

Models Combining Input & Output Controls
Inputs Behavior
Attitude
Motivation Skills Abilities Job Perception

Inputs
# Calls Days worked Expenses Selling vs. nonselling time Quotas

Outputs
# Orders Order Size # New, lost, or active accounts

A Model of Salesperson Evaluation Comprehensive evaluation of a Salesperson should incorporate criteria from each of these dimensions.
Input-based System Behavior Calls Reports Complaints Demonstrations Dealer meetings Display set up Travel/entertainment expenses Output-based System Results Sales revenues Sales growth Sales/quota Sales/potential New accounts Contribution margins Contribution percentage

Salesperson Evaluation

Behavior

Professional Development

Results

Profitability

Evaluating and Controlling Salespeople

Models Combining Input & Output Controls
Four Factor Model $ Sales = Days worked x Calls Days Worked Orders Calls Batting Average Sales $ Orders Average Order Size

$ Sales = Days worked x

Call Rate

How can sales be increased?