Chapter 18.

• Building Relationships Competency Profiling

  Competency profiling can be used as a hiring tool Competency profiles are derived form the top-performing salespeople Used as hiring criteria for recruiting new salespeople

  Example: Johnson & Johnson Hospital Services (JJHS) (1993)

  Used Focus Groups to determine Skills needed to develop long-term relationships Behaviors that demonstrate the skills identified Developed entire profile Sales Competencies - 39 Sample Behaviors - 174 Competencies and behaviors integrated into Annual Objectives Forecast Requirements Performance, Evaluation and Reward system Evaluation process becomes less subjective Success in competencies show up in paychecks Next step is to integrate into recruitment

• Introduction

  Actual performance must be measured and compared with desired performance On a macro level marketing audits are often used Evaluation should be done for The total marketing function The individual salesperson

  Steps in the Evaluation Process

  Quantitative and Qualitative goals are set Discuss, adjust and agree upon goals Develop plans to reach goals Observe job performance or Departments or units Individuals Evaluate performances against benchmarks Review evaluation Take appropriate action

---

• Analyzing the Total Marketing Function
  Analysis of Sales Volume
  Start with a predetermined benchmark Sales Potential Last years sales Moving average Compare to actual sales Even if results are acceptable farther analysis is necessary because of the Iceberg Principle
  Text Example: Widget Manufacturing Co Year Sales Potential Actual Sales % of potential 1993 $2,000,000 1,000,000 50% 1994 $2,200,000 1,400,000 63.6% Increases 400,000 What lies beneath the iceberg? 40%
  Territory analysis
  Territory Year Sales Potential Actual Sales % of Potential A 93 $1,000,000 400,000 40% 94 $1,100,000 675,000 61.4% B 93 $600,000 350,000 58% 94 $700,000 500,000 71.4% C 93 $400,000 250,000 62.5% 94 $400,000 225,000 56.3% Total 93 $2,000,000 1,000,000 50% 94 $2,200,000 1,400,000 63.6%
  Product analysis
  Year Ter Product Sales Potential Actual Sales % of Potential     93 A Regular 700,000 300 42.9     Deluxe 300,000 100 33.3     B Regular 400,000 250 62.5     Deluxe 200,000 100 50.0     C Regular 200,000 150 75.0     Deluxe 200,000 100 50.0       94 A Regular 750,000 200 26.7     Deluxe 350,000 475 135.7     B Regular 450,000 350 77.8     Deluxe 250,000 150 60.0     C Regular 200,000 150 75.0     Deluxe 200,000 75 37.5     93 Total   $2,000,000 1,000,000 50%     94 $2,200,000 1,400,000 63.6%
  Customer analysis
  Same analysis by customer
  Marketing cost analysis
  Application of basic accounting techniques to determine the relationship between Marketing costs Sales Profits
  Full Cost Approach	Assign all costs direct and indirect to the product territory customer Theoretically most accurate Arbitrary costs assignments can be bothersome
  Direct Cost Approach	Only direct costs assigned Many modifications Cost assignments can be a source of much debate
  Example

---

• Evaluating the
  Individual Salesperson’s
  Performance

---

• Evaluation Issues
  Why evaluate?	To achieve sales goals To keep selling costs under control To have a dialog how sales tasks are best performed
  Evaluation is complex and difficult Many managers approach it haphazardly, unsystematically
  Reasons for a Formal Evaluation Program
  To identify the reasons for success or failure of salespeople To reconcile uncontrollable elements impacting a salesperson's performance To provide data for promotions To provide a record for discipline and termination To provide information for updating the job description To provide the basis for Training Compensation Motivation To appraise individuals of their standing in the company
  Elements of one Evaluation Program

---

• The Evaluation Process

  Analyze and develop a Job Description Select criteria for evaluation Develop measures of performance for each criteria Establish performance standards for each criteria Monitor actual performance Compare actual performance to standards Review results with salesperson and recommend action

---

• PAC – Participation, Acceptance, Commitment
  Participation	Salespeople may be asked to prepare their own objectives. Sales manager then reviews Salesperson and sales manager each prepare objectives and then adjust in a dialog
  Acceptance	Objectives and evaluation must be considered Fair Attainable Criteria and measurements must be perceived as objective and measurable
  Commitment	Salesperson must agree or this is all a waste of time

---

• Job Analysis and Description - Chapter 10

---

• Performance measurements
  Quantitative
  Objective and standardized Easier to use
  Qualitative
  Focus on Quality not quantity Often ambiguous Allows use of personal biases Should accompany quantitative measures Other requirements Standardized form Consistent over time Used for the entire sales force
  Techniques for Qualitative Appraisals
  Behaviorally Anchored Rating Scale(BARS)	Each point on a scale is labeled with a different description of behavior Often a dozen or more scales
  Checklist Scale	More of a standardized 5 or 10 point scale Usually has more scales
  MBO	Goal setting and evaluation process Mutual goals Periodic reviews Evaluation based on each goal
  Effectiveness versus Efficiency
  Effectiveness
  Effectiveness is a function of Territory Objectives Resources allocated to that territory Salesperson's performance Measure actual sales against potential, quota or objectives
  Efficiency
  Profitability of a territory Time, effort and money invested to get sales Ratio analysis - various ratios are used as a measure of efficiency Expense/Volume (E/V) Profit/Volume (P/V) predicts the effects of sales on profits predicts the number of sales needed to offset rising expenses
  Evaluating actual performance
  Who should evaluate?
  Who should design the evaluation system? The most experienced Ususally top management Who should implement it? Usually the first line managers
  When and how often?
  Informal evaluations should be done frequently- daily, weekly Formal evaluations should be on a regular schedule - two months is considered optimal
  Sources of Information for the Evaluation
  Company Records	Sales Reports Expense Reports Activity Reports Complaint Records Call Reports
  Observations	Accompany salesperson Observe phone conversation, mail, e-mail
  External Sources	Customers Associations Agencies
  Recommending Action Improvement
  Salesperson should agree on what are reasonable improvements Step by step plan should be developed Reasonable time period should be specified
  Characteristics of an Effective Evaluation Program
  Motivation	Evaluation should motivate salespeople to want to improve
  Participation	Evaluation should offer the sales person an opportunity to participate
  Agreement	Both parties should agree on Objectives Means of getting the objectives How attainment will be measured
  Commitment	Salesperson should be committed to attaining the objectives
  Realism	The program should be based on realistic objectives that reflect actual territory conditions
  Objectivity	The program should be centered around objective and constructive techniques and measuring tools

---

• Summary

  Managing salespeople is one subfunction within the overall marketing function of the company The entire management program gains its focus through four main ingredients The defined market targets The role of personal selling with the marketing mix The job description The evaluation program