MKTG 341 Sales Management: Analysis and Decision Making 8th Edition CH 10

360-degree feedback
An assessment technique that involves performance assessment from multiple raters, including sales managers, internal and external customers, team members, and even salespeople themselves.
performance management
An approach that involves sales managers and salespeople working together on setting goals, giving feedback, reviewing and rewarding. Salespeople create their own development plans and assume responsibility for their careers. Sales manager acts as a partner in the process providing feedback that is timely, specific, regular, solicited, and focused on what is within the salesperson’s control to change.
outcome-based perspective
A perspective that focuses on objective measures of results with little monitoring or directing of salesperson behavior by sales managers.
behavior-based perspective
A perspective that incorporates complex and often subjective assessments of salesperson characteristics and behaviors with considerable monitoring and directing of salesperson behavior by sales managers.
behavioral criteria
A criteria for performance evaluation that emphasizes exactly what each salesperson does.
professional development criteria
A criteria for performance evaluation that assesses improvements in certain characteristics of salespeople that are related to successful performance on the sales job.
results criteria
A criteria for performance evaluationthat assesses results acheived by salespeople.
sales quota
A reasonable sales objective for a territory, district, region or zone.
profitability criteria
A criteria for performance evaluation that assesses on the profitability of sales.
graphic rating/ checklist methods
Approaches in which salespeople are evaluated by using some type of performance evaluation form.
ranking methods
Approach in which salespeople are evaluated according to a relative performance on each performance criterion rather than evaluating them against a set of performance criteria. *Advantages*: effective way to identify and reward core competencies. *Disadvantages*: constraints on their practicality, limited usefulness; can be complex and cognitively difficult; cannot be translated into graphic rating/checklist form.
management by objectives (MBO)
A performance evaluation that involves the (1) mutual setting of well-defined measurable goals with in a specified time period (2) managing activities within the specified time period toward the accomplishment of the stated objectives, and (3) appraisal of performance against objectives; most common and comprehensive goal setting method.
behaviorally anchored rating scales (BARS)
A performance evaluation method that links salesperson behaviors with specific results. It is the only approach that focuses on linkages between behaviors and results.
outcome bias
The prejudice that occurs when the outcome of a decision rather than the appropriateness of the decision influences an evaluators ratings.
job satisfaction
A salesperson’s happiness with his or her job.
1. The sales manager and salespeople discuss the salesperson’s evaluation, based on feedback from multiple sources.
2. The sales manager rates the salesperson according to predetermined criteria or standards of performance in order to determine whether the salesperson is above or below expectations.
3. The salesperson’s performance is reviewed relative to his or her previous performance evaluation to ascertain accomplishments in performance and areas that need improvement.
4. Focus is on improving the system and the salesperson’s development and future performance. Sales manager and salesperson work together to specify resources, structure, and training needed for performance issues. A mutual agreement is reached regarding objectives, degree, type of improvement and an action plan; the action plan lays out a road map that shows the salesperson exactly what to do to improve and provides a way to develop needed skills.
A typical approach to performance evaluation incorporates four distinct stages. What are they? Explain.
1. *Impact on gross profits* – through the products that they sale and/or the prices they negotiate; Ex. 2 salespeople could generate same $ amount of sales and acheive the same sale evaluation, but one may be selling products with a higher margin products and/or maintaining higher prices in negotiation.
2. *Sales expenses inccurred* – 2 Salespeople equal in sales and sales performance, one may not have as many sales expenses which increases net profits.
Salespeople can affect profitability in two ways, what are they? Explain.
1. *Job relatedness*- designed to meet the needs of each specific sales organization.
2. *Reliability*- measures should provide accurate assessments of the criteria they are intended to measure.
3. *Validity*- measures should provide accurate assessments of the criteria they are intended to measure.
4. *Standardization*- The measurement instruments and evaluation process should be similar throughout the sales organization.
5. *Practicality* -process must be understood by sales managers and salespeople and be able to implement it i a reasonable amount of time.
6. *Comparability*- result of the performance evaluation process should make it passible to compare the performance of salespeople directly.
7. *Discriminability*- evaluative methods must be capable of detecting differences in the performance of individual salespeople.
8. *Usefulness* – info provided by the performance evaluation must be valuable to sales manager in making various decisions.
List the 8 characteristics should an ideal performance evaluation have? Explain.
1.*Graphic/Checklist Method*
2. *Ranking Methods*
3. *Objective-setting methods*
4. *Behaviorally Anchored Rating Sales (BARS)*
What are the basic methods for evaluating salesperson performance ?
1. *Evaluate* salespeople against relevant performance criteria in order to determine whether there are common areas of low performance.
2. *Compare*- salesperson evaluations to identify problem areas
3. *Investigate*- problem areas to identify causes of performance problems.
4. *Determine* sales management actions to eliminate causes of future problems and to solve existing problems.
What is the framework for using performance information?
*Causes* include: Sales or other sales quotas are incorrect; Poor account coverage; Too few sales calls.
*Actions* include: Revise sales or other sales quotas; Redesign territories; Develop motivational programs; Provide closer supervision.
If a salesperson is failing to meet *sales* or other *results* quotas, what are the potential causes? What actions does the sale manager need to take to correct the problem?
*Causes* include: Behaviorial quotas are incorrect; Too little effort; Poor quality of effort.
*Actions* include: Revise behavioral quotas; Develop motivational programs; Conduct training programs; Provide closer supervision.
If a salesperson is failing to meet *behavioral* quotas, what are the potential causes? What actions does the sale manager need to take to correct the problem?
*Causes* include: Profitability quotas are incorrect; Low gross margins; Highly selling expenses.
*Actions* include: Revise profitability quotas; Change compensation; Develop incentive programs; Conduct training programs; Provide closer supervision.
If a salesperson is failing to meet *profitability* quotas, what could be the cause? What action does the sale manager need to take to correct the problem?
*Causes* include: Professional development quotas are incorrect; Inadequate training.
*Actions* include: Revise professionla development quotas; Develop motivational programs; Conduct training programs; Provide closer supervision; Change hiring practices.
If a salesperson is failing to meet *professional development* quotas, what could be the cause? What action does the sale manager need to take to correct the problem?
A scale that can be used to measure salesperson satisfaction in total and for specific job dimensions. An analysis of the satisfaction can be used to determine appropriate action to increase salesperson performance.
1. Determine appropriate compensation and reward disbursements.
2. Identify salespeople who should be promoted or fired.
3. Determine training and counseling needs.
4. Provide info for HR planning to identify criteria for future recruitment and selection of salespeople.
5. Advise salespeople of work expectations.
6. Motivate salespeople.
7. Help sales people set sales goals.
8. Enhance communications.
9 Tie individual performance to sales organization goals.
10. Improve salesperson performance.
What are the 10 different purposes of salesperson evaluations discussed in the textbook?
*Outcome-based* perspective focuses on objectives by measure of results, with little monitoring or direction of salesperson efforts by sales managers. (Objective)
*Behavior-based* perspective focuses on close supervision of salesperson efforts and subjective measures of salesperson characteristics, activities, and strategies. (Subjective)
What is the difference between on outcome-based and a behavior-based perspective for evaluating and controlling salesperson performance?
1. Evaluate on a monthly, quarterly, or annual basis. More frequent evaluations prevent problems from getting out of hand. Annual evaluations may be too late.

2. Combine input and output criteria which are evaluated using quantitative and qualitative measures.

3. When used, performance standards or quotas are set in collaboration with salespeople.

4. Assign weights to different objectives and incorporate territory data.

5. Use multiple sources of information.

6. Most are conducted by the field sales manager who supervises the salesperson.

7. Provide a written copy of the review and personal discussion.

What approaches are typically used for salesperson performance evauations?
Salesperson is evaluated by multiple raters. It helps salespeople better understand their ability to add value to their organization and their customers. Involves th Sales Manager, Oneself, External Customers, Team Members, and Internal Customers (other employees the salesperson interacts with).
Explain the 360-Degree Feedback system.
1. *Behavior*- Consists of criteria related to activities performed by individual salespeople, including: Sales calls, Customer complaints, Required reports submitted, Training meetings, Letters, and Calls. Should not only address activities related to short-term sales generation but should also include non-selling activities needed to ensure long-term customer satisfaction.

2. *Professional Development*- Assess improvements in certain characteristics of salespeople that are related to successful performance in the sales job. Characteristics include – Attitude, Product knowledge, Initiative and Aggressiveness, Communication skills, Ethical behavior.

3. *Results*- Salespeople measured objectively based on results such as – Sales, Market share, and Accounts
A sales quota represents a reasonable sales objective for a territory, district, region, or zone. Some research shows that rewards for achieving results have a negative effect on performance and satisfaction.

4. *Profitability*- Salespeople have an impact on gross profits through the specific products they sell and/or through the prices they negotiate for final sale.
Salespeople affect net profits by the expenses they incur in generating sales. Criteria examples include: Net profit dollars, Gross margin per sale, Return on investment, Number of orders secured, Selling expenses versus budget.

What are the 4 dimensions of a salesperson performance evaluation that serve as its criteria? Explain each one.
1. Concentration of businesses within the territory
2. Commitment by the sales manager to assist the sales representative
3. Growth of businesses within the territory
4. Geographic size of the territory
5. Complexity of products sold
6. Sales representative’s past sales performance
7. Extent of product line
8. Financial support (e.g., compensation) a firm provides
9. Relationship of product line
10. Amount of clerical support
What are the important elements in assigning sales quotas?
1. Personal relationships
2. Perceived difficulty of territory
3. Outcomes (i.e., ends justifies the means)
What are the three most common sources of performance evaluation bias?
1. *Consider the criteria* on which members will be evaluated and the methods used to evaluate performance.
2. *Establish a link* between team performance and positive outcomes to promote individual and team effort.
3. *Foster the process* by allowing team s to participate in developing goals and evaluation criteria.
When designing the appraisal process for teams, what three things must sales managers do?
1. Turnover
2. Absenteeism
3. Motivation
4. Organizational commitment
Although the direction of the relationship is unknown, job satisfaction may be related to performance. List four other things that are related to job satisfaction.
1. Determine problem areas.
2. Identify the causes of the problem.
3. Take appropriate action to eliminate the causes and to solve problems that are already present.
4. Improve performance.
The basic diagnostic approach is used to :
Sales organization *effectiveness* is a summary of the overall success of a sales organization in meeting its goals and objectives in total and at different organizational levels. By contrast, salesperson *performance* is a function of individual salesperson performance in individual situations.
Differentiate between sales organization effectiveness and salesperson performance.