Several methods were used to evaluate the capacity, talent and overall performance of salespersons in a company. The most common methods used to evaluate the performance are through
- Sales Target
- Sales Territory and
- Sales Report
They are discussed as below.
Evaluating performance of Salesperson by Sales Target
The organization sets sales. target for each salesman that he has to attain. Such targets may be set either on the basis of units to be sold or based on the value of sales. However, while setting the target it is important to consider the following points:
1. The target for sales must not be impossible to attain.
2. It must be reasonable.
3. It must be set taking into account the past records, market potentials, etc.
4. Sales target must not be rigid.
5. The incentives to be given to the salesmen shall be linked to the targets.
Advantages of fixing sales targets
Setting targets for the salesperson will offer the following advantages:
1. Fixing sales target enables the salesman to work according to a plan.
2. It provides a basis for the evaluation of the salesman’s performance.
3. It is possible to coordinate production and sales.
4. It does not allow any salesman to be insincere or careless.
5. It enables efficient salesperson to earn more by way of incentives by attaining the target each time.
Problems in setting sales targets
1. It is difficult to evolve a basis upon which the target may be set.
2. Certain unpredictable changes in the market conditions may render the targets unrealistic.
3. The same target cannot be set for all salesmen as the potentials of each person and each market differ.
4. Some salesmen are capable of doing much more than the target set for them. Thus, sales targets limit the initiative.
5. The target cannot be rigid. What was possible last year may not be possible this year. Therefore, the target needs to be revised periodically.
Evaluating performance of Salesperson by Sales Territory
A sales territory is a small segment of the entire market for a product or service. Each salesman is usually made in charge of a particular area or territory. For the trend in sales in each such area, the salesman concerned becomes accountable.
Thus, sales territory enables the business to not only evaluate the performance of the salesman but also to know the sales trend.
Advantages of establishing sales territory
The advantages of establishing sales territory may be mentioned as follows:
1. It enables the business to cover the entire market more effectively.
2. It makes it possible for the salesman concerned to maintain good rapport with the clients in his area.
3. It is possible to compare the progress in sales in each territory.
4. It also gives scope to compare the performance of salesmen working for different territories.
5. It avoids duplication of work by salesmen in the same area.
6. It ensures proper allocation of funds for different territories.
7. It also helps to have knowledge of the extent of competition in each area. A particular area, having intense competition, may require more funds for sales promotion.
Factors to be considered in establishing sales territories
1. The sales territory should be so determined that it should be possible for an average salesman to cover it within the stipulated time.
2. Having a particular sales territory should be profitable for the business.
3. It should also give scope for the salesman to undertake any promotional campaign.
4. Each salesman shall, as far as possible, be allotted not more than one territory.
5. Each territory should be subject to periodical review. Additional manpower or finance may be provided depending upon the requirements.
Evaluating performance of Salesperson by Sales report
Salesmen are duty bound to prepare reports on the progress of their work and forward the same to their organization for necessary action. As the salesmen are the persons who know the dealers, buyers and competitors in each area, they are expected to send periodical reports to their office at regular intervals.
Contents of Sales report
Such reports usually contain information on the names and addresses of the customers, the orders received or to be received from them, the terms of the deal, the preferences of the buyers, the action required on the order from the organization, etc.
Advantages of sales reports
1. Sales reports enables the concern to take suitable action at the appropriate time.
2. The report is an evidence of the actual work done by the salesperson.
3. It helps to evaluate the performance of the salesman.
4. The sales report is also an indicator of the effectiveness of the sales promotional activities of the business.
5. It also indicates the trend in sales in each area and the steps to be taken to increase sales in certain places.