Evaluate your sales team's performance
By John N. Brennan, Shipley Associates
Before you can evaluate the performance of your sales team, you must first analyze its components. Here is a simple formula you can use to analyze the performance of your team as a whole or of individual sales representatives:
Performance = Competence + Motivation + Opportunity
The components are independent of each other. In other words, a sales representative can be highly motivated but incompetent, poorly motivated but highly competent, poorly motivated and incompetent, or highly motivated and highly competent. Regardless of your sales team's level of motivation and competence, if the opportunity component is weak, sales performance suffers.
After you evaluate the components of performance, evaluate another key measure of performance: sales results. After you complete all of your evaluations, you can take action for each sales representative.
Competence includes knowledge of your products, your sales processes and policies, your company, and your industry. It also extends to knowledge of your customers, their problems and opportunities, and their industry. Additionally, it includes a basic understanding of how business operates.
Depending on your industry, sales representatives might need to have a certain amount of knowledge in technology, finance, engineering, manufacturing, or human resources. They should be able to ask informed questions of their customers and to perceive gaps in their own knowledge so that they can call in a technical expert at the appropriate time.
The second element of competence is sales skills. These skills include:
<image no longer exists> Knowing how to prospect for business
<image no longer exists> Knowing how to prepare for a sales call
<image no longer exists> Knowing how to build rapport and trust with customers
<image no longer exists> Knowing how to qualify prospects and assess their needs
<image no longer exists> Knowing how to write a proposal and deliver a sales presentation
<image no longer exists> Knowing how to overcome objections and close the sale
When you evaluate representatives who manage key accounts, look at their skills in building relationships at multiple levels of the customer organization, managing change, communicating back into your company, influencing, negotiating, and thinking strategically.
You have several tools to assist you in this evaluation. There are sales competency assessments that you can perform on your representatives. The best assessments list generic sales skills and knowledge and use behaviorally anchored rating scales (BARS). BARS help you rate objectively, fairly, consistently, and precisely.
Some companies create competencies from benchmarking studies, focus groups, and customer surveys. However, you may find that you can customize off-the-shelf assessments to meet your particular situation. Here is a sample of an assessment of product knowledge used by an electronic publisher of political and economic reports:
Level 1 (Novice) Knows the names of all the products and can review features with customers from the product catalog or sales collateral.
Level 2 (Competent) Knows the names of all the products and can review features with customers from the product catalog or sales collateral. Can list current world economic and political events. Can demonstrate online products at a customer's desk. Answers customers' general questions about the product.
Level 3 (Proficient) Knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral, if necessary. Is aware of current world economic and political events and can link them to a customer's business. Can demonstrate online products at a customer's desktop. Answers customers' general and specific questions about the products.
Level 4 (Expert) Knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral, if necessary. Is aware of current world economic and political events and can discuss them in depth on a collegial level with customers. Can demonstrate online products at a customer's desktop. Answers customers' general and specific questions about the products.
There are also online selling-skills tests that measure various sales traits or aptitude. Many tests claim to measure competencies, and they might even produce a report that reads like a competency assessment. But, in fact, they measure only aptitude — useful for the selection of sales representatives, but less useful for evaluating performance.
Observations in the field
The most effective method of evaluating your sales team's competencies is to accompany them into the field and observe them in action. Use a competency assessment as a guide, and record what you see. Your representatives will appreciate the time you spend with them, and they will be much more likely to accept your assessment.
Motivation is the desire to succeed. It can come from within or from incentives.
Assessing your representatives' motivation is much more subjective than assessing their competencies. Observe them in the field and around the office, and note the following:
<image no longer exists> Are they giving 100 percent effort?
<image no longer exists> Do they have a positive attitude?
<image no longer exists> Do they enjoy seeing their customers?
<image no longer exists> Do they celebrate their sales successes?
<image no longer exists> Do they closely track their sales results and commissions earned?
Also look at past performance. A decline in performance might indicate a motivation issue rather than a competency issue.
Opportunity is the availability of goals, territory, tools, products, and support.
Performance evaluation starts with you. To evaluate the opportunity component of performance, ask yourself the following questions:
<image no longer exists> Have you set the right sales strategy and goals?
<image no longer exists> Does your team understand and accept the goals?
<image no longer exists> Are territories clearly defined?
<image no longer exists> Do you have the right salespeople in the right territories?
<image no longer exists> Does your team understand and accept the territory assignments?
<image no longer exists> Does your sales team have sales collateral, product samples, portable computers, and electronic communication devices?
<image no longer exists> Does your sales team have marketable products?
<image no longer exists> Are the products positioned, promoted, and priced effectively?
<image no longer exists> Is adequate product training available?
<image no longer exists> Do you support your representatives in the field?
<image no longer exists> Do you coach your representatives, team up with them on joint calls, empower them, and provide a winning sales culture for them?
<image no longer exists> Do you create effective sales incentive programs, partner with marketing to generate leads, and partner with production to coordinate delivery?
A negative response to any one of these questions might affect the performance of your sales team.
Evaluate sales results
At this point, you have evaluated the competencies and motivation of your representatives. You have also considered the role that opportunity might have played in your representatives' performance. Now it is time to look at the most important measure of performance: sales results.
Evaluate performance against sales goals
The fairest way to evaluate sales results is to measure them against goals. Keep track of whether your representatives achieve or exceed the goals that you set for them.
Be sure to set goals that support your sales strategy. If your growth strategy is to get more revenue from existing customers, it's a good idea that your sales representatives' individual goals state the source of the revenue. Your evaluation measures might include a percentage of total revenues from existing customers, and an increase in revenues from existing customers compared with last year. You would not give much weight to any decline in the total number of accounts.
Measure sales results rather than sales activities
Be careful of the activity measures trap. If you measure sales activities (for example, number of calls or number of proposals), you get activity from your representatives, but it might be at the expense of results. Instead, measure results such as revenue, profit margins, number of new accounts opened, and increases over last year.
Evaluate teamwork in complex sales
High-value, complex sales with lengthy sales cycles present a different challenge. Consider measuring the financial value of opportunities uncovered during the needs assessment, the cost of proposed solutions, the amount of profit protected during price negotiations, and the value of additional business created during follow-up after the sale.
Remember that complex sales require team efforts. Consider and measure the contribution each team member makes to these sales. A writer revises a proposal. A sales assistant sells, schedules, and coordinates sales meetings with key people inside the customer organization.
After you complete your evaluations, use the following four categories to decide which action to take with each of your salespeople.
Competent and motivated
Keep and delegate
Incompetent but motivated
Keep, coach, and train
Competent but unmotivated
Keep and counsel, or redeploy
Incompetent and unmotivated
Consider redeployment or termination
Sound evaluations deliver results
A fair and accurate evaluation of your sales team's performance helps you get the best from your team. By evaluating performance against goals, measuring results rather than activity, and choosing the optimal development strategy for each sales representative, you can ensure that your team is always ready to deliver maximum performance and results.
About the author John N. Brennan is a Senior Consultant with Shipley Associates, a professional services company focusing on sales and business development consulting, training, and process improvement.
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