How do you measure a salesperson’s performance?

The most common response I hear when I ask a sales person how he or she did for the quarter or the year; is something about their quota. i.e., “I made quota” or “I’m at 70% of quota, but with two big deals hanging fire.”  While quota should always be part of a performance evaluation, I would suggest a good appraisal should include other considerations.

In a previous posting we talked about Marketing Metric, Sales, needs Performance Metrics. Good performance criteria should have quantitative and qualitative measurements. The following are some of the major categories for both areas.

Quantitative measurements for a salesperson (note: appropriateness will depend on the salesperson’s role or title).

1-Sales quota for the year, for the region/territory, percentage as compared to others and other regions/territories.

Looking at just one person’s sales quota does really tell you anything about that person’s performance. You need to see how each person in doing relative his/her surround, the regional performance and others.

2-Accounts managed, number of account calls

You need to measure sales personnel on how they handle and manage accounts. You may have one person having a good quota but with just one account versus another person with equally good quota but with numerous accounts. Who is actually performing better?

3-Handling of expenses

It is great to have good people exceeding quotas but you want them to be profitable at the same time. Individuals should be goaled on managing and controlling expenses as related to their job (examples: marketing programs, travel, demos, and sales venues)

4-Geographic coverage, account “density”

Similar to criteria # 1, account coverage should be factored in to get a quota per account ratio. This will recognize individuals who not only strive for revenue, but also strive to develop accounts for future rewards.

5-Products and services sold per goals

A well balance of portfolio to revenues not only benefits a sales person but provides a nice competitive advantage in the overall market place

6-New accounts/ new opportunities

It always great to get re-occurring revenues, but a good salesperson always needs to develop the “next” group of customers. This is important for many reasons; two of them are increasing your base and opening up new markets.

Qualitative measurements for a salesperson

     1-Innovation- creative ways to “sell” to various accounts

Companies always need to differentiate themselves and what better resource then your sales person who is the front line with the customers. You can write great brochures, wonderful case studies, but the best promotion is a high energy sales person who exudes enthusiasm.

     2-Recuiting and training of others

People in sales are the most critical resource and usually ones of higher salary; therefore bringing on and training these individuals is a key component for sales success.

     3-Motivation and motivation of others

Sales people’s attitude is a reflection of the company they work for, thus if you want your image to be positive, can do, and confident looking then make sure part of sales appraisal has this factor.

     4-Role modeling/leadership for others

Related to recruiting and motivation, sales are a focal point from a customer’s point of view.  Thus performance should include how a sales person is viewed by the customer, follow sales people and sales management

     5- Managing accounts, tasks and personnel

Sales people have to be good business people also. How one manages and cares for accounts is equally important as acquiring accounts.

     6-Efficiency in tasks, meeting goals

Good sales people (actually all employees) need to be efficient because we all contribute to the success of the enterprise and therefore how we get things done has an impact on both customer satisfaction and economic factors.

In summary a salesperson’s performance appraisal should be multi- dimensional.  The two major sub- categories of qualitative and quantitative provide a good balance for each salesperson.   Second, by having a mix of criteria, you normalize sales people, territories and goals for apples- to- apples comparison. Third, you will have your sales force working towards all goals and objective and thus a win – win for all.

So once you have your sales strategy in place, one of the major tasks is to develop territory goals and eventually goals, measurements and performance criteria for each member of the sales team.

 

RHL 5/4/10

3 comments to How do you measure a salesperson’s performance?

  • Dick:

    All of your measurements make sense, that quota should not be the only criteria. However, I wish more companies focus in on the financial performance of their sales teams, the actually margin delivered in their portfolio. I also think that new customers/markets are great, but your best customer is your existing customer, thus I would judge an individual on how deep they go in this department.

  • yeah, Thanks for posting! I really enjoyed the report. I’ve already bookmark this article. :)

  • sometimes Sales Management takes a lot of effort and skill.”–

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