Sales management’s next task is to measure actual performance. Emphasis in this phase of control, in other words, shifts to gathering performance information. It is necessary to define information needs, determine the information sources, and collect the information.
The choice of performance standards dictates the information needed. However, with increasingly sophisticated management information systems, the choice of performance standards is based as much on information availability as on the desire to use certain standards. It is good practice to review periodically the sales performance standards in use and the availability of other information that might permit use of different or additional standards.
There are two basic sources of performance information: sales and expense records and reports of various sorts. Almost every company has a wealth of data in its internal sales and expense records, but this information frequently requires reworking, or reprocessing, before it is useful for sales control purposes. Reclassified according to sales management’s information needs, sales and expense data contribute to the determination and measurement of actual performances.
The methods of obtaining needed information depend upon the sources. Internally generated information, such as that from the data-processing installation, is provided on a routine basis, or in response to requests for special tabulations. Information obtainable only from sales personnel or field sales management personnel is gathered through formal reports; such information is also obtained through personal observation-by trips to the field or through field sales supervisors.
System of Field Sales Reports
The fundamental purpose of field sales reports is to provide control information. Good communications require interaction between those preparing and those receiving reports. A good field sales reporting system provides both for communication from the field to headquarters and from the headquarters to the field.
Field sales reports provide sales management with a basis for discussion with sales personnel. They indicate the matters on which salespeople need assistance. The sales executive uses field sales reports to determine whether sales personnel are calling on and selling to the right people, and whether they are making the proper number of calls.
A good field sales reporting system assists sales personnel in their self improvement programs. Recording accomplishments in written form forces individuals to check their own work
Purposes of field sales reports The purpose a report is to serve determines the nature of the information it contains and the frequency of its transmittal. The general purpose of all field sales reports is to provide information for measuring performance; many reports, however, provide additional information. Consider the following list of purposes served by field sales reports:
- To provide data for evaluating performance-for example, details concerning accounts and prospects called upon, number of calls made, orders obtained, days worked, miles traveled, selling expenses, displays erected, cooperative advertising arrangements made, training of distributors’ personnel, missionary work, and calls made with distributors’ sales personnel.
- To help the salesperson plan the work-for example, planning itineraries, sales approaches to use with specific accounts and prospects.
- To record customers’ suggestions and complaints and their reactions to new products, service policies, price changes, advertising campaigns, and so forth
- To gather information on competitors’ activities for example, new products, market tests, changes in promotion, and changes in pricing and credit policy.
- To report changes in local business and economic conditions
- To log important items of territorial information for use in case sales personnel leave the company or are reassigned.
- To keep the mailing list updated for promotional and catalogue materials.
- To provide information requested by marketing research for example, data on dealers’ sales and inventories of company and competitive products.
Types of Sales Force Reports
Reports from sales personnel fall into six principal groups.
Progress or Call Report: Most companies have a progress or call report. It is prepared individually for each call or cumulatively, covering all calls made daily or weekly. Progress reports keep management informed of the salesperson’s activities; provide source data on the company’s relative standing with individual accounts and in different territories, and record information that assists the salesperson on revisits. Usually the call report form records not only calls and sales, bill more detailed data, such as the class of customer or prospect, competitive brands handled, the strength and activities of competitors, best time to call, and “future promises.”
Expense Report: Because most sales personnel are reimbursed for expenses and itemized expense records are required for income tax purposes, most companies have an expense report. From sales management’s standpoint, the purpose is to control the nature and amount of salespersons’ expenses. This report also helps the salesperson exercise self-control over expenses. The expense report reminds salespersons that they are under moral obligation to keep expenses in line with reported sales-some expense report forms require salespersons to “correlate” expenses with sales. The details of the report form vary with the plan for reimbursing expenses.
Weekly Expense Report
Name__________________________________________
Week Ending____________________________________
Itemize below Amount to be reimbursed I hereby certify that the above expenses represent monies spent for legitimate business only
Approval___________________
Signed___________________________
Sales Work Plan: The salesperson submits a work plan (giving such details as accounts and prospects to be called upon, products and other matters to be discussed, routes to be traveled, and hotels or motels) for a future period, usually a week or a month . The purposes are to assist the salesperson in planning and scheduling activities and to inform management of the salesperson’s whereabouts. The work plan provides a basis for evaluating the salesperson’s ability “to plan the work and to work the plan.”
New-Business or Potential New-Business Report: This report informs management of accounts recently obtained and prospects who may become sources of new business. It provides data for evaluating the extent and effectiveness of development work by sales personnel. A subsidiary purpose is to remind sales personnel that management expects them to get new accounts. Comparing the information secured with data in company files, management evaluates the effectiveness of prospecting.
Lost-Sales Report: This report provides information for evaluating a sales-person’s abilities to keep customers and to sell against competition. Lost sales reports point the way to needed sales training, changes in customer service policies, and product improvements. The salesperson reports the reasons for the loss of the business; but receipt of a lost-sales report also causes management to consider further investigation.
Report of Complaint and/or Adjustment: This report provides information for analyzing complaints arising from a salesperson’s work, complaints by class of customer, and cost of complaint adjustment. This assists management in detecting needed product improvements and changes in merchandising and service practices and policies. These data also are helpful for decisions on sales training programs, selective selling, and product changes
Reports from Field Sales Management: In decentralized organizations, field sales executives have an important part in setting sales performance standards. Branch and district sales managers and, in some cases, sales supervisors assist in establishing sales volume quotas for salespeople who, in many companies, also are consulted on their own quotas. Branch and district sales managers, in addition, play roles in breaking down branch and district sales volume quotas to quotas for individual sales personnel, and to products or product lines and/or to types of customers—occasionally, even to specific accounts. At the district level, especially in larger companies, profit and/or expense quotas are sometimes set for individual sales personnel and by product line.
The district sales manager’s planning report is called a district sales plan, often prepared by compiling, with or without revisions, sales work plans, and covering the work or results that each district salesperson expects to accomplish during the month, quarter, or year ahead. District sales plans usually require the district sales manager to suggest standards for appraising his or her own performance, for example, the recruiting of a certain number of new sales personnel and the carrying out of some amount of sales training. District sales plans are subject to review and to revision by higher sales executives.
Field sales executives have responsibility for reporting information on personnel performance. Since they are in the most frequent contact with the sales force, they are well placed to observe individual sales personnel in the field. Consequently, field sales executives prepare “sales personnel evaluation” reports, often of the merit-rating type, which gather information on qualitative sales performances. In some companies, this is called a “progress report” and includes qualitative information on personnel performance and data comparing individual performance to quantitative standards. Sales personnel evaluation reports are prepared either periodically or each time a district sales manager or supervisor works with a salesperson.
Who should evaluate sales people?
The primary evaluator should be sales persons’ immediate supervisor because this person has direct knowledge having actually worked with the sales person. For some companies the immediate supervisor completes the entire evaluation including recommendations for pay raises and promotions. The evaluations and recommendations are then sent to the manager’s immediate supervisor for final approval. The manager’s supervisor accepts the recommendations without question.
In majority of organizations several managers evaluate each salesperson. The simplest approach is for the district manager and the regional sales manager to arrive at the evaluation. The other district managers in the region also may express their opinion when the region’s entire management group gets together periodically.
Review is necessary
- To make certain that the appraisal form has been filled out properly.
- To check against personal bias or errors in judgment
- To rate the rater’s ability to set performance standards and to evaluate sales personnel
When sales people be evaluated? : Sales people should be evaluated at the end of each performance cycle. A performance cycle is a period related to specific product goals or job activities. For example consumer-goods manufacturers typically have some products they want to emphasize periodically. They may have six performance cycles during the year. Every two months sales force is given specific sales goals for five to ten different products. These goals should be compared with results after each cycle. In addition sales people are monitored monthly for other products they sell. These periodic performance evaluations provide the input for semiannual and annual performance evaluations. They provide important feedback to both management and sales people. A minimum of one formal evaluation should be completed yearly for each salesperson.
Number of Reports: The optimum number of reports is the minimum necessary to produce the desired information. Holding down the number of reports is important, since they are generally made out after the selling day. Report preparation places demands on free time, and, unfortunately, the best people often have the least time. All reports are reviewed from time to time to determine whether the information is worthwhile. When a new report is proposed, the burden of proof of its need is upon its advocates. Information obtainable through other means at no higher cost should not be gathered through field sales reports. Some companies, in assessing the worth of a sales report, discontinue it without notice or insert intentional errors in the form, thus learning whether the report ill essential and the use, if any, made of the information.
Design and Construction of Reports: Each field sales report should be as short as is consistent with its purpose. This is especially important for those submitted by sales personnel-whenever possible, the form should provide for easy checking off of routine informational items. Similarly, sales report forms should be of conveniently portable size and shape.
Information on field reports should be so arranged that it can easily be summarized. There should also be set routines for transferring information onto other records.
Detail Required in Sales Reports: The amount of detail required in sales reports varies from firm to firm. A company with many sales personnel covering a wide geographical area needs more detailed reports than does a company with a few salespeople covering a compact area. The more freedom that sales personnel have to plan and schedule their activities, the greater should be the detail required in their reports. However, and in apparent contradiction, commission sales personnel are asked for less detail in reports than are salaried salespeople, probably because management feels that it has less power to direct their activities. In general, the higher the caliber of sales personnel, the less is management’s need for details. High-caliber people are expected to exercise self-control, thus reducing the need for detailed formal reporting.
