What would you say is the most crucial component of a sales performance evaluation? I would say that there's many components that are important in having a successful performance evaluation. Not only do you need to measure the salesperson success sales activity, you have to measure their expenses, you have to understand what the company has put forth for them in terms of pricing, how beneficial that is or helpful that is in helping them reach their objectives. You also have to make sure that as a manager, that you give them the tools that are needed to complete their sales job in terms of training, coaching, and several things. So, that when you do finally, in the end, evaluate them, you have basically looked at all aspects of their position. Then you can make a more fair assessment of how they've done. Is there a story you can share of a business that incorrectly believe that their high sales expenses could be made up for by rising sales revenue? Most recently, the story would be on a small business side. Like when I had my business, I did not have a retail-front, storefront because I knew those fixed costs would have to be covered whether I sold one item or 500. So, I think making sure that you're on the lower expense item rather than a higher expense, just being very cautious about expenses. Just to assume that you're going to reach this goal, it often doesn't happen that way. So, I would say maybe erring on the side of caution is the best. Okay. What kinds of business or computer skills are needed to operate sales performance analysis software. Excel spreadsheet. If you can understand what the parameters or the goals are for the salesperson, percentage of quota, how effective their sales in relation to their expenses are, how that balances out. Really, if you could look at that and read the mathematical basic math, you should be fine. Can you think of any expenses that might crop up unexpectedly and catch your business off guard? What kind of problems that a business might have as a result? Well, the biggest thing that I would think of is having dinners or more buying free items or something for customers that is just really outside the parameters of the business. Something that could be looked at as unethical, I would say. Or contributing to certain types of causes that might be questionable or politically charged in one way or another. It might come back on the business as a negative, and that has to be really looked at carefully. What are some factors that might lead to a sales manager re-evaluating customer price and coverage policies. Well, if the salesperson is doing everything that they're asked to do, and they're continuously losing business, and you've been along with them and you've seen that their approach and their work ethic and everything is good, there might be a situation where the company is not competitive in a certain venue. In that case, it's not necessarily the salesperson error, but it may be the company needs to make adjustments. Also, there might be a competitive situation where competition in that area might necessitate changing the pricing to accommodate that particular area. How reliable or accurate is the Pareto principle when performing a sales performance analysis? It's absolutely time-tested, 80-20 rule: 80 percent of your sales productivity comes from 20 percent of your sales force. Over and over the studies show that, but in my experience it is that way. It's usually pretty spot on. That those who are the best workers are the most effective. When as a manager, what you want to do is dig into that and find out okay, what combination are they using that's causing that jump in productivity, and work with that with their other salespeople to see if they can help out and boost them into the 80 percent. What is the most effective way that a sales manager can evaluate their sales team without being unfair or harsh? Most effective way is to do a lot of homework. Is to look at what's going on in their lives? How are they doing their job? Have I given them the proper training? Are they being challenged enough? Are my expectations normal? Good enough? Or too high? You take all these components in, and you evaluate that person from several different areas. Then that's the best way you can avoid being biased in one way or another. Do you have a story that you can share with us about a time when either you were evaluated or when you had to evaluate others about sales performance, and whether that was a success or a failure? One particular time I remember it was probably 15 years ago when our company was a large company that I worked for decided to use what we call 360 degree performance appraisal. So, what they did was the manager stepped back a lot and all the other people that were in the department evaluated another person within the department on their performance for the year. What tended to happen is everyone was cautious on edge and didn't feel like they could talk freely and be as open with the people that they worked with because they were afraid about poor evaluation. So, in my experience, they didn't use it again. They did one year and they decided not to use it again. I was never even evaluate and on it. I just know that trying to evaluate people that I worked with was difficult in that perspective. It just made people on edge. Are there any new processes or technologies that sales managers are using to evaluate their sales force? Salesforce.com is a big thing now that technology platform. It just allows, first of all, allows salespeople to go through their prospects, qualify their leads, work with customers, and use social media tools and a lot of the technology to keep in touch with their customers. So, that's a really effective tool for sales force. But it also, the manager can take a look at what the salesperson is doing within their area and they can see how successful they are in certain areas. Then they could coach them or offer guidance saying, "Maybe you could increase your call volume or change the structure of your day in terms of logistics so that you are able to see more people in a day." So, it's helpful in both ways. How can you use metrics to measure sales performance? Well, a lot of times you would use percentage of quota, is one metric, and that's helpful just straightforward how well are they doing, but you also want to use as far as number of sales calls per day. I know in my experience, we lined up our day where we knew what exactly we were doing in each hour of a day, how many sales calls we had to make in that day to meet our annual objective. So, we would take an annual objective across all things; sales calls, sales volume, new customers, customer loyalty programs, and things like that. Take those parameters and then back them off so that we had a weekly or even daily objective, so that we would keep on top of it. So, the metrics are very important. You start with the annual and you back it off to a quarterly, or monthly, and then a weekly, and then a daily so that you know every day if you don't do these certain things or meet so many people, you're not going to meet that objective 364 days later. What are some of the pros and cons of measuring sales productivity? Well, of course, the pros are you can keep track of who's doing well and who's not, and sales and revenue, and all that. Some of the cons that are really concerning is that sometimes the salesperson does not put the customer first. That's the biggest issue. Is that they're worried productivity. We tend to do what we're rewarded to do. So, if we're going to reward people on high productivity and not reward them on good customer care, then we have to understand that high productivity is going trump the second one. So, the best packages are where both are really emphasized so that you do have customer care and you have productivity. How do you measure customer loyalty, and how does it play a role into the evaluation process? Actually, in my experience we have not measured customer loyalty. We've measured sales performance. Of course, you want to make sure you don't have customer complaints, but they're really has never been a venue to say how loyal is this customer? Why are they so loyal? Why are they staying with us over time? It's really important to know. Some salespeople may not be as high performing, but they have a huge base of loyal customers that are very staunchly loyal. That's important to measure. It should be given the weight, as much weight at least as revenue producers because it's very expensive to get a new customer. It's much less expensive to maintain a loyal customer. How often should you evaluate your sales team? I would say quarterly, annually definitely, and if you set the parameters in annually, say at the beginning of the year, and you visit back with them at least quarterly to say, "Okay, here's our objective. How are we coming forward on this objective?" Then you coach them on where they're great, and where they need to improve, come back again another three months so that they are constantly being updated with where they are today and where they need to go in the future. So, quarterly.
