3.

Introduction to Sales Force Performance Evaluation :

3.1. Evaluation of Sales Force Performance
Evaluating the performance of a sales force is a comprehensive process that
encompasses In several keys areas :

1-Sales Volume Analysis: This involves examining the actual sales volume compared to the
budgeted goals. It helps in identifying variances and understanding their causes. This chapter
focuses on sales volume analysis.

2-Marketing Cost Analysis and Profitability Analysis: These analyses look at the costs
associated with marketing activities and their impact on profitability.

3-Evaluation of Individual Salesperson Performance: Various analytical measures are used

to assess the performance of individual salespeople.
Importance of Performance Evaluation :

Performance evaluations are crucial for identifying and focusing on customers with the
greatest potential. For companies to remain competitive, especially in the current market
environment, they must effectively evaluate their sales performance. This ability to assess
performance helps in making informed decisions and strategically allocating resources to
maximize sales and profitability.

3.2. A Marketing Audit: A Total Evaluation Program :

a.Definition : A marketing audit is a comprehensive, systematic, and periodic evaluation of

an organization's marketing objectives, strategies, activities, and performance.

b.the importance of marketing audit :

Identifies Issues: Reveals gaps in marketing activities.

Strengthens Strategy: Helps stakeholders to enhance their competitive advantages.

Adaptability: Enables the organization to adapt to market changes effectively.

c.key features :

1.Thorough: In-depth review of all marketing activities and strategies.

2.Costly : Involves significant financial investment, especially if external experts or resources

are involved.

3. Requires substantial time, effort, and resources to gather data, analyze, and report findings.
3.3.Sales Management Audit :

a.Definition : An evaluation of a company’s sales objectives, strategies, and tactics, as well

as the sales organization, including policies, personnel, and performance.

b.The importance of sales management audit :

Ensures alignment with business goals: It checks if the sales activities are helping the
business achieve its overall objectives.

Identifies strengths and weaknesses: It helps pinpoint what’s working well and where
improvements are needed in sales management.

Improves sales team effectiveness: By analyzing the team’s performance and methods, it
ensures that they work more efficiently and successfully.

C.Key Features :

_ It evaluates what goals the sales team has, how they plan to reach them, and the specific
actions they take.

_ The audit assesses the sales team’s policies, the people involved, and how well they’re
doing.

_ The sales audit is an important part of a wider evaluation of all marketing efforts, ensuring
everything aligns.

3.4.The Evaluation Process

Figure 1 : The evaluation process

1. Find out what happened : get the facts by comparing actual results
with budgeted goals to determine the variations.
2. Find out why it happened : determine what specific factors in the marketing
program accounted for the variations.
 3. Decide what to do about it : plan the next period’s activities to improve
on unsatisfactory conditions and capitalize on favorable ones.

5. Bases for Analyzing Sales Volume :

5.1.Total Sales Volume :

Figure2 :Total Sales volume

Total sales volume, which represents the combined sales of all products across all
territories and customers, provides an overview of a company’s performance. However ,
analyzing sales trends over time is more valuable than focusing on a single year’s volume .
Key trends include the company’s sales performance over several years and its share of
the total industry market . Analyzing total sales is straithfoward , requiring only the
company’s annual sales figures and the total industry sales for the relevant market .This
data helps calculate the company’s market share , offering insights into its position in the
industry and guiding strategic decisions.

5.1.Sales by territories :
The goal of this type of analysis is to compare actual sales in different regions or territories
with expected sales, based on their potential. Here’s how it works:

5.1.1.Market Index Selection:

First, the company needs to select a market index that accurately reflects the potential sales
for each territory. For example, if a company sells products in a region where 10% of
national retail sales occur in a specific territory, the company should expect that 10% of its
sales come from that territory as well.
5.1.2.Determine Actual Sales:

Next, the company calculates the actual sales in each territory during the period being
analyzed. This could be in dollars or units sold.

5.1.3.Set Sales Goals:

Using the market index, the company determines the expected sales (or goals) for each
territory. For example, if Territory A should account for 27% of total sales, the goal for that
territory is calculated based on the total sales volume.

5.1.4.Compare Actual Sales with Goals:

The company then compares the actual sales from each territory to the goal set using the
market index. This comparison shows whether a territory is underperforming or
overperforming relative to expectations. A performance rating is then calculated by dividing
actual sales by the territorial goal. A rating of 100% means the territory met its goal, while
percentages higher or lower indicate overperformance or underperformance, respectively.

Key actions :

a.Soft Spots:

Territories that perform below expectations are called "soft spots." These areas are where
the company can make the most improvements, as focusing on them could yield the
greatest returns. For example, if Territory A has significantly underperformed, it becomes a
"soft spot" that requires management's attention to understand why it’s struggling and what
can be done to improve performance.

b.Evaluating Strong Territories:

On the other hand, territories that exceed expectations may require less immediate
attention. However, it’s still valuable to understand why these territories are performing
well—this information can potentially be used to replicate success in underperforming
areas.

C.Industry Comparison:

To gain additional insights, the company compares its performance to the industry averages.
This helps understand how the company is doing relative to its competitors in each territory.
For instance, if the company is performing better than the industry in certain territories, it
can build on that success. Conversely, if it’s lagging behind the industry, it may need to
rethink its approach in those regions.

5.2.Sales by Products :
 In many companies, the 80-20 principle applies to products, meaning a small number of
products generate the majority of sales or profits, while many others contribute little.
Analyzing sales by product lines can offer valuable insights to management, helping them
understand which products perform well and which do not.

Sales analysis can be done by:

a) Sales summary: Companies can examine current and past sales data for individual products
or product groups. This helps identify trends and understand how each product is
performing.
b) Industry Comparison: If industry sales data is available, it can serve as a benchmark for the
company’s performance, helping to determine whether sales trends are in line with the
industry.
c) Geographical Analysis: Analyzing sales of each product by territory helps identify regional
strengths and weaknesses. For instance, a product may perform well overall but may be
underperforming in a specific region, indicating a need for corrective action.

5.3.Customer classification :
The 80–20 principle is often evident when analyzing sales by customer groups, where a small
percentage of customers may account for a large portion of total sales. Many customers
contribute marginal or even unprofitable sales. Understanding this dynamic can help
companies optimize their sales strategies.

To analyze sales by customer groups, a company can use various classification methods:

1. Industry Classification: Customers can be grouped by industry, such as service stations,

marine, transportation, or government .
2. Channel of Distribution: Customers can be grouped based on how products reach the
market, such as wholesalers, department stores, or discount houses.
3. Key accounts: Companies may group customers by specific accounts, often highlighting key
or major accounts.

Combining the previously listed types of analyses provides even more in-depth information
to guide sales organizations.

Case Study : Seal Rite Envelope Company Analysis of Sales Volume

Background:

The Seal Rite Envelope Company manufactures and distributes a wide range of paper
products, including envelopes. Rose Douglas, the company's sales manager , and Chernak is
the new presdient of the company.

Key person :

Mr.Chernak :the new president of the company

Rose Douglas :the company’s sales manager

Main issue : is the difference in priorities between Rose Douglas, who focuses on
detailed data analysis, and Max Chernak, who prefers a broader, more strategic overview.

Question : How should Rose Douglas evaluate the effectiveness of her sales analysis
system?

Arguments :

Mr.Chernak : "I'm concerned about the effectiveness of our new sales tracking system.
While it provides a lot of data, I'm not sure how relevant it is to our business. Is the level of
detail we're getting really necessary? I'm worried that we might be getting lost in the data,
rather than gaining valuable insights."

Rose Douglas : "I understand your concern, Mr. Chernak. However, I believe that capturing
detailed data is crucial for making informed decisions. By analyzing the specific details of
each sale, we can identify trends, pinpoint areas for improvement, and optimize our sales
strategies. For example, we can see which products are selling well, which sales reps are
performing best, and which marketing campaigns are driving the most sales."

Mr.Chernak : " I'm still not convinced that the system is providing the practical value we
need. We need to be able to use the data to make quick decisions and take action. Is the
system user-friendly enough to facilitate this?"

Rose Douglas : "We've designed the system to be user-friendly and intuitive. We've provided
training to our sales team to help them understand how to use the system effectively.
Additionally, we're constantly working to improve the system's functionality and user
experience."

Recommandations :

_Focus on Key Metrics.

_Cost-Benefit Analysis.

_Enhance Decision-Making with Actionable Data .

_Leverage Technology for Efficiency.

Conclusion :
Sales volume analysis is essential for evaluating a company's performance by comparing
actual sales with budgeted goals, helping to identify variances, both positive and
negative. By examining these differences, companies can understand the causes behind
the variances, such as market conditions, sales force performance, product issues, or
regional factors. This analysis provides valuable insights that guide future planning,
enabling businesses to adjust sales strategies, allocate resources effectively, and make
informed decisions to optimize performance. Ultimately, sales volume analysis helps
companies stay competitive, adapt to changes, and ensure they meet their financial and
strategic objectives.