EVALUATE THE PERFORMANCE OF YOUR SALES REPRESENTATIVES

Evaluating your sales representatives is an important part of your job. As a general rule a sales representative is evaluated on his results: how much he sells, and at what profit for your company.

How much a sales rep sells on a given territory depends on a number of parameters, such as the size of the potential market, the product adequacy for the market, the level of competition, etc. Based on these parameters product cost and distribution cost can vary as well. Company profit can be different for the same product sold to two different territories. This means that different sales objectives must be allocated to each territory, but it is necessary to quantify these objectives nonetheless and to assign them to your representatives.

Define Criteria

Assigning quantified objectives (number of products sold or revenue) and qualitative objectives (reach out to new prospects or reinforce a strategic partnership) are important tools to maximize the potential of your sales representatives. Each representative must know the objectives and agree with them to give his best. In an ideal world those objectives would be reachable with difficulty. In reality all managers know that objectives can become obsolete after a few months, if the market changes, if the sales representatives lands a large contract, etc. For these reasons it is not advisable to have an annual contract that ties a representative to a sales target, it is preferable to have a continuous dialogue to ensure that the sales representative remains motivated to sell your products.

Evaluation criteria are different for a new sales rep than for an established one. Do you get along well with your representative? Do you have easy and open conversation? How many new prospects is he reaching out to, and does he have sales opportunities? All these criteria are early signs of future success for a new sales representative.

There can be a ramp up period, presenting your products to a new market can take time. What is the typical sales cycle for your products? Some high-end equipment can have a sales cycle of several years, and you must give a new representative time to market your products before landing the first contracts.

For an established representative evaluation criteria should be simple: how much is he selling and how many new prospects is he getting. Level of sales is the essential parameter; it can be expressed as revenue or profit. Do not forget that it is more valuable to sell two times less but at a margin that is three times higher.

The second criterion is the number of prospects that your sales representative brings. If your sales representative has a lot of opportunities but a very low conversion rate there certainly is a problem. Identifying the root cause is key: do you need to train your sales representative better? Should you tailor your product to specificities of the local market? What are the barriers to closing the sale?

Results, results, results

Never lose sight of the end result. A sales representative can be very personable, very professional, but if he does not sell he is not useful to your company. You must then determine why results are bad. If the problem comes from the fit of your products for the market you must tailor the product quickly. But if the problem comes from the representative himself you must take steps to replace him. It is generally a difficult step but it is essential to the success of your company.