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Performance evaluations are just what they say: an evaluation of how a person is doing against predetermined standards of success. They are critical measurement tools for sales managers, organizations, and the sales professional.

Rating Systems

As you begin the process of measuring and managing performance, you may find the task overwhelming. Let’s face it—it is easier to complain about salespeople and their performance than to determine exactly what their performance is in relation to the realities of their assignments. Begin this activity, which should be done every four to six months in today’s business environment, by developing a list of areas to evaluate. Some areas might include:

• Sales results
• Sales quality
• Sales activities
• Administrative activities
• Customer relations
• Selling and nonselling competencies
• Training
• Job knowledge
• Organization
• Time and territory management
• Team contribution
• Expense control
• Cross-organizational relations
• Personal attributes

At this point, the last thing you want to do is to decide any of these areas are ‘‘poor’’ or ‘‘OK.’’ You need a rating system to effectively determine their current state, where they have been, what progress they have made, and where you realistically want them to be at a designated time in the future. Determine appropriate metrics to use (dollars, percentages, ratios, etc.) for each category and keep it simple. Eliminate the average rating, and forget the overall rating.

The salesperson’s evaluation will consist of quantitative and qualitative issues. When evaluating the quantitative areas, use the metrics. When looking at the qualitative areas, use terms, numbers, letters, etc. You may choose a 1–10 or A–D rating system, but you still need to designate exactly what these mean. One of the more common, and therefore the most accepted, is the six-level evaluation rating system. It looks like this:

• Rating 1: Poor: Performance is significantly below acceptable levels.

• Rating 2: Below average: Performance is close to, but not yet at, the acceptable level.

• Rating 3: Fair: Performance is at the acceptable level, but still needs improvement.

• Rating 4: Good: Performance is at the acceptable level with accomplishments satisfactory.

• Rating 5: Very good: Performance is above the acceptable level, and accomplishments are very satisfactory.

• Rating 6: Excellent: Performance and accomplishments are outstanding.

This is only one example. Select the rating system that is best for you and the realities of your business. Make sure that it will accomplish your desired results in the easiest, simplest, and fairest manner possible.

Evaluation Tools

One often overlooked tool for evaluating performance is pipeline management (sometimes referred to as funnel management). This time-tested method can be brought up to date with modern technology, such as the hardware and software mentioned previously (for example, contact management and customer relationship management software), or it can be completed on a simple piece of paper. Its real value is to provide you with three key areas of knowledge. First, where are the salesperson’s strengths and weaknesses related to each specific sales competency (prospecting, presentations, proposal writing, negotiations, etc.)? Second, what will be the revenue at any particular time period in the future? Finally, what resources will be required to support sales at any future time period? It’s relatively simple. Consider using it in the following steps:

Step 1: With your team involved, identify the primary steps necessary to successfully complete a sale. Don’t become too process oriented and break the steps down into all the decision and exception points. Simply consider what it takes to drive a sale through to closure. Some steps you might consider include:

• Identification of an Opportunity Stage. Make sure you all agree on what an opportunity might be. Typically, it must include a real need of a specific customer, a timeframe within which that need must be filled, and the necessary budgeted funds to acquire a solution to that need.

• Identification of Decision Maker(s) Stage. Of course, you might also want to know the influencers, evaluators, approvers, and acquirers.

• First Meeting with Decision Makers Stage. This is for presenting the viability of your company as a possible solutions provider.

• Opportunity to Gather Additional Information Stage. This might be research, engineering specifications, historical data, price design, etc.

• Presentation of Solution Stage. Here you should consider the proposal or presentation stage in whatever is typical in your industry and your customer’s marketplace—anything from a written proposal to a stand-up presentation.

• Negotiations Stage. This could be a formal event between your negotiations/contract/legal team and that of the customer or just the salesperson and the buyer working out the terms and conditions.

• Contract Stage. Here your salesperson is required to actually get a signed contract.

• Project Management Stage. Postsale event would require the salesperson to assemble, and perhaps hand the project off to, an implementation person or persons.

• Any Other Stage. Consider what it takes to drive a sale in your business and industry; every business is unique. Don’t forget any special requirements of your leadership or management team, as well as such possible departmental or support crossover teams like pricing and proposal teams.

You will probably have six to eight specific steps that can be listed within a pipeline chart. Again, don’t get so specific and detail oriented that the sales professional must spend all his time communicating to you each small step he has taken on each sale.

The reducing space is based on the reality that opportunities ‘‘fall out’’ of the list as each stage is completed. Perhaps the customer changed direction or lost funding. Maybe, after the data-gathering stage, it turned out that your product or service was not a good match. No matter how good a salesperson is, and no matter how good your products or services are, it’s unlikely that you will close every opportunity.

Step 2: Now that you have an agreed upon a pipeline chart, you can begin to manage from it by asking your team members to provide a monthly list of opportunities on which they are currently working. Don’t worry about every little nickel and dime sale. Just ask them to list the bigger opportunities over a particular dollar threshold. They should give you the following information:

• Name of customer

• Product, service, or application

• Anticipated dollar value of sale when closed

• Current sales stage

• Expected sales stage in next thirty days

• Any unique challenges or obstacles that could impact the successful closure of the sale

Step 3: Take a look at your combined pipelines for all your team members. Notice anything? Perhaps you discovered that your team’s total sales results for any specific month in the near future look dismal. Maybe you see a specific month coming up in which your resources that support sale closure and implementation of offering will be overburdened. For example, will you have enough proposal writers or contract negotiators? These charts, when combined, will help you plan for the future more effectively and will communicate prospects to your leadership with a greater sense of confidence.

Step 4: One of the most valuable side effects of a pipeline chart is its ability to evaluate any salesperson’s weaknesses by identifying where the pipeline becomes congested and where most of the opportunities are lost. For example, if most ‘‘fall out’’ at the proposal stage, than this is probably a signal to review the salesperson’s writing skills or financial analysis competency. Maybe a little training would improve the ability to advance more opportunities to closure. Or, the problem may be positioning with new decision makers, contract negotiations, or any of the other key steps to sale closure