Setting standards of performance requires consideration of the nature of the selling job. In other words, sales job analysis is necessary to determine job objectives, duties and responsibilities, and the like. These, in turn, depend upon selling strategy. In some companies, for example, the key problem is to obtain new customers. The selling of new business requires skills different from those needed in companies whose main problem is that of servicing established accounts (that is, trade selling). Setting performance standards for new-business sales personnel requires different measures from those for trade-selling sales personnel. In companies relying upon dealer sales effort to push the product through the marketing channel, selling strategy calls for the manufacturer’s sales personnel to devote major segments of their time to training dealers’ sales personnel, assisting in the planning and preparation of dealer advertising, and securing “preferred” display space in dealers’ showrooms. Performance standards are designed to measure the performance of activities that the company considers most important.
Some unique sales jobs exist. The mainframe computer “salesperson”, for example, is both a management consultant and a system analyst who is required to know the decision-making approach appropriate to the particular industry or establishment buying the computer. Evaluating the job performance of a computer salesperson requires standards that measure not only skill in new-business selling but, even more basically, effectiveness as a management consultant and skill as a system analyst. It is important to recognize the nature of the selling job before selecting standards of performance.
Setting sales performance standards requires considerable market knowledge. It is important to know the total sales potential and the portion that each sales territory is capable of producing. Management needs evaluations of customers and prospects from the standpoint of potential profitability for each class and size of account. Marketing intelligence must provide evaluations of competitors’ strengths, weaknesses, practices, and policies. Management must know the selling expenses in different territories. All these items bear on the setting of performance standards, especially quantitative standards.
Sales management also takes other factors into account in setting performance standards. Sales planning is reappraised to assure that it is the best possible under the circumstances. The policies and procedures being used to carry the personal-selling portion of the marketing program into effect are reviewed for appropriateness. Adjustments are made for the strengths and weaknesses of the individual sales personnel and for the differences in their working environments. Sales management puts together a combination of sales performance standards to fit the company’s needs, its marketing situation, its selling strategy, and its safes organization.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.