The Capital District Region is a vibrant area which has quite a potential as per the data collected but due to some reasons the performance is lagging behind the national average.
The primary reasons for this underperformance are low employee morale, high turnover and poor efficiency. Hence, we need to address these issues at the earliest and identify the high and low performers among the sales force in order turnaround the situation.
We need to critically evaluate the performance of the individual sales agents so as to identify the loopholes and plug them accordingly. Following are some of the metrics on the basis of which we evaluate individual sales agents and accordingly we need to make changes with respect to allocation of areas, sales targets etc.
Performance Metrics
The performance metrics of sales agents has been developed on four parameters namely:
– Performance
– Efficiency
– Business Development
Finally these metrics should be assigned Weightage and accordingly the sales agents are ranked and suitable territories be allocated.
Performance
Sales H1 (83) to H1 (82)
The ratio compares sales in first half year sales in 1983 to that of 1982. This indicates the performance of the sales agents. This would indicate the potential of the agent and the ability to harness sales potential in an area.
Higher the ratio better it is.
Sales/Active Account
This measures the sales skills of the agent , how far is the salesman able to push his products to his clients.
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Higher the ratio better it is.
Active/Potential Accounts
This compares the activity of the salesman, also measures whether the sales agent is able to convert potential in to actual sales.
Higher the ratio better it is.
Sales per unit area of Territory
This ratio measures the amount of sales over per unit area of territory. This would indicate the reach and potential of the salesman.
Higher the figure better it is.
Net contributions
Net contributions are calculated by deducting total compensation and expenses incurred on an agent from the total profits generated by that agent.
Higher the figure better it is.
Efficiency
Profit Margin
This ratio measures the margin of profits generated on every rupee of sales. This ratio indicates the focus of the salesman on pushing those products that have high profit margins.
Sales/Expense
This ratio measures ability of the agent to maximize sales while incurring minimum expense. This shows how efficient the agent is. Also it denotes the revenue earned per unit expense.
Higher the ratio better it is.
Profit/Costs
This ratio measures efficiency of the agents by calculating profits generated per unit if costs incurred. Costs include total compensation plus expenses incurred.
Higher the ratio better it is.
Expense/Area
This ratio measures total expenses incurred by the agent per unit of area under control.
Lower the ratio better it is.
New Business Development
Number of calls per potential customer
This ratio measures the endeavor of the agent to develop new business and harnessing potential sales.
Higher the ratio better it is.
New customers / Total customers
New customers added to total customers.
Higher the ratio better it is.
Individual Performance Evaluation & Recommendations
(Refer Annexure 1)
Doug Eaton
He is the most efficient salesman as his sales to expense ratio is the highest. His experience and networking skills has been responsible for this achievement. Over the years he has been an efficient performer, and has the credit of the highest profit contributed and also high profit/expense ratio. He can be assigned the job of mentoring new salesmen. New salesman under him could learn the job well.
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Ernie Burke
Though a good performer, he refuses to follow certain company policies like merchandising programs. He brings the third largest profit to the company but has a low profit/expense ratio, so should be made to reduce expenses. Since sales/account ratio is low hence should be placed in residential and retail areas and not in industrial areas.
Jean Durfee
In spite of the low number of potential accounts, she has generated a revenue figure which is third highest. Also the sales generated per unit expense are very high. Jean has the best conversion rate of the customers, and hence is a good performer. Jean has contributed high profit and low expenses, and should be given greater responsibility.
Ed Harlow
The area he is handling is very small but the expense to area ratio is very high. The market buying power could be one of the major constraints which are leading to high expense to area ratio. This area also includes high value accounts. It is a low number high volume business. The sales to expense ratio is comparable with that of the best performers. He could be called an average performer who likes dealing in big accounts and hence should be concentrating on items for industrial use.
Tom Furness
Furness is one the strong pillars for the company we notice that in spite of going through some personal problems, Furness has registered a growth in sales by 25%over the H1 of previous year. Besides, he has high expenses which could be a cause of concern. Maybe we should expect better performance from him in next few months.
Zeke Gibson
The efforts which he is putting in the work are low which is evident from the number of calls. Also his conversion ratio (Active Accounts to Potential accounts) is one of the lowest among all. Though his sales figures are comparable in the absolute terms, they are less as compared to the potential of the region. Another indicator of his declining performance is his total compensation. Though his salary is 3rd highest, the total compensation he is getting is lower down the order. He should be given clear targets, and should be given a warning to improve his performance.
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Sonny Caplan
Though the buying power of the market is comparable to others, and market has large number of potential accounts, the sales generated by him are very low. His conversion ratio is poor. Expenses are high primarily because of very large area he needs to cover. So the region probably needs to be divided to tap the exact potential of the area and the employee. He is a poor performer and his performance needs to be watched closely.
Bill Alderson
He should be provided proper training under some experienced salesman, e.g. Eaton in the domain of goods and sales because he is from a different industry. He is an eager learner, young and hard working hence should be groomed for the future. He has been assigned to a very large geographic area which also has very high number of potential accounts. This mismatch between is experience and assigned area could be one of the major deterrents in his performance.
Metrics for Territories
The various territories within the Capital District Regions should also be ranked/ classified on the basis objective metrics. This way the allocation of salesman to respective various territories can be accordingly planned. Following are some of the metrics:
– Area size
– Population
– Active accounts
– Potential accounts
– Buying power index
– Potential accounts/area
– Number of
– Small stores (sales value basis)
– Medium stores (sales value basis)
– Large stores (sales value basis)
– Average growth percentage
– Percentage of total national sales
Above are some of the measures which should be kept in mind while assigning sales territories to individual salesmen, this way the salesman who is most suitable to a particular region can be assigned to it.
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For e.g. If a particular territory is witnessing a huge gap in active accounts and potential accounts, then a salesman who scores high on new business development should be assigned to that area.
Recommendations
Ed Harlow handles a very small area; hence we suggest he should be transferred to Western Virginia where he can assist Alderson. Since he Alderson is not able to handle such a big and high potential area well, Ed Harlow can be assigned to half part of the territory. Whereas Durfee can be assigned added responsibility of entire District of Columbia, since Durfee has exhibited a very decent performance.
Gibson and Caplan need to be monitored carefully. Since they are showing poor performance, they must be warned once.
Annexure 1
Salesperson Eaton Burke Durfee Harlow Furness Gibson Caplan Alderson
Potential Accounts 504 525 185 139 358 427 883 933
Sales($thousand) 1840 1600 1500 1300 1220 1120 880 620
Active Accounts 205 310 160 120 220 130 307 458
Compensation 76800 64000 52000 54000 50400 52400 36600 26400
Expenses 8200 13600 8600 7800 14800 7000 17800 14600
Buying index 0.8891 0.873 0.6697 0.2956 0.8498 0.499 0.7694 0.8513
Land area(sq. miles) 1806 9045 1301 61 4239 6524 24070 28738
Profit to company($thousand) 620.86 515.04 538.08 450.36 416.5 381.44 300.54 205.1
Profit/Expense 75.71 37.87 62.57 57.74 28.14 54.49 16.88 14.05
Sales/accounts 8.98 5.16 9.38 10.83 5.55 8.62 2.87 1.35
Active/Potential 0.4067 0.5905 0.8649 0.8633 0.6145 0.3044 0.3477 0.4909
Profit/Costs 0.0073 0.0066 0.0089 0.0073 0.0064 0.0064 0.0055 0.0050
Contribution 535860 437440 477480 388560 351300 322040 246140 164100
Sales Growth
(H1(83)/H1(82)) 1.11 1.06 0.96 1.02 1.25 1.11 0.92 0.86
