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Belch: Advertising and
Promotion, Sixth Edition
IMC PERSPECTIVE 18-2
V. Developing the
Integrated Marketing
Communications Program
18. Personal Selling © The McGraw−Hill
Companies, 2003
Measuring the Effectiveness of the Sales Force—
Is It Really Just ROI?
Probably for as long as there have been sales forces,
managers have sought ways to determine whether they
are effective or not. In the past, salespeople were evaluated
on the basis of their sales—that is, did they reach
their sales quotas? As the role of the sales force
changed from being purely concerned with selling to
becoming more involved in marketing and more responsible
for maintaining customer relationships, managers
recognized the need for expanding evaluative criteria
beyond just the achievement of sales goals. The evaluation
criteria of today are vastly different from those in
the past. Sure, sales are still important, but now other
measures are gaining in importance as well.
One of the more often discussed measures is ROI
(return on investment). More and more top executives
are asking their sales managers for accountability—as
in “Are we getting the returns we seek from the sales
force?” The idea is that by measuring the impact of programs
designed to aid the selling process as well as
measuring sales closures, the marketing team can be
more effective and efficient. Unfortunately, it isn’t
always that easy. In a survey conducted in 2002 of companies
with a marketing budget of $1 million or more, 56
percent indicated they had no system for measuring the
ROI on their marketing investments. As noted by David
Reibstein of the University of Pennsylvania’s Wharton
School of Business, “In marketing, benefits like advertising
impact aren’t easily put into dollar returns. It takes a
leap of faith to come up with a number.” Marketers know
that it is often difficult to separate advertising, promotions,
and other communications efforts from the selling
effort.
Then what about ranking them? Many of the largest
firms in America, including GE, Ford, and Microsoft,
rank employees by categorizing them as top 20 percent,
bottom 10 percent, and the like, with the top getting
highly rewarded and the bottom likely to be let go.
Others use A, B, or C grades, with two straight C’s constituting
grounds for dismissal. Cruel? While Jack
Welch, ex-CEO of GE, and Dick Grote, president of
Grote Consulting (a performance management company
in Texas), don’t think so, eight Ford employees
did, and they filed a class-action lawsuit claiming discrimination.
A study of 17 large companies, conducted
by the American Productivity and Quality Center, corroborated
the positions of Grote and Welch, concluding
that forced rankings were the most effective way
to identify and reward core competencies. Whether
rankings outweigh discrimination is still to be seen,
however, and may have to be decided in the courts
rather than the marketing office.
How about sales per employee as a measure of effectiveness?
Saleforce.com, for example, uses sales per
employee to compare the relative performance of its
sales forces. A steady rise in sales per employee is a sign
of improving efficiency. Siebel Systems also employees
this system, releasing the lowest-performing 10 percent
of its employees. Altera, Bea Systems, and Sun Microsystems
also use measures of sales generated by
employees to determine if they are operating “fat” or
“lean.” James S. Pepitone, chairman of Pepitone, Berkshire,
Piaget Worldwide, a management firm based in
Dallas, is not sold on the concept. He considers it a relative
metric, arguing that “it only has meaning in comparison
to itself” and should be used only as an internal
benchmark, and a ballpark figure, confounded by
numerous other factors.
Well, then, what about quotas? Perhaps we should go
to the old reliable and set sales targets and goals. Many
companies are scrapping sales quota systems in favor
of compensation packages that promote new behaviors
among salespeople (like maintaining customer relationships),
arguing that the old system doesn’t work
anymore. Salespeople have both positive and negative
attitudes toward quota dropping. While some feel that
it may reduce their sales effectiveness and motivation,
others recognize that in today’s customer relationship
world, providing service and keeping old customers are
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