Marketing expert witness Don E. Smith, President, American Consulting Group, LLC, writes on THE LIMITATIONS OF USING SALES QUOTAS AS THE PRIMARY MEASURE OF PERFORMANCE
II. ADDITIONAL QUANTITIVE EVALUATION OPTIONS
A. Define and use quotas for each major product line plus a total for all products. Page 3, table 1, Historic Sales.
B. Define easy-to-secure, meaningful distributor quantitative performance measures. Compare to a national average or similar distributors based on an index (distributor actual/national average and distributor/similar). Set goals. Keep it simple. Page 3, table 2, Performance Index.
1. Credit and payables: DRO, % of $ paid within 30 days, # of “special events.”
2. Customer satisfaction score: Very effective. Requires major effort.
3. Distributor field support costs: Activity based record of cost.
4. Inventory: $, turnover, mix.
5. Leads: # received: % follow-up feedback. # & $ closed.
6. New products: # of new customers, $, % of total sales.
7. Orders: #, $ and $/order. % emergency.
8. Pricing: # & $ of special price requests/orders. % of total sales.
9. Product returns: #, $ and % of sales returned.
10. Profitability of product mix: Typically an index based on product weights.
11. Samples: # received:. % follow-up feedback. # & $ closed.
12. Shipments: #, $ and $/shipment. % to stock/drop-ship.
13. Coop/MDF funds: % of funds earned that were used.