Performance indicators to watch

Recently, the sales manager of a leading paint product manufacturer that distributed its product through wholesalers to retail outlets, major retailers (such as do-it-yourself chain stores and supermarkets), and directly to building contractors, was given the mission to make a major inroad in the market segment of professional builders and substantially increase the firm's market share in this segment.

The sales manager developed a program for the sales force that included contests and bonuses for salespeople who could reach the highest sales volumes in this market segment over a one-year period. After one year, management proudly claimed that the firm's market share objective had been reached and even surpassed. Given the success of this incentive program, the sales manager decided to keep it running for another year. Quite unexpectedly, the sales to building contractors showed a sharp decrease the following year.

The sales manager decided to investigate and analyze the situation to find out why this sharp sales decline had happened. Salespeople, clients who had ordered that year, as well as those that had not ordered, were questioned. It quickly became obvious that the market share increase gained the previous year had been the result of hard-sell tactics from a sales force that had been motivated to reach the highest sales volume possible. To that effect, salespeople had overstated the quality of the products and promised delivery times that could not possibly be met by the production department.