As salespeople are the employees most directly responsible for a company’s revenue, Sales Management is a critical component of a company’s success. Here’s a guide to all things Sales Management.
What is Sales Management?
Sales management is the process of organizing and running a sales team to increase a company’s profits, sales volume, and/or growth. It’s a multi-faceted process that involves hiring the right people, creating and managing a sales strategy, training salespeople, forecasting sales goals, operating within a budget, reporting to upper management, and analyzing data to improve processes throughout the sales organization. Sales management is also about creating a sales culture that helps meet the company’s goals.
What are the roles and responsibilities of Sales Management?
A Sales Manager’s responsibilities include:
- Sales Planning
Sales Planning is the process of structuring market opportunities and organizing a sales team to best take advantage of those opportunities. It includes territory planning, quota planning, sales coverage, and account segmentation. Sales planning is the glue that connects high-level boardroom strategy to on-the-ground execution.
- Sales Incentives
Sales Incentives (incentive compensation) are compensation packages that motivate salespeople to sell particular products. By increasing or decreasing compensation percentages for selling these products, by adding bonuses for selling particular combinations or volumes of products, or by offering other prizes, effective sales managers can encourage salespeople to sell the products that most promote a company’s overall goals.
- Sales Insights
Sales Insights are the data a sales manager collects to measure the health of the sales pipeline, forecast future sales, price products appropriately, and assess the effectiveness of individual salespeople and teams. Thanks to the huge amount of data now available, sales managers can have true, data-driven insight into how changes in the activities of the sales team can affect the bottom line.
One key to selling well is hiring the right team. Good sales managers are always on the hunt for potential employees, and recruiting becomes far easier when a sales manager creates a culture that appeals to the sort of salespeople the department needs. If the team offers the right tools, the right opportunities, and the right culture, the right people will apply.
Once a sales manager has hired the right people, the team needs advice, direction, scripts, marketing assets, and up-to-date information about developments in the product. Good sales managers check in often to make sure their team is energized, providing mentoring, education, opportunities for team-building, and regular exchanges of information.
What are the important Sales Management functions?
The Sales Manager sits between salespeople and executives. Their job is to both make sure that salespeople have the tools and support they need, and to make sure that the sales organization’s activities align with the overall goals of the business. That twin goals are accomplished through the following activities:
- Setting quotas
There are two key goals when a sales manager sets sales quotas. Every year (or every quarter), quotas must be:
- Actionable: reasonable but still inspiring.
- Rolled out on time.
If either of these steps is done wrong, it’s harder for salespeople to do their jobs. To avoid this problem, adopt a quota-setting process that uses the right technology. Ideally, good quotas are based on data: sales data from both individual salespeople and the team as a whole, broken down by product, region, opportunity, and other variables.
Setting this system up requires software that can automatically collect and analyze data. The longer the process takes, the more likely it is that quotas will be rolled out late. The more automated the analysis, in contrast, the easier it is to get quotas ready on time. Late quotas are a disaster for salespeople: If quotas get rolled out three months late, salespeople only have nine months to meet their sales goals for the year.
Similarly, the more data that sales managers can collect and analyze, the more quotas can be targeted to individual reps. This is critical: Reps in different geographies with different accounts and selling different products should be held to different standards. Aggressive salespeople might require a different quota than slow-and-steady types might. This is ok; the point is to increase revenue, and the best way to do this is to get each salesperson to work their hardest.
- Incentive Compensation
Creating an effective incentive compensation plan is often the key factor that determines whether your salespeople will sell the products that matter most to your company. We recommend adopting three strategies:
- 1. Use the right technology.
When done right, a compensation strategy should tie together a host of stakeholders including finance, supply chain, HR, marketing, and more, all of whose goals are tied to the compensation plan. For this reason, it’s critical to manage that plan on a platform that can deliver your data to the right people in your organization.
At many companies, compensation data is shared over spreadsheets via email. Today, a better solution is to use a cloud-based platform that provides stakeholders across the organization with instantaneous access to the data—the same data that’s shared across the whole organization—and respond to changes and updates as they occur.
- 2. Define roles clearly.
In tech-oriented companies, responsibility for planning and maintaining the sales compensation program tends to fall under sales operations or a similarly-named team. Elsewhere, responsibility can vary widely—in some companies, HR manages the compensation plan, in others finance does, in others it’s marketing or even IT. With so many cooks in the kitchen, communications can become messy. Vagueness about responsibility can also cascade down the chain, leaving reps and leaders unsure.
Teams tend to be more successful when they define clear roles before the design process begins. Input should arrive from across the sales team. Similarly, dispute problems are often resolved when a dispute resolution process has been etched into stone. By deciding who will be responsible for what steps, sales managers can save time and increase rep motivation because reps can trust that their disputes will be handled both appropriately and within a predictable time frame.
- 3. Plan for the future.
At many companies, managing the compensation plan is an exercise in fighting fires: So many issues arise each day that simply keeping up with them is a challenge. The best compensation plan managers side-step many of these issues by planning for them from the beginning, splitting their time between running the current plan and modeling future scenarios, both of which involve using data from other divisions in the company, including finance, supply chain, HR, and marketing. Doing this keeps your plan prepared for changes coming down the pike.
When you have a clear picture of the present, planning for the future isn’t difficult. Increases to headcount, focus on a new industry, a revised product roadmap, revisions to the marketing strategy— all may necessitate changes to your compensation plan. If you wait until after these events occur to start figuring out how to modify the plan, you’ll not only leave reps confused, you’ll also add unnecessary delays to your company’s sales cycle.
In many ways, hiring is a sales manager’s most important job. Great salespeople can sell even in the worst of circumstances, and no amount of work can save poor salespeople. Here are some tips for creating a productive hiring process.
- Be honest
Explain your sales process clearly. Successful hiring so often comes down to fit (which, to be clear, isn’t the same as “this person is someone who is like me”)—does this person have the right amount of energy for this position? Will they be comfortable pitching your products to your customers? Can they pitch to CEOs? Or, conversely, will they be happy pitching to lower-level employees, if they’re used to going to the top of the company? They only way to assess fit (and to avoid problems later) is to be up front about what your company is and how your sales team runs.
- Put salespeople through a simulation
The best way to evaluate a salesperson’s ability to sell is to have them sell something. While “sell me this ballpoint pen” tests used to be considered helpful, in fact, a better strategy is to have a salesperson sell you your product. Doing this evaluates not only the salesperson’s selling ability, but also helps you see what kind of research the candidate has done, and whether they’ve thought through what your product can do for customers. Even if they don’t know everything about your product (which is ok—you haven’t given them your scripts and materials yet), you can throw difficult questions at them and see how they respond.
- Observe their questions, not just their answers
Good salespeople make customers feel comfortable and spend their time looking for legitimate pain points that they can help solve. The best way to do this is to ask questions, especially when buyers are skeptical. When interviewing salespeople, don’t just see how they answer your questions—notice how they ask questions of you. Are their questions smart and insightful? Do they evolve in response to the answers you provide? Do they seem authentic?
- Keep employees happy
Because salespeople are generally paid through variable compensation, keeping them happy requires a different strategy than keeping salaried employees happy. Here are some best practices for ensuring that salespeople stay happy and motivated.
- Make sure that your payment structure reflects your corporate culture.
There are two schools of thought when it comes to paying sales people. The first is to pay a lower basic wage and offer incentivizing “performance pay” as commission. This option lets salespeople control their own destinies but can sometimes leave people working around the clock to scrape a decent wage together. The alternative is to pay a higher basic salary. This option provides more security but can reduce motivation.
Ultimately, the choice you make should reflect your corporate culture, and the overall values your company wants to promote. Make sure these all align.
- Keep wider business goals in mind.
Salespeople like to know that their efforts help promote larger goals. Sales goals should always reflect larger business goals, and should be realistic, not wildly aspirational.
- Deliver payments consistently.
Salespeople are happiest when their payments arrive quickly, and when they can tie those payments back to actions taken in the field. When there’s too long of a delay between a sales and commission payment, it’s very difficult for salespeople to recalibrate their selling behaviors. This can in part be solved by using technology that automates data collection and payment calculations.
- Communicate expectations.
For your strategy to work, it’s crucial that you put clear sales targets in place, so that the salesperson knows precisely what’s expected of them. This provides any easy, consistent way to measure performance. If your pay strategy isn’t based on commission, regular monitoring can ensure that targets are being met, and can expose potential slackers.
- Use intelligent software.
When your sales force is dispersed around the country, using integrated, collaborative technology can save a lot of time and duplication of effort. Intelligent systems can allow individuals to log in from remote locations and enter sales information into a centralized repository. Salespeople can stay connected to one another and to the team as a whole. Even better, give salespeople a way to see where they stand relative to their quota, ideally in real time.
- Ask for feedback.
Feedback is key to keeping salespeople happy. Before implementing a new compensation plan, ask your sales team how last year’s plan went. Then ask other relevant people to review the strategy and find holes. Ultimately, salespeople need to be able to control the factors that contribute to their success and earning potential. Without that, they will become disenchanted, possibly aggrieved, and start job-hunting elsewhere.
Tips & Strategies for Sales Management
The best sales managers are able to keep their team happy without dulling their competitive edge. How? Here are 10 sales management tips.
- Analyze data.
Although success in sales once depended on how hungry a team was, today it depends on how smart that team is. To succeed in today’s market, sales managers have to be strategic about where to send their salespeople, how to segment their accounts, and how to motivate the team. All of that data needs to be gathered from the team and the market, so that you can identify problems and opportunities before your competition does.
- Build a powerful sales strategy.
Pushing a team out into the field without a solid sales strategy is recipe for failure. The strategy should define how your company will market its product, what accounts it will target, how it will assign its salespeople, what incentives it will use, what its KPIs will be, and more.
- Keep the strategy transparent.
Creating a sales strategy is important; Equally crucial is keeping that strategy transparent to the team. Frequent communication helps salespeople understand their jobs better and keeps them in the loop when the strategy shifts.
- Review and adapt.
A sales strategy isn’t a fixed entity; it’s a fluid set of guidelines, able to pivot quickly to take advantage of new opportunities. To be successful at sales management, sales leaders need to regularly assess what about their approach is working and what isn’t, and then modify accordingly.
- Model the future.
Successful sales leaders prepare themselves for the inevitable evolutions of the market by using technology to see the future. Armed with modeling capabilities and “what-if” scenario planning, sales leaders can imagine different scenarios and assess the effects of potential choices.
- Connect your strategy.
To properly run their teams, sales managers need to know how decisions, no matter where they’re made, will affect the sales strategy. Instead of tackling problems in isolation, you need a system that reflects how each decision affects the others.
- Use advanced software.
The best sales managers are those who can quickly analyze lots of data, automate functions, and use modeling to optimize their sales strategy. The only way to achieve this is to employ software that offers real-time calculation abilities and connects multiple components of a sales strategy, ideally on a single platform. And the whole team needs access to it, both for data entry and for planning strategically within the context of the whole team.
- Get input from all directions.
Although sales managers once ran their departments like autonomous dictators, today’s forward-thinking managers know that the more they can gather input from the people above and below them on the hierarchy, the more effective their decisions will be. It isn’t possible for one person to know and see everything, and sometimes the best ideas come from the most unlikely places.
- Coach, coach, coach.
Sales managers often used to be the rock-star salesperson on their team, and are often repositories of knowledge. So pass it on! Individual coaching sessions, group role playing, formal and informal mentoring, and considered observations are all great ways to build coaching into your operations.
- Step in when necessary, but not too much.
Good sales managers remember that the point is to help their team fly on their own. Arm salespeople with all the tools they need and then give them the freedom to do their jobs. If they understand the reasoning behind decisions, they’re more likely to support uncomfortable changes. And you’re more likely to notice problems that need special attention.
How to become a sales manager
If you’re a top earner at your company, becoming a sales manager may not be your goal—it may mean a step down in income, and you’ll have to take on administrative and organizational responsibilities. Sales Manager may be the perfect job for you if you like to lead. If so, here are some ways to prepare for the job and work your way up.
- Work in sales.
It may be obvious but it’s important. If you want to be a sales manager, you have to know how sales works. When reps come to you for advice, you want to be able to advise them from experience. You need to know what problems salespeople face, and what both good and bad sales managers do.
Companies are sometimes wary of promoting their best salespeople. If things go wrong, they’ll lose a great salesperson and gain a poor manager. If the title of sales manager is your goal, prove that you can walk the walk.
- Take on organizational responsibilities.
One huge difference between being a salesperson and being a sales manager is the amount of organizational responsibility involved. Drawing territories, setting quotas, and segmenting accounts are all activities you’ll have to be involved in as a manager.
Prepare yourself by getting involved early. While you’re still a salesperson, ask to help with some organizational activities. Become a mentor to newer salespeople. Help figure out sales strategies. Create a training program. Offer ideas that make your team more efficient. Anything—as long as it moves you away from being a lone wolf and towards a leadership role, will help.
- Handle your numbers.
Another big difference between salespeople and sales managers is that the numbers are more complicated for managers. Quotas can be five or ten or one hundred times as large, and it’s your job to figure out how to get your team to meet them. Forecasts are now your responsibility, as are figuring out how to allocate salespeople to the right opportunities, measuring pipeline health, creating a compensation plan, and many more data-driven decisions.
You’re more likely to achieve your objective if you have a planning platform that can gather information from throughout the sales organization and use that data to determine ideal outcomes. Even so, you’ll need experience working with numbers like this and the strategies they support.
- Learn from your teammates.
As a sales manager, you’ll have to manage a team of salespeople, each of whom has a different style. As tempting as it may create mini-models of you, your job is to enable the qualities that make them successful, even if those qualities are different from yours.
You can start this process by observing your teammates now, seeing how they work and adding some of their techniques to your repertoire.
Are you learning how to pass feedback up the ladder? Are you working on receiving feedback? If not, you should be. A huge part of the sales manager’s job is communication: coaching, sharing information, and giving and receiving feedback.
The better you get at this, the better sales manager you’ll be.
Here are some resources we recommend.
Cracking the Sales Management Code, Jason Jordan
One of our favorite books on Sales Management, Cracking the Sales Management Code supplies a wealth of insights for managers and executives trying to get the most out of their teams. Jordan’s research-based advice tackles sales processes, sales metrics, and strategic sales objectives, offering practical, actionable techniques for improving sales organizations of all sizes.
Arguably the most important book on sales compensation, Compensating the Sales Force compiles a career’s worth of insight into a single volume. There are few aspects of sales compensation that aren’t comprehensively engaged by Cichelli’s prose. Filled with straightforward guidelines for all sales organizations, Cichelli’s book is an essential component of any sales leader’s toolkit.
The Future of Sales Compensation, Chad Albrecht and Steve Marlet
Two experts in the world of sales compensation come together to figure out how sales incentive programs should keep pace with the changing business world. This is essential reading for sales leaders interested in maintaining a competitive edge, Albrecht and Marley’s book offers copious approaches for rethinking sales compensation in the new, digital economy.
The Challenger Sale, Matthew Dixon
Dixon provides a number of new strategies for selling large-scale enterprise solutions. The primary argument is that there’s only one sales approach truly appropriate for this sales context. Luckily, any strategies that make up this approach can be taught to anyone. Dixon calls reps who adopt this approach “challengers” and details a method for fitting all sales reps into this mold.
Connected Planning Xperience (CPX) is the world’s preeminent planning event. Hosted in San Francisco and shared around the world, it’s a once-a-year opportunity for businesses to gather and share insights on the power of Connected Planning.
The Gartner CSO & Sales Leader Conference is for sales leaders focused on sales operations and enablement who come together each year to share the latest research covering sales talent, customer buying behavior, account-based marketing strategies, and leveraging digital channels.
SiriusDecisions Summit is one of the primary conferences for thinking about the future of sales management. Now that SiriusDecisions has been acquired by Forrester, there are certain to be many new insights available to attendees.
Held in August every year, Spotlight on Sales Compensation is one of America’s main conferences for sales compensation. Hear from companies, analysts, and sales leaders who are developing new approaches to sales comp, and who are ready to share their successes.