The ultimate guide to sales performance management
AUTHOR
Get answers to all your sales performance management questions — plus five tips to increase your sales performance.
Sales performance management (SPM) is a set of operational and analytical functions that automate and unite back-office operational sales processes to improve efficiency and effectiveness. SPM capabilities include incentive compensation management, quota management and planning, territory management, advanced analytics, and gamification.
Putting a complete SPM strategy into place can be complicated. A sales strategy contains many interlocking parts, each of which influence the others. Account segmentation, incentive compensation, territory planning, quota setting, pipeline optimization, and forecasting are some of the tools a sales leader uses to assess and manage a sales organization. For this reason, the most forward-looking sales leaders approach SPM holistically, taking it as a unified set of concerns rather than a collection of disconnected parts.
Why is sales performance management important?
How your company brings its products or services to market is as important as what you’re selling. Even the best products rarely sell themselves. Conversely, a great sales team — when paired with a great sales strategy — can sell virtually anything. Knowing this, the best sales leaders work to innovate not only the products they sell, but the ways they sell.
SPM enables you to develop sales strategies that cover all parts of the sales cycle and impact all steps of the sales process. By properly managing the various aspects of sales performance, you can implement new strategies and techniques that will help your sales organization succeed.
What are the components of sales performance management?
An SPM strategy is generally built on three priorities: where, how, and what to sell. The way you attend to each of these priorities defines your plan for succeeding in the market.
Sales planning (where to sell)
Sales planning is how your sales organization slices up the market and aligns your team to fit. This includes account segmentation (how accounts are organized), territory allocation (how salespeople are assigned territories), quota setting, and capacity planning (how many salespeople a team needs in its various geographies).
Effective sales planning is about staying ahead of changes in the market or the workforce, using advanced modeling to optimize the potential of each account, territory, and region. Because poor territory and quota planning can dramatically reduce motivation, sales planning is also a tool for reducing attrition, and making sure your sales organization puts its salespeople in the best position to succeed.
Sales incentives (how to sell)
Sales incentives are the commission structures that encourage salespeople to sell specific products to specific customers. By modifying these commission structures and adding various bonuses, sales leaders can nudge salespeople to focus their energies in desired directions. Because sales incentives are visible on a near-daily basis to salespeople, sales incentives can often be the place where sales leaders devote the bulk of their energies.
The best sales incentives accomplish two goals. They allow individual salespeople to maximize their personal earnings and they advance the company’s bottom line. Because sales incentives may need to change quickly to capture new business priorities or products, insurgent competitors, or other unpredictable dynamics of the market, sales incentives need to be malleable enough to change quickly without updating so often that salespeople become confused.
Sales insights (what to sell)
Sales insights are about focusing on the metrics that help you measure and improve your business. These include pipeline management, pricing and discounting, sales forecasts, and other similar KPIs. Arguably, it’s in this area that SPM has made the most progress in recent years. Advanced software now helps sales leaders collect and process data from throughout the organization, and then deliver it in the appropriate forms to different stakeholders.
By managing the huge amounts of data an SPM solution produces, sifting through it for insights about the health of the organization, you can use sales insights to dramatically improve nearly all metrics: deals closed, deal size, velocity, and more.
5 tips to increase sales performance
1. Keep your sales strategy transparent
Although a strong sales strategy is key for taking down the market, equally key is making sure that strategy stays transparent to your team. Communicate often, explaining why your organization is targeting the market the way it is, and what it hopes to accomplish by doing so. Doing this keeps salespeople in the loop, so they can be aware when strategies shift, and has the added benefit of showing salespeople the company trusts them.
2. Give salespeople analytics
Even more beneficial is when salespeople can check in at any time to see where they stand relative to their quotas. At many companies, it takes weeks or months for salespeople to know how they’re doing. Figuring out how many and what kind of deals they’ll need to meet their quotas is even more complicated.
Luckily, today’s advanced software can automatically show salespeople in real time how much money they’ve made over any given period and how far they are from their quotas. The best software even lets salespeople run “what-if” models to help figure out what deals they should target to maximize their income. This modeling can incorporate information about how likely any deal is to close, how similar deals have gone, the salesperson’s experience with that company, the likely renewal value of the deal, and more — all complex variables that are handled more effectively by software.
3. Get input from all directions
Sales leaders were once like dictators: they made decisions, and the business lived or died with them. Today, forward-thinking sales leaders know that the more they can gather input from the people around them — both above and below them in the hierarchy — the more effective their decisions are.
How effective are your compensation plans? Ask the salespeople who are directly affected, and the managers who oversee those salespeople. What are potential implications of your new idea? Ask people up and down the chain to come up with objections to it and see how powerful those are. Subject your ideas to criticism — it only strengthens them.
4. Use advanced software
Today, the best sales leaders are those who can quickly analyze lots of data, automate functions, and use modeling to optimize their sales strategy. The only way to do this is to employ advanced software that connects the varied components of a sales strategy and offers real-time calculation abilities.
Point solutions, for example, may be able to help with any individual component of SPM, such as compensation or account segmentation. But point solutions can’t help you evaluate the effect that any of these individual components have on the rest of your plan. Similarly, software that can’t automatically gather data from across the sales organization or perform complex calculations in real time leaves sales leaders without enough information to make strategic decisions.
The solution to both of these issues: use the most advanced software available, preferably software that can put the entire sales strategy (and the entire sales team) on a single platform.
5. Review and adapt
A sales strategy isn’t a fixed entity. It should be seen as a fluid set of guidelines. To be successful at sales management, you need to regularly assess what about your approach is working and what isn’t, and then modify accordingly.
Gathering widespread data is critical. Are there specific products, geographies, or territories that aren’t performing well? Are there salespeople or teams that are overperforming? Are there new competitors in the game? If your actuals aren’t matching your forecasts, can you figure out why?
What to look for in sales performance management software?
There are plenty of different SPM software solutions out there, many of which claim to improve your sales performance. The best ones include the following three features:
1. Connecting people and processes
All businesses today strive to have a single source of truth that gives everyone access to the exact same data. In most places, however, data is spread across different solutions and spreadsheets, so that SPM processes remain disconnected and disjointed. SPM solutions allowing all departmental stakeholders to work in the same platform with the same data enable businesses to create a connected plan that drives connected decision-making.
2. Access to real-time data
With access to real-time data, an SPM solution allows you to monitor, plan, and react to the ever-changing business world and swiftly move to incorporate new company objectives. With real-time data for T&Q, you can monitor sales territory coverage gaps and fill them quickly. With real-time data for managing incentive compensation, sales reps can better understand the impact any given deal will have on their earnings. With real-time sales forecasting, the sales organization can share information about future sales with finance, supply chain, and the other parts of the company.
3. Predictive analytics
To get a leg up on your competition, it’s vital to be able to use predictive analytics to do enterprise-wide planning and modeling. Without predictive analytics, it’s quite difficult for you to test future scenarios and see what courses of actions will work best. With predictive analytics, you’ll know ahead of time what to do in the event of any number of circumstances, and then take action while your competitors are still trying to register what just happened.
Additional sales performance management resources
Looking for more SPM guidance. Check out these deep-diving resources: