On this page
Organizations that use SPM achieve 3x annual revenue growth compared to those that do not.
A key trend in the current sales landscape, sales performance management or SPM, is an innovative sales management discipline that uses next-generation tools and data-driven best practices to achieve superior sales results. From sales strategy plan to the organizational structure are improved upon under SPM to offer the company a sustained competitive advantage in the market.
And its importance cannot be overstated. According to InsightSquared, 81% of sales team members in organizations that have embraced SPM achieve their sales goals, compared to 25% in lagging organizations. The former companies also registered 3x annual revenue growth compared to the latter. Enough said. If you’re wondering how to implement SPM at your organization, read right on!
The Process of Implementing a Sales Performance Management System
1. Determine the metrics you want to measure
The performance metrics you measure as part of your SPM system should reflect the focus of your organization's success metrics as a whole. A few metrics you could consider measuring are:
Sales Productivity Metrics
These measure the efficiency with which your salespeople can reach their goals. The quicker they reach their sales targets, the higher their sales productivity. A few metrics to measure here are:
- Percentage of hours spent prospecting
- Percentage of hours spent on administrative tasks
- Percentage of closed deals that resulted in sales
Conversion Rate
This metric refers to the percentage of leads converted to customers by each salesperson. It provides you with information about your leads' quality and if the organization has sufficient resources to nurture them into a sale.
Quota Attainment
Quota attainment or individual quota attainment is a measure of the sales target's percentage that each sales rep has reached over a time period. This metric aids benchmarking, i.e., understanding the goals you have set for your sales team are too aggressive, too easy, or just right.
2. Get your sales team’s buy-in
Communicating your goals to your team and getting their buy-in into the metrics they’ll be assessed on is key for several reasons. Firstly, if your team feels they are part of the goal-setting process, their ownership over the goals will be considerably higher. Secondly, clear and unambiguous communication of the goals you have in mind for your team is essential before your soldiers hit the battleground!
Remember to allow your team to voice any concerns they may have and even push back if they choose to. For instance, your team may feel certain goals are too aggressive or that measuring certain areas of performance is inappropriate. Once they have voiced their concerns, you could take either of two courses of action - course-correct and change the metrics you will be using or help your team understand how these goals and metrics tie into organizational objectives.
It could also be useful to involve your sales team in the goal-setting process from the beginning, leading to higher ownership.
3. Develop your sales team’s performance-improving skills
Now that you have determined what metrics you are going to track and you have your team’s buy-in into them, it’s time to ensure your sales reps have the right skills and resources to achieve them. An effective way to do this is by allowing your team to zoom in on the skills they want to improve and then leveraging this inherent interest to build up the skills they need to achieve organizational goals. You could then use methods such as offering them coaching tools, introducing them to mentors, or even a colleague who may have stellar skills in the area to get the job done.
4. Offer regular feedback to individual sales team members
To track and monitor your sales team’s performance, this final step of providing them with personalized feedback is important. A holistic performance review includes the following:
- The sales team member’s performance about documented goals that they are being assessed for
- Their improvement or actions are taken basis previous rounds of feedback
- Their successes and the strengths they have which have enabled these successes
- Constructive feedback about areas that offer room for improvement
- An overarching summary of their performance based on whether they met, did not meet or exceeded expectations
The Components of Sales Performance Management
When it comes to Sales Performance Management, it can be compelling to ask the good old questions centered around the four W’s and H, i.e., what to sell, where to sell, and how to sell.
1. Sales Planning (Where to Sell)
Poor territory and quota planning can quickly lead to sales attrition - a costly affair for any organization. To guard against this and other negative consequences, such as poor employee morale, sales planning is an effective sales performance management tool.
It involves segmenting the market through account segmentation, quota setting, capacity planning, and territory allocation, followed by aligning the team to fit this segmentation.
2. Sales Incentives (How to Sell)
Incentive structures can be leveraged to course-correct sales team action in desired ways. The best incentive structures allow for both the maximization of individual earnings and advance the company’s bottom line.
It can be useful to keep commission structures flexible to be able to incorporate market changes quickly. However, it is also important to not change them so often as to leave salespeople confused.
3. Sales Insights or What to Sell
Advanced Sales Performance Management software now captures data from throughout the sales organization and then delivers appropriate insights to different stakeholders. Sales leaders can use these insights to deliver considerable improvements on all sales metrics, including average deal size, deals closed, and more.
Types of Sales Management Styles
As Steve W. Martin notes in the Harvard Business Review, there are broadly seven different sales management styles, each of which corresponds to a particular behavior pattern.
1. The Mentors
Important drivers of sales success, the mentors represent the class of sales leaders who are sales experts and measure their success through revenue goals met or exceeded as well as individual sales team members’ success.
2. The Expressives
Skilled at people management and with a panache for expressing their emotions and encouraging others to do the same, the expressions have a flair for both putting their team at ease and admonishing them as the situation demands.
3. The Sergeants
With a title drawn from military lingo (and for a good reason!), the sergeants are hard workers who “rally their troops” or push them to work harder while at the same time displaying a high level of loyalty to their team, sometimes even rivaling that which they display towards the organization.
4. The Teflons
Possessing a pleasant and agreeable disposition, the teflons are skilled at staying above the workplaces' day-to-day politics. However, they typically do not manage to form close relationships with their team members.
5. The Micromanagers
Highly methodical and organized, the micromanagers expect the same from their team members and demand things done their way. Their sense of responsibility to their organizations is strong, and they pride themselves on meeting their revenue goals.
6. The Overconfidents
Exceptional on sales calls and gregarious in public, the overconfident are typically closed to feedback and will get the job done at any cost, doing things their own way.
7. The Amateurs
The amateurs are sales managers who aren’t necessarily new to the role but find themselves outside their comfort zone in it. They typically find themselves in an identity crisis until they can garner enough sales experience and improve their game.
Success Factors for Sales Performance Management
Maximize your success while implementing a performance management system for the sales team by paying attention to these critical success factors.
1. Scope the Project Accurately
A deep understanding of the project is essential to scoping it accurately. Ensure you involve your internal teams at all stages and gain insight into the assumptions made at each stage.
2. Prioritize the Requirements
Determine what you want to achieve with your sales performance management solution system. In case of multiple goals, prioritize them and consider rolling out the solution in phases to address the key needs first and minimize risk.
3. Check Data Quality Before Implementation
The data involved in arriving at your incentive plans need to be complete, coherent, and accurate. This ensures that trust is generated and also eliminates the need for manual invention at later stages.
4. Determine the TCO Accurately
Apart from licenses, you also need to factor in the cost of implementation, infrastructure, hardware, training, and upgrades. You would also want to consider the future cost of analytics for the year-on-year data that will emerge.
5. Select a Scalable Solution
Choosing a solution that will scale with your business is key. In practice, this translates to solutions that can handle ever-increasing data and adapt to more complex workflows.
6. Designate a Skilled Internal Project Manager
Ensuring that you have experienced project managers both internally and externally (i.e., with vendors or other third parties) can go a long way in helping you avoid additional expenses and delays at later stages.
7. Offer Sufficient Training
Training or coaching is an essential component of a successful SPM solution. A good one will offer tools and support for scheduling personalized or targeted coaching to each sales rep, provide feedback, and analyze results.
8. Choose Flexible Compensation Plans
The best SPM systems allow users to alter their compensation plans without the support of their IT teams. To achieve this, both an intuitive interface and the familiarity of subject matter experts with the SPM system are key.
9. Leverage Data to Encourage Employees
Great reporting leads to great sales performance. A detailed breakdown shows how each rep’s compensation arrived at reduces disputes while real-time goal attainment reports provide them with clear information on their progress towards quota achievement.
5 Critical Sales Problems and How Management by Process Can Address Them
1. Failing to Respect Customer Needs (or the Lack Thereof!)
Too often, sales reps intend to deliver a prepared script to their prospects or customers and end up not listening to what the latter is saying to them at the moment. The result? Irritated prospects and wasted time. Rather, the idea in sales is to identify prospects with a need for the product and create value for them with an effective opening question, a good headline, etc.
2. Adding to Salespeople’s Woes
Measures that organizations take to assist salespeople in reaching their goals often backfire. A classic example here is that of a CRM, which adds to reporting tasks instead of eliminating them. Sales coaching, which takes up a significant chunk of time from the salespeople’s day, is another example. When designing new processes, if the approach ensures that they add value to all the stakeholders involved, these problems can be kept at bay.
3. Making Assumptions Instead of Using Hard Data
There is a time and place for using one’s gut instinct in business, and it’s not in areas where hard data is already present and pointing you in a different direction. Often, the former approach leads to wrong assumptions being made - a problem that can be rectified by sifting through data from the field and basing decisions on that instead.
4. Following the Process to a Fault!
While following the sales process put in place is desirable in most cases, it must be remembered that this alone isn’t the goal. Every process has a goal in mind, and that of the sales process is to get customers or prospects to pay for your products or services. Optimizing processes can get in the way of this as it may gobble up salespeople’s time, leaving them with little of it to get actual selling done. Instead, find out from your sales folk where they have the most trouble - finding, closing, or keeping their deals - and take a hint when processes are not being followed.
5. Managing for Results Rather Than Deal Flow
If the sales manager is required to make the decisions and be there every time a deal is closed, the organization becomes dependent on them to bring in results, and the brand suffers in their absence. The solution is management by the process; in other words, putting people-independent processes in place to keep the deals flowing - both now and in the future. SPM calls for a culture that is built on experimentation, innovation, and continuous improvement. It focuses on what really works, stripping away everything else. In the end, SPM is for the sales scientist who is prepared to leave behind the mistakes of the past and march forward boldly into a brave future!
