Sales performance management is all about the data.
The facts and figures driving excellence.
So let’s start with some facts of our own.
Over 81% of sales reps achieve their annual quota at companies that emphasize SPM, while lagging companies typically see only 25% of their reps achieve these quota goals.
Those stats come from OpenSymmetry and demonstrate how crucial it is for you to implement some form of SPM at your company.
OpenSymmetry also found one other interesting fact:
Companies that do apply SPM experience 3x higher annual growth in revenue than other companies lagging behind.
SPM = better performance from salespeople and increased revenue.
What more could you ask for?
Well, you may want an explanation of what exactly sales performance management is, its benefits (apart from what we just told you), and ways to make sales performance management succeed in your company.
If that’s what you’re looking for, you’re in the right place.
Let’s start by defining our terms.
What Is Sales Performance Management?
Sales performance management is about observing, leading, and training your salespeople to upgrade their skills, optimize their processes, and improve their results.
What this looks like in practice varies from company to company. In many ways because of technology used.
One company may use a manual process to observe sales practices and provide feedback while you may use automated software to collect hard data you can compare to metrics (which is what we encourage you to do).
From that data, you may draw conclusions.
From those conclusions, you may implement various changes to advance your sales team and organization to greater performance.
This is one of the most important aspects of sales management.
To help you really understand it, here are the 3 things every sales performance manager needs:
- Visibility into behavior and performance for your benefit and for your sales team so you both can observe and react to progress in real-time.
- Accurate sales forecasts to predict potential revenue or profit problems and fix them before they grow into a bigger issue.
- Sales team motivation and incentive programs to keep your salespeople engaged, inspired, and performing at their peak.
Benefits of Sales Performance Management
We mentioned in the intro to this post that sales performance management really does allow your sales team to do exceptionally well and to bring in at least 3x the revenue than similar companies without it.
But there are even more benefits to SPM, such as:
- A strong sales pipeline - better performing sales reps means a robust pipeline filled with opportunities and clear next action steps.
- Better sales opportunities - reps are given the tools, training, and resources needed to generate qualified leads that are more likely to close.
- Improved analytics - by using the appropriate sales performance management software, you’ll be able to identify leading and lagging indicators and KPIs.
- More accurate forecasts - cutting-edge analytics often means you can better predict revenue and profits for every quarter.
- Enhanced territory management - the tools at your disposal will help you reveal who your salespeople are, who your customers are in every territory, and how you should match each territory to each salesperson’s unique skill sets and experience level.
- Higher ROI on sales enablement - not everything sales enablement creates will be useful for sales performance management, but those that are will be put to its fullest use by managers.
- Deeper profit margins - by consistently applying your proven SPM system, you’ll help your salespeople promote the right solutions and structure the right deals for higher profit margins.
The 3 Components of Every Sales Performance Management Plan
No matter what plan you institute, they’ll all have the following in common:
- Sales planning
- Sales incentives
- Sales insights
We’ll dive into each below.
Sales planning is all about fitting your sales team with the territory they have to sell in.
First, sales managers have to assess the entire region to determine how to slice it up into different territories.
Once they have territories, they assign each sales rep or group of reps to each territory.
From here, every sales rep is given their own quota they have to hit in their territory. Quotas are often based on a sales rep’s skills, experience, and the number of opportunities currently in their territory.
Sales planning is as much about dominating your market as it is about keeping your salespeople motivated.
You want to stay ahead of your competition and do everything possible to capture more of your market, but you should remain realistic when setting targets and quotas for each salesperson.
Asking too much may be too overwhelming and setting goals that are too low may be offensive to those who believe they can achieve more than what managers think they can.
It’s a fine line to walk and it’s one of the top things a sales performance manager needs to handle.
Sales incentives have to do with how sales performance managers incentivize reps to sell one product over another.
For example, if you’re in the employee recognition business you may sell pins and rings to companies that want to award their employees.
Rings are harder to sell but offer a higher commission, while pins are easy to sell but provide low commission.
This is a good structure that makes sense for salespeople. They’re incentivized to try and sell the harder product because they’ll make more money doing it.
You can also play around with different types of bonuses for number of products sold and so on.
Sales incentives don’t have to stay the same.
Try out one program and see how it performs and what your sales reps think and change accordingly.
Sales insights are about collecting all the data you can on all the metrics that matter to drive smarter decision-making.
You may collect data on pipeline management, results from pricing and discounts, sales forecasts, or many other KPIs.
Thanks to advanced business intelligence software, you’re able to gather information throughout the sales cycle and across your entire organization.
Armed with that data, you can improve many different metrics, from the size of deals to the number of deals closed.
That’s why collecting, analyzing, and applying sales insights is such a critical sales performance management tool.
But these 3 components are only some of the things you have to think about when it comes to SPM. There are many more things you can do to create a successful program.
6 Ways to Succeed with Sales Performance Management
Now that you know what sales performance management is and why it’s so important to implement in your organization, here are some tips on how to successfully roll it out:
Develop a Sales Performance Management Strategy
Before digging into the nitty-gritty of your salespeople’s numbers, you need to decide as a company how you’re going to penetrate your target markets, differentiate yourself from your competition, and scale as you grow.
Your strategy needs to be buyer-focused above all and include a high-level view of the technology, tools, and training needed to support your strategy and the various processes that go into it.
Monitor Sales Reps’ Performance
Once you know what you want to accomplish as a sales organization, you can effectively guide your sales reps toward those goals.
To do that, you’ll need to know how they’re currently performing.
You need clear visibility into the activity of all of your sales reps so you can identify what behavior they’re taking that leads to desired outcomes and what behavior needs to be halted or improved upon.
This also means keeping your sales team motivated to do better.
Motivate Your Sales Team
Salespeople need constant motivation.
You were probably a sales rep at some point too, and know how hard it can be to consistently hit your sales numbers.
Behind all the fancy tools and complex processes is the willpower of each individual sales rep putting those things into practice. If they lose the excitement, that spark to go out into the field and win deals than it doesn’t matter what new technology you’re using. Nothing will get sold.
It’s your job as sales performance manager to keep reps inspired and motivated quarter after quarter.
Sales gamification is a great solution to this problem.
Give your salespeople prizes for hitting their numbers, such as a customized ring.
Send your top salespeople on a vacation for going above and beyond their required numbers.
Create virtual leaderboards that display where reps are in relation to each other.
Provide cash bonuses for closing specific deals or selling a specific kind of product that hasn’t been selling very well.
The bottom line is:
Your salespeople (and your higher-ups) will thank you.
Forecast Sales Accurately
Knowing where you want to go and the numbers you want to hit is only half the battle.
The other half is accurately predicting where you’ll end up so you can plan accordingly.
Without crunching these numbers early on, you may realize only later that you’re running into serious revenue generation problems and nowhere near the number you thought you would be.
But you can effectively predict future sales using at least one of these 3 methods:
- Lead value - analyze historical sales data from your lead sources and use the data to create a forecast based on the value of each source.
- Opportunity creation - Use demographic and behavioral data to predict which opportunities are more likely to close.
- Opportunity stage - predict the probability of an opportunity closing based on where the prospect is currently in your sales process.
Automate Employee Compensation
Regardless of the size of your company, you should invest in software that automates critical elements of your business such as employee compensation.
Because if you don’t…
You may wind up with costly errors.
A study performed by Xactly revealed the following statistics:
- A majority of companies spend 10% of total revenue on sales compensation yet 83% experience payment inaccuracies.
- An error rate of just 1% can result in 11% of reps being paid incorrectly throughout the lifetime of their plan.
- An error rate of 10% can result in 72% of reps being paid incorrectly.
Minor errors can cause major problems.
But Xactly also found the opposite:
An automated compensation plan results in 3x higher efficiencies.
By automating your compensation plans, you mostly eliminate the element of human error.
Be a Good Manager and Coach
It’s not enough to simply manage.
Sales performance management requires a dedicated coach who can inspire, teach, and guide salespeople to greater heights of success.
And SPM provides you with the metrics and KPIs and analytics you need to be an effective coach. All that data will inform you of who needs your help the most and in which area they need it.
Sales Performance Management Software You Didn’t Know You Needed
Many of the tips we touched on today require you to communicate with your sales team or other departments.
Being a coach to your reps, delivering sales insights, motivating your team; they all require consistent (and persuasive) communication.
You may not have thought about it, but when you communicate with your sales team you’re mostly using your voice or text-based materials.
But there’s a third, more powerful tool you’re forgetting:
Improve your sales team’s behavior and success by discovering why CloudApp is an essential sales performance management tool today!