Sales Performance Management 101: Everything You Need to Know

Looking to increase your revenue while motivating your salespeople to be the best that they can be? It's time you got started with sales performance management (SPM).

In today's competitive landscape, effective SPM management will not only give you an edge when it comes to hitting your sales forecasts, but will also help you retain your best-performing sales stars and help everyone in the team reach peak performance.

What is sales performance management?

It's one of the hottest topics in sales right now, but what does it mean? Essentially, sales performance management brings together everything you need to get the most out of your salespeople in a structured way.

From motivating and training your sales team to analyzing data, managing quotas, and spotting opportunities to improve, effective sales performance management is a blend of software and people management, helping you fine-tune the processes and data you need to get the most out of your sales team.

Why introduce sales performance management?

When you embrace sales performance management, you'll find that it has advantages for your business and your salespeople alike. In other words, it's a win-win.

How does sales performance management help my business?

Salespeople hate paperwork.

They'd much rather be out doing what they do best: talking to customers. A smooth management system frees them from admin tasks to let them do just that.

What can sales performance management do for my sales team?

Motivating your salespeople = higher retention

There are plenty of good reasons for embarking on a sales performance management program, but one of the biggest — that affects both employers and employees — is sales staff retention.

The turnover rate for salespeople is notoriously high; at an estimated 35 percent, it's nearly three times higher than the average for all professions. When you think about the cost of recruiting, hiring and training each new salesperson on your team, doesn't it make sense to prioritize the ones you have?

Sales performance management addresses some of the key reasons why salespeople leave their companies: pay, career opportunities, and a lack of engagement.

A fair and transparent compensation management system gives your team the confidence to stay instead of jumping ship for a vague promise of more compensation elsewhere.

When you provide opportunities for career development and the chance to learn new skills, you're well on your way towards reversing any disenchantment before it sets in.

A good SPM system gives everyone visibility of your company's overall goals and sales targets, increasing your sales team's sense of engagement and helping them to see the big picture. They'll be less likely to leave if they feel that you are all working towards the same thing.

3 key elements of effective sales performance management

What, then, makes up a good management program? While they have a lot of ground to cover, all the most effective SPM systems have these three elements in common:

1. Accurate sales forecasting.

Not only will everyone know what their targets are, but you'll have a good idea of compensation costs for the year.

2. Real-time information.

Tracking sales performance against your forecast will give you immediate visibility of any potential problems, allowing you to take action in good time.

3. Sales team management.

Information is only as good as what you do with it. Having programs in place for training and development, as well as compensation, will help keep your salespeople motivated.

The role of sales management software

Sales performance management is not just about software — but software can certainly play a major part in making it happen. Quite simply, with the right technology you'll gain faster, more targeted insights that help boost your business, as well as making your salespeople's lives a great deal easier.

If your organization has been bumbling along with nothing more than a bunch of spreadsheets and a tangled web of emails, you're missing out on a powerful management tool. A key part of any sales performance management strategy, technology can help you build a strong sales pipeline, improve communication and help you make accurate forecasts — all in the one place. Here's what the right software can do:

Incentive compensation.

With software, you can make sure that commission payments are calculated accurately, and automatically paid on time — a boon for both salespeople and managers. When your team has visibility of their upcoming pay and how it was calculated, they'll become more engaged and have confidence in the process. For managers, meanwhile, automated payments mean fewer mistakes and none of the costs associated with continually correcting under- or overpayments.

Smooth communications.

Software makes it easy to handle disputes and misunderstandings. Whether it's messaging through the software platform or using a chatbot to answer common queries, sales management software lets you say goodbye to all the email chains and games of phone tag that used to characterize compensation conversations, making the process more streamlined — and altogether more pleasant — for everyone.

Territory management.

Need to figure out who should be responsible for certain geographical areas or customer groups, and how to calculate their targets fairly? Some sales territories can be more challenging than others, which makes planning potentially complex to navigate. With effective SPM software, however, you'll have all the data at your fingertips so that you can keep your teams and territories in balance and maximize everyone's potential.

Quota management.

Don't know where to start with sales targets? It's important to get quotas right: set them too high and your sales team will quickly become disheartened; too low and you'll be paying out higher-than-expected commission costs. With the right software solution, you'll have access to all the data you need to make an informed decision and set realistic sales targets. Plus, of course, you'll have all the necessary data at hand when you need to adjust your targets throughout the year to keep your cash flow on track.

Analysis.

It's all very well generating a ton of data — but you have to put it to work. With realtime reports on sales across products, categories, territories and individual salespeople, you'll be able to see if your results are aligned with your forecasts and make any necessary tweaks along the way.

4 steps to effective sales performance management

Ready to take the plunge? The best SPM strategies are built on a solid foundation — so it pays to set clear goals before you start, and to include regular feedback sessions and reviews once your new processes are in place.

1. Establish your strategy

Before you implement your sales performance management system, it's important to ask some questions first. What are your goals? Who do you need to work with in your organization to make it happen? What data do you need to gather before you can get started?

Sales performance management is a group endeavor, bringing different parts of a company together to create a streamlined plan that works for everyone. So make sure that you are all aligned before you begin. Does everyone have an understanding of your KPIs? Are you all working to the same definitions of the various stages in the pipeline? If you can agree a clear strategy with all your stakeholders at the beginning, you'll save a world of pain later on.

By engaging with your sales team at the start of the process, meanwhile, you'll be able to get their buy-in when setting quotas and sales forecasts. Ask for feedback at an early stage to bring your team on board.

2. Motivate your team

When you move to an automated commission payments system, you and your salespeople will feel the benefit pretty much immediately; everyone likes to know that their compensation is calculated fairly and paid on time. But your SPM management is more than a one-trick pony. Get it right and you'll be helping your team to reach their targets and continually develop and improve.

Sales management software does so much more than process payments. You can introduce an element of gamification, with leaderboards to show your team how they are performing in relation to everyone else. And while it's great to give your salespeople a clear picture of their attainment, why not show them the next level, too? When they see how close they are to making the next step on the compensation ladder, it might just give them the motivation they need to get there.

3. Build on your insights

Sure, your sales performance software is capable of gathering lots of lovely data. But it's no use to you if you don't plan to review it regularly and put these insights to good use.

The benefits of having immediate, accurate reporting cannot be overestimated. Instead of wading through columns of spreadsheets, you can access a customized dashboard with the information you need — whether that's a high-level snapshot or a more granular picture. So when you build your SPM strategy, it's important to think about how you'll make the data work for you.

Is performance aligned with your sales goals? Reviewing sales performance regularly will help you reset expectations inside the business and take any actions to change direction if necessary. By adjusting your plans and reallocating resources as you go, you'll be in a better position to meet your targets by the end of the year.

4. Complement your software with great people management skills

Just as you use data to continually improve your plans and forecasts, you can use it to help improve your sales team's performance too. It's a great tool to have when you're conducting a review, allowing you to compare someone's individual performance year on year, or to measure it against their sales targets.

When you have all the figures in front of you, it's easier to identify opportunities for training, and to bring them up in performance reviews. Even better, when your salespeople have visibility of their own attainment, you can encourage them to take ownership of their development, setting their own stretch targets or asking for coaching when they need it.

For example, your data might reveal that a salesperson is frequently losing prospects at the same point in the pipeline — at the first meeting, say, or in the final negotiation. With a little extra coaching, you can help them overcome that hurdle by arranging for training or assigning them a mentor from within the team.

Sales performance management is about more than just compensation management software (although that particular technology is undoubtedly very welcome). It's actually a whole set of tools, from creating accurate forecasts to analyzing sales performance and using data analysis to motivate your sales team and keep them reaching for the sky.

About Varicent

Varicent helps clients accurately track, manage, and report on sales processes through the industry-leading Sales Performance Management (SPM) solution. Established in 2005, Varicent innovated the SPM software industry by developing business tools for Incentive Compensation, Territory, Quota, and Channel Management. With Varicent's augmented intelligence-powered platform, customers realize bottom-line efficiencies and top-line results through sales dashboards and models for better decision making at all levels of the business.

For more information

To learn more about Varicent, speak to one of our sales performance management experts, visit www.varicent.com. Other product and service names might be trademark of Varicent or other companies.

Published by Varicent. Adapt internal links and the demo URL to your site structure before publishing.