For a long time, the world of sales has grown increasingly competitive. The rise of technology and science has enabled companies to compete on a level never seen before.
While organizations recognize the importance of holding and maintaining aggressive goals to remain competitive, sales teams have failed to rise to the task.
Even in more sales-friendly times, sales could not meet the standards set by their leadership teams. In 2018, for example, the average quota attainment was a dismal 54%. As sales have struggled to keep up in the past year, most sales teams won’t keep up with their quotas.
What can a company do to enable their sales to succeed even in a tough market?
Having the right tools is no longer enough. Instead, companies need a way to bring their tools together to get better insights and processes that result in higher quota attainment.
This is where a sales performance management (or SPM) plan is critical. It allows companies to remain effective, and their sales reps productive even in the most competitive environments.
No matter how good your product or service, they do not sell themselves. How a company sells is just as important as what they are selling. As a result, leadership needs to be strategic about what they sell and how they sell it. SPM can set your organization apart and improve your selling process to be more effective and efficient.
Here is everything that you need to know about sales performance management and how to harness it to improve sales.
What Is Sales Performance Management (SPM)?
Sales Performance Management is a data-driven process to ensure that each sales rep meets the company goals and objectives. SPM includes sales planning, incentives, and insights with software to help with your sales team’s hiring, motivation, and performance.
Many organizations have technology that helps with various aspects of sales, such as CRM or productivity software. Without SPM, though, the software is siloed and managed manually, resulting in errors and the potential for missed insights.
SPM is the process that allows leadership to utilize their data and technology in a way that brings all aspects of their technology into a single source of truth. This provides deeper insights and more effective processes that can drive sales.
Benefits of Sales Performance Management
SPM changes the sales process at a more fundamental level. The result is that everyone sees benefits at every level. Some people who benefit from a performance management plan include:
Leadership is facing an increasing problem of keeping the senior members of their sales teams. The average tenure of a sales rep is 1.5 years, a nosedive from 3 years in 2010.
This plunge in tenure is not only costly for companies to replace, but their average sales rep lacks the expertise to be a true asset to your team. Considering that the average ramp time for a sales position is typically 3.2 months and new salespeople reach their full productivity at 12 months, many companies are struggling with an unproductive team that leaves as soon as the company has invested heavily in them.
Not only are reps leaving quickly, but they are not as invested in driving your sales. A Gallup State of the Global Workplace found that 85% of employees are either not engaged or actively disengaged from their jobs.
SPM helps fight against these issues by improving the education and motivation of your sales teams. Research shows that high performing teams are twice as likely to provide ongoing training than low-performing teams.
Sales reps that feel their company prepares and educates them report higher satisfaction and a feeling of value at their companies. These both decrease the likelihood that they will jump to a new company as quickly as possible.
Sales performance management gives the organization and accountability that enables sales teams to thrive. Often, training efforts are half-hearted and under-utilized. Vital tools are left unused. However, the right training encourages and promotes new research, science, and software to improve sales.
The right motivation through SPM gives sales reps clear goals to follow and achieve. It also incentivizes them in a way that works best for your unique team. For example, gamification can help promote a healthy competition on your team to inspire them to be even more productive.
As your sales reps improve their skills and opportunities, they will have better-qualified sales opportunities. Both the size and quality of their sales leads will improve as they have the skills and knowledge to improve their pipelines.
SPM gives management a more effective way to oversee and support their sales teams to reach their goals. The right tools help management with critical parts of their job to make sure more reps meet their quotas.
A performance management plan provides managers with a structural approach to hiring, training, managing, and incentivizing their teams. They can focus on critical success factors rather than making the same mistakes over and over again.
In addition, management can provide more effective territory management and individualized quotas to help their sales team succeed. Companies that create a general quota for all sales reps and do not take skill or territory into account saw 14% less quota attainment. SPM allows leadership to create customized quotas based on territory-specific opportunities so that reps are challenged without being overwhelmed.
Leadership can harness SPM to create a more comprehensive strategy that relies on a high-level view of data, processes, and tools.
The right software enables better forecast accuracy to allow leadership to make more practical goals and sales plans. It helps executives reach a consensus of the sales force’s state and create successful goals that take all angles and data into account.
In addition, SPM provides better sales analytics so that leaders can better understand what is going on in the sales department. Often, executives are detached from the issues and processes that affect sales. The right data, though, provides these critical insights to inform them and optimize their goals.
Feedback loops in SPM also help leadership optimize and refine their strategies. Once decisions, processes, and sales goals are established, the job is far from over. A constant feedback loop allows leadership to detect and adjust should any problems or opportunities arise quickly.
SPM provides insights to drive efficiency and allow leadership to see critical threats or opportunities ahead of the competition. This gives an organization the chance to make a healthier profit margin.
How to Build a Sales Performance Management Plan
Building a sales performance management plan is not a once-and-done project. It requires consistently implementing and using data to align your business better to meet the company goals.
Here are the steps to take to build a sales performance management plan successfully:
Step #1: Set Your Goals and Individual Quotas
It’s impossible to create effective quotas and processes without understanding your goals first. Your overall company vision will help influence the sales structure and where your sales team needs to direct its energy.
Predictive analytics is a powerful tool during this stage to get a sense of where your company is headed. It is how you can either capitalize on your trajectory or mitigate any future threats to your company. You can test future scenarios to see which course of action would work best.
Management can use this information to create well-balanced territories and assign each region to the most capable sales reps. Once leadership has agreed on goals and structure, this information can guide the creation of individual KPIs for each sales rep. Creating individual quotas and conversion rates can help inform each sales rep what level these goals look like for them practically.
Step #2: Automate Compensation
Compensation is the most critical source of motivation for sales teams. It’s also one of the costliest parts of business: most companies spend at least 10% of their revenue on sales compensation.
Errors in compensation can have a large impact on your sales team. A study by Xactly found that an error rate of only 1% results in incorrect payment to 11% of all sales reps over the lifetime of their plan.
Automation prevents confusion and costly errors. In fact, the same study by Xactly found that automation results in three times higher efficiencies.
Sales teams of all sizes can benefit from automating compensation and avoiding any conflict. It prevents distraction as your sales team will not have to worry over their paycheck and whether they are being paid correctly. It will also improve morale as they do not have to worry about missing out on their commission.
Step #3: Communicate Goals and Standards
Transparency is critical to your entire process. Outside sales reps are typically accustomed to their own schedule and sales process. Without team buy-in, they may fail to take many of the steps necessary for success, such as using software or engaging in training.
Discuss the new goals and processes and why they are being set. Explain the benefits to your sales reps specifically and how it can help them achieve their quotas.
Make sure that each salesperson understands their specific quota and conversion rates. Explain that they are set for them specifically to help maximize their success.
Step #4: Monitor and Motivate Your Team
Now is the time to coach your reps to success. Ensure that they have the tools and training they need to maximize their sales.
Providing training doesn’t mean that you necessarily are their teacher, but it is vital that leadership offers an environment that encourages learning and skill development. Hold reps accountable for attending training, connect teammates for development, introduce newer salespeople to potential mentors, and encourage mentorship in your team.
Motivation is a critical factor in sales. Without the spark of inspiration on your team, sales will suffer.
Clear analytics can motivate your salespeople. They need to understand how they are performing each part of the month or quarter. Encourage them to keep an even pace that allows them to perform strong the whole time, instead of rushing to make quota at the end.
For example, if they have a conversion rate of 20% and need 20 paying customers a month to reach quota, your sales rep will need 100 leads, which breaks down to four leads a day. Rarely are these breakdowns so clear and easy to navigate, though. Analytics will give them valuable insights to keep them motivated the whole month.
Gamification is another potentially powerful tool. Gamification takes advantage of friendly competition to push each sales rep to do their best. It can use performance data based on what you would like to encourage in your reps and creates a game with opportunities for recognition or prizes.
Step #5: Evaluate Performance and Provide Feedback
Regular performance reviews allow management to monitor rep performance, provide helpful feedback, and encourage accountability. A useful performance review should both encourage and challenge reps to achieve their best performance.
Review Their Goals
Keep their initial goals in mind during their review. You can track their progress based on their goals and discuss whether they are achieving as much as they hoped to.
Provide Feedback on Their Progress
If your rep improved since their past quarter or review, now is the time to note it. Be sure to recognize their wins and progress. If they have been working to improve their cold call skills or closing techniques, for example, be sure to bring it up to them.
Discuss Their Strengths
Their reviews need to be an encouragement to them. Recognize their strengths and how they have contributed to their success. For example, their soft skills may have led to closing more deals and their general success in your company.
Provide Constructive Areas of Growth
Discuss where they need to continue improving. Should they be prospecting more? Improving their productivity? This is the time to discuss it. However, don’t just point it out. Provide helpful tips and advice they can apply, even training if they are weak in a critical area.
It’s easy to get lost in the many points during a performance review. A summary at the end can help clarify their general performance. You can rate your reps on a scale of 1-5 on how they meet the expectation given to them. This is a helpful way to provide them with an overall impression of how they are doing.
Regular performance reviews can provide powerful accountability and motivation to your team. It also gives management the chance to provide helpful coaching to improve performance.
Step #6: Review Goals and Processes
SPM requires constant surveillance and adjustments. In the beginning, it might require adjustments often as you navigate what works best for you and your team. However, even those who have found success in performance management will need to adapt based on the market and changes to their team.
This constant review can help you to react quickly to changes in the market before your competitors. Continue to monitor sales forecasts and analytics to make sure your team performs as well as they should.
Software for Sales Performance Management
There are a lot of software that claim to help with SPM. However, successful software should include:
- Access to real-time data
- Predictive analytics
- Connections between people and processes
These features will help leadership and sales teams make practical adjustments to help improve sales. Some of the best software for SPM are:
Oracle helps reps to perform at their highest level. Enabling rep accountability, Oracle guides your sales team through skill-building tasks and training modules. It also allows sales reps to focus on the accounts with the highest earning potential.
To know where your sales need to go, it’s important to understand where your team currently is. Anaplan uses your team’s performance to drive planning. Organizations can test-drive different go-to-market strategies to get insights into their effectiveness.
Gamification can provide critical motivation and help give your team an edge over the competition. SPM software can help leadership hone exactly what skills they want to target and encourage. LevelEleven does just that. It identifies critical sales behaviors to help drive productivity and focus for your team.
Map My Customers
Map My Customers drives sales performance management with critical customer visualization, automated activities, lead generation, and route optimization to increase rep productivity and transparency. It also syncs with the biggest CRMs on the market so you can have a single source of truth for all your critical information.
This mobile-first, all-in-one software maximizes you and your team’s efficiency through a more intuitive workflow, whether you’re on your desktop or your mobile device. The purpose-built sales tool simplifies day-to-day activities, making it easy for your reps to capitalize on opportunities and equipping you to make data-backed decisions.
Map My Customers provides you with all the automation you and your reps need. Two standout features of the platform are the Quick Actions and Check-Ins. Your reps can email, call, or route to customers quickly and easily with the click of a button directly from within the tool. Then with Quick Actions, they can automatically log activities simultaneously, enabling your team to stay on top of administrative work with very little effort. Reps can also Check-In with an account in just a few taps — the app will then pre-fill and timestamp information based on their location. With this information, you can easily get an overview of your reps’ performance, increase productivity, and identify improvements to your territory management strategy.
The platform can stand on its own as your sales CRM or integrates with many of the top CRM options. By automating many of your team’s sales activities, Map My Customers enables you to make sure that your reps are spending most of their time doing what is most important: selling.
Create a Stronger Sales Team with a Sales Performance Management Plan
A sales performance management plan gives structure and insights into your sales strategy. It helps provide critical insights into your sales team, plus tools and training to help them perform at a new level.
Companies that utilize SPM benefit from better hiring, training, team motivation, accountability, and territory management. However, SPM is not a one-time event, but a process to continuously adjust and improve the sales process.
By following our performance management plan guide, you can stop trailing the competition and start carving the best path for your sales team and company.