Sales performance management 101: Definition and strategies
A sales performance management process enables you to analyze and actualize your business' progress and move you toward success.
By Donny Kelwig, Contributing Writer
Last updated October 17, 2022
The sales performance management market was valued at $3.1 billion in 2020 and provided an average of 204 percent ROI. The numbers don’t lie: having a thoughtful and solid sales performance management strategy is good for business. But if you’re unfamiliar with this terminology and process, it can sound like just another string of business terms.
In this article, we’ll unpack what sales performance management is, why it matters, and how to successfully implement this game-changing strategy into your business.
What is sales performance management?
Sales performance management (SPM) is a process for planning, analyzing, and improving business strategies across an organization, with a special focus on guiding and managing your sales reps to help them achieve company goals and objectives. The overall aim of sales performance management is to improve how efficiently and effectively your business operates.
There are many overlapping parts to consider when putting together a sales performance management strategy. Some things to consider include:
- Training staff and helping them set their own goals
- Pipeline optimization
- Account segmentation
- Quota setting
- Incentive compensation
- Developing sales reps’ skills and monitoring their individual development
Each consideration affects another when put into practice, so it’s wise to think of the big picture when creating your sales performance management process. These aren’t isolated parts but many pieces of an overall puzzle that add up to a successful and efficient business.
Why is sales performance management important?
Sales performance management benefits your business across the board. Using a solid SPM process will:
- Significantly reduce processing time
- Decrease operational errors
- Allow you to track opportunities created by each sales rep
- Enable you to track the number of client conversations each sales rep conducts
- Create sales analytics and data that can help guide your business plans
- Improve sales forecasting accuracy
- Lead to better-trained sales reps
- Improve your territory management
- Create better compensation structures
- Increase sales and revenue
- Boost sales ROI
- Accelerate close times
- Eradicate inefficiencies
- Automate menial tasks
Essentially, creating a solid sales performance management process will streamline your company’s operations, and thus improve sales performance. By aligning processes, you can get many elements of your regular processes working in tandem and significantly reduce mistakes and redundancies.
Components of sales performance management
Part of what makes sales performance management such a powerful strategy is how much of your business it takes into consideration. This macro view of operations is divided into individual components that you’ll then analyze and optimize.
The main components of SPM include:
It’s important to start at the drawing board. Consider how best to organize your accounts and which salespeople will thrive in which territories (and how many to devote to each). When you strategize your approach from the beginning, you set up your team for success.
You want to optimize the potential of every account your sales team handles. This will also serve to motivate them. When they’re sent out with a plan they can get behind, they’ll perform better. That better performance will lead to increased sales which in turn leads to more motivation for your team to stay on the right track.
Even the best-laid plans still need supervision and adjusting. Check in on how things are going. How is your team faring? How are they feeling? Analyze each rep’s output and how well they are meeting their quotas. The better you understand your sales team, the better you can guide them toward their own maximum potential.
Good management yields a twofold benefit: not only will your sales team’s techniques and returns increase, but so too will the pride they take in their job. Not only do highly engaged teams show 21 percent greater profitability, but employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform their best work.
Along with managing your team with solid guidance and training to improve their skills, it’s also important to incentivize them. Commission structures and the potential for yearly bonuses can be huge motivators for sales reps. When maximizing a sales team’s earnings coincides with maximizing the company’s profits, everyone is set up to succeed.
Acquiring data is vital for the continuous improvement of any organization, but good data is useless without regular analysis. You need to know how effective your current operational procedures are so that you can make them better.
You also want to know how your company is doing in comparison to your competitors and industry benchmarks. Are you falling behind? If so, assess why. Understanding what’s not working in your business is just as important as knowing what is working. You should be positioned to pivot quickly—fixing failures and investing in the policies that are yielding the results you want.
Accurate data, metrics, and analysis also provide the added bonus of laying the groundwork for more accurate forecasting. Being able to predict trends in demand, output, revenue, and ROI for your company is crucial in today’s fluctuating economy. But without centralized data and cutting-edge analytics, businesses continue to rely on flawed human intuition, leading to inaccurate forecasts, sales pipelines, and quota attainment. In fact, Gartner estimates that by 2025, only the top 10 percent of B2B enterprise sales organizations will be using advanced data analytics. Anyone outside of this 10 percent bracket will be at a severe disadvantage.
Ultimately, the components of your sales performance management strategy are cyclical. You begin with sales planning and move toward analyzing data and forecasting future outputs for your company. You then use the key insights that you’ve uncovered to create better plans—and the cycle repeats itself. All the while, your business gets more streamlined, your processes improve, and your sales increase.
You can also think of the components of SPM as falling into three main categories:
Where to sell. This covers planning and things like account segmentation, territory allocation, quota setting, and capacity planning. Figure out where to devote your resources and how to divide and conquer your chosen market.
How to sell. This encompasses managing and incentivizing, including things like commission structures, staff training, and goal setting. Organize and motivate your team to do its best, and set goals that you actively work to reach.
What to sell. This includes analyzing and forecasting, such as pipeline management and identifying and evaluating sales metrics. The data your SPM reveals is invaluable. Analyze it closely and use what you’ve learned to continue improving your products and your sales methods.
How to implement a sales performance management process
We’ve established that having a sales performance management process is worth the effort, and we’ve gone over all the components that compose such a process. Now let’s discuss how exactly you implement an SPM.
SPM implementation can be broken down into clear steps:
1. Make a plan
All successful policies begin with a plan. Think about what performance metrics you want to assess. How can you best measure these metrics? Think about your overall business objectives. How can you simplify them? How can you best distribute these objectives and goals to each member of your team?
Particular metrics worth measuring and evaluating for each of your sales reps include:
Quota attainment is the percentage of the sales target reached by each sales rep in a given month (or specified sales period). If your sales team is having a hard time meeting its quotas, your set goal may be too hard to achieve. Conversely, if every sales rep is smashing their quota, you should likely adjust the bar higher.
Conversion rate is the percentage of leads each rep is able to convert into paying customers. For example, if a rep has 100 active leads and manages to convert 25 of them into customers during any given sales period, their conversion rate is 25 percent.
Tracking this metric provides useful information about the quality of your leads, the resources your sales team has, and even which of your sales reps may be the most skilled. If your conversion rates are low compared to other sales teams in your industry, it may indicate flaws in your pipeline and/or training.
Sales productivity refers to the amount of time it takes for each sales rep to meet their quota. The faster your team members meet their quotas, the higher their sales productivity. You want to evaluate the percentage of total hours they spend prospecting, the percentage of total hours they spend on data entry, and the percentage of closed-won deals.
Once you really know how your team is doing, you can best assess how to support them and help them improve.
2. Share company goals with your team
Now that you’ve assessed your metrics and made a plan, it’s time to share the company goals with your sales team. You need to be communicative and invite your sales reps to buy into your plan. This is where it’s smart to solicit feedback. You want to be sure everyone feels heard; understands why the goals, benchmarks, and quotas are where they are; and feels ready to jump in.
Enable your reps to voice their concerns and set their own development goals within the general quotas. A concern may well lead to an even better idea, and your reps may already know what they need to improve upon. Involve them in this process even as you push them to reach their maximum potential.
3. Manage your sales reps
Once everyone’s performance plans and goals are set, make sure you’re providing adequate structure and resources to help your team meet them. Conduct regular check-ins. Offer training sessions. Connect reps with a mentor or a teammate who excels in an area they struggle with. Helping sales reps improve and succeed not only increases job satisfaction, but sales training can yield an ROI of 353 percent.
4. Provide feedback
Regular feedback and consistent performance reviews are the final part of implementing your SPM. All the insightful data you’re collecting and analyzing on team performance won’t mean a thing if it’s not communicated to your sales reps. How can they improve if they’re not told what they need to improve upon?
A helpful performance review should include:
- The goals and KPIs each sales rep is being assessed on
- Feedback on their recent projects/selling ability
- Encouragement and acknowledgment for the things they’ve done well
- Constructive criticism concerning the areas they can improve
- A summary and/or rating of the rep’s overall performance
What to look for in a sales performance management software
Great sales performance management software automates and integrates your processes and data to help improve efficiency and team performance in your company. The best SPM software has many of the following features:
- Advanced sales performance analytics
- Quota management (and forecasting)
- Sales gamification
- Sales territory optimization and strategic mapping
- A platform for the documentation of your business goals and objectives
- Sales incentive compensation management
- Real-time data collection
- A wide array of customizable automations
- Easy integration with other software your company already uses
When selecting the right SPM software, prioritize a platform that provides the features you need, integrates easily with your existing tech stack, and can scale with you. Ultimately, sales management software should make it easier to connect your departments, provide management with the data they need, automate menial tasks, and help your sales reps focus on what they do best: sales.
Improve your SPM process with Zendesk Sell
Every organization’s bottom line relies heavily on the performance of its sales teams. Great management is the key to activating and motivating your sales reps.
With Zendesk Sell, a sales manager’s job becomes easier. Our comprehensive CRM platform contains all the tools you need so that both managers and sales reps can perform more efficiently and productively. If you’re ready to improve territory management, sales forecasting accuracy, sales rep training, and compensation accuracy, start your free trial of Zendesk Sell today.
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