There’s a lot of buzz lately about Sales Performance Management (SPM), with many interpretations of what SPM is and in turn, what the real business impact is for sales organizations today. Some viewpoints focus SPM on Incentives and Compensation Management. Others center SPM on objectives setting or confuse basic account, contact and opportunity management with SPM. It’s time to clear the hype from the hard facts so that you can assess how best to leverage Sales Performance Management to supercharge your sellers in 2014.
First, let’s define Sales Performance Management:
A framework and set of tools that translate sales strategy into execution while applying processes that optimize sales performance.
I like to think of it as the sales organization’s version of Six Sigma. Traditionally, B2B selling has been more about art than science but with the changes in buying behavior and the empowered customers we engage with today, the best sales organizations are marrying art and science. By aligning selling behavior to sales goals and applying sales process optimization and best practices sharing, top performing sales organizations are teaching their B Sales Reps to understand and engage their customers more effectively in order to become A Players and win the hearts and minds of their customers.
So, let’s briefly look at the components of Sales Performance Management, organized by what I call The 3 C’s of SPM: Coverage, Carrots and Coaching.
Coverage is step 1 in your SPM journey. It starts by segmenting your territories to align with your sales objectives and assigning optimal quota levels per region, team and rep. Next, existing sales staff are allocated to territories based on the required skill set to win in each territory. Once existing sales resources are allocated, gaps are identified and hiring and training plans are created. Recruiting processes kick-off to bring on new talent where needed and new sales personnel are then successfully onboarded leveraging best practices to ramp sellers to full productivity in the shortest amount of time. For this segment of SPM, it’s important to have sales goals and objectives, seller profiles and skill sets from HR systems, recruiting, onboarding and learning management systems exposed in relevant context in your sales application so that you’re effectively aligning, allocating and hiring the right resources and streamlining the process every step of the way.
Carrots is step 2 in your journey. Goals and objectives are useful in focusing sellers on what they need to do and where to focus. If selling new products, targeting new markets or bringing on new customers is core to your business strategy than setting relevant goals with meaningful rewards provides the carrots to drive sellers towards adopting new sales behaviors. Getting incentives and commissions right is also important so that you’re rewarding the right behaviors and neither overpaying (loss of profit) or underpaying (leading to unwanted attrition) for performance. Providing sellers with what-if analyses to model their potential commission based on meeting these objectives helps them identify the accounts and opportunities to focus on that will get them to the desired end result the fastest – and at the same time if you’re focusing on the accounts where you can deliver the most value, you’re going to do a better job at making your customers successful. Gamification can be employed to maintain motivation and provide public recognition internally for a job well done. Again, these capabilities should all be exposed in relevant context in your sales application so that sellers can see the impact, and potential impact, of their behavior in generating desired rewards, desired results and desired customer success.
Coaching is step 3. With Carrots as the “what”, Coaching is the “how”. “Smart training” should be used – training that tracks on an ongoing basis which sales educational programs are most effective in helping sellers make their revenue targets and achieve their goals. Training should also be personalized and in-context, based on who I am as a seller, the customers I’m calling on, the products I need to sell, what I’ve done in the past and correspondingly what I need to do now to be successful in the future. Best practices should be identified through activity analytics and sales social collaboration – what does “great” look like. These best practices should be exposed to sales managers to not only benchmark sales reps but also pinpoint the challenges a given seller is having in becoming an “A” rep. Sales managers can then set individual activity plans to improve performance and reinforce these plans during coaching sessions, making them more impactful. Sales reps can also learn a lot from each other and through virtual sales buddies. Social collaboration is key in sharing this sales “wisdom of the crowd” in real-time to scale best practices sharing and accelerate sales performance improvements.
As you can see, SPM encompasses much more than incentives and compensation, and does not include the more basic sales processes such as account, contact and opportunity management. The intent of SPM is to build off of the foundational elements of the sales process and day-to-day selling motion to optimize resource allocation and implement continuous improvement of the selling motion – ultimately engaging the customers where you can deliver the most value and best help them achieve new levels of success.
And when the full breadth of the framework is leveraged, the impact is significant. Research from Aberdeen shows significant performance advantages for sales organizations who fully adopt Sales Performance Management practices as compared to those that don’t:
- 83% of all sales reps achieved annual quota in the last measured year versus 53% among all other firms
- 61% of first-year sales reps achieved annual quota in the last measured year vs. 40% among all others
- 14.9% average year-over-year increase in corporate revenue; all others average 3.6%
- 3.6% average year-over year improvement in (reduction of) average sales cycle, vs. a 1.7% worsening (lengthening) of the cycle for all others
With these mega improvements in sales performance, you can’t afford to maintain the status quo with your selling motion. Now is the time to evaluate each component of SPM, identify where your sales “bottlenecks” are occurring and embrace Coverage, Carrots and Coaching to develop your 2014 plan to optimize. Your success is counting on it.
And to learn how SAP can help you supercharge your sales organization in 2014 with the full breadth of SPM, take a look at our Solution Explorer for Sales.
Good selling now and in 2014.