What are your company's revenue goals? How do you achieve them?
Undoubtedly, there's some sort of sales process involved--as well as a team that drives it. But what drives them? How do you empower your team to meet the goals you've set out--and optimise your sales process along the way?
That's where sales performance management (SPM) comes in. From the territories you map out and the quotas you define, to the incentives that drive your team to meet their goals at every stage, your sales performance management program ensures all of the pieces are in place to move sales forward. Driven by data, it lets you better plan, manage and analyze your sales program from start to finish.
To find out how to build the best SPM for your organization, start with the following:
The performance of your sales team is critical to the success of your business as a whole. Sales performance management (SPM) recognises that, employing a data-driven approach to planning, managing and analyzing your sales process. In doing so, it helps you drive your sales team and gives leadership the insights they need to make the best decisions around future goals.
In other words, SPM helps you make more informed, data-driven decisions, visualise how well your sales teams are meeting their targets and lets you stay agile in the face of change. In doing so it helps you move your entire organization towards its revenue goals.
SPM lets you use data--from historical data to pipeline data--to determine the best sales territories, calculate appropriate quotas and optimise the sales process--all with the ultimate goal of maximizing sales and profitability. It can offer insight into the way you incentivizst. your sales team, enable your scenario modelilng and future planning and provide insightful feedback that allows you to continually improve sales within your organization.
And, with the right SPM process and tools in place, SPM lets you do that with a clear line of sight and a single source of truth by which to track your progress. All of which puts you in a better position to meet your revenue and sales goals.
Most sales performance management programs will incorporate three main components: sales planning, sales incentives and sales insights. Consider each in turn, as well as some of the elements that drive them:
What markets are you looking to target? How can your sales team best meet their needs?
Sales planning starts with questions like these, as you segment your accounts, set your sales targets and align your team. An offshoot of your revenue planning--which helps determine revenue expectations and create goals around
them--your sales planning allows you to align your sales team and processes in a way that makes those revenue goals possible.
A couple of key elements of the sales planning stage include:
Most organizations motivate their sales team in some way to help inspire them to meet their quotas. Bonuses, commissions and other incentives--paid out when targets are met--can give reps the extra boost they need. How you structure those incentives will depend on your organization and team. Key parts of your Sales Incentives program include:
Through constant measurement and ongoing analysis of your sales program, organizations can continue to optimise and update the processes, levers and teams in place to improve results. Your Sales Insights may include:
Sales performance management takes the mystery out of sales, giving your sales team clear goals to strive for, the right motivation to get there and whatever resources they need to achieve their objectives along the way. In doing so, it lets your entire sales team work together to help your organization meet and exceed its revenue goals.
But how do all of those different elements come together into a cohesive SPM process? And what kind of team do you need to move that process along? Here's a step-by-step guide:
The SPM process starts by looking ahead, to predict projected sales growth and consider the territories or markets that will help you meet your goals and/or expand your reach. Sales forecasting and advanced analytics will help you get a more precise view, to better inform the decisions ahead.
Next up: defining your territories and setting the sales quotas that will maximizs the potential for each. This step will ensure you're putting your sales reps in the best possible position to meet their targets successfully.
Now that you've figured out your territories--maybe determining additional potential in one or deciding to move into new territories altogether--it's time to make sure you have the right team to back those plans up, including the roles below:
At this point you've built your territories and paired them with the right sales team and quotas. Motivating that team to meet their targets, though, is where your incentive compensation management (ICM) program comes into play. By incentivizing their success, you put your sales team on the right path to meeting their targets.
It's time for more analysis--to look at how the decisions you made affected your overall profitability and what more you can do to better meet and/or improve on your revenue goals. Which means, once you're done, starting up with step one again, to take another look forward and set new goals.
To help visualise every step of the sales journey, organizations turn to their sales pipeline. Your pipeline follows the stages you use to lead someone through that journey so that you can better understand the steps needed to make that happen and ensure you have enough leads to make your ultimate goals.
Here's an example of what your sales pipeline might look like:
A strong sales pipeline stands at the heart of every sales program. Building out yours takes a combination of recent sales data, an understanding of your audience and sales territories and a process that works for both. Consider each in turn:
An analysis of your recent and historical sales data will give you valuable insight into the types of conversion rates your sales teams achieve, your average deal size, velocity, actuals versus forecasted results and stage conversions. Together, these allow you to better predict future needs and build out targets and goals at every stage of the pipeline so that you always have enough leads flowing through to accomplish your ultimate objectives.
A clear understanding of your target audience allows you to better understand where to source new leads and how to identify a solid lead once you find it. That insight, in turn, will allow you to build out the best sales territories to meet your objectives, determine the best sales reps for each and align quotas according to each territory's potential. (We'll dive more into sales territories in the next section.)
An established sales process will provide your sales reps with a framework to help them make their quotas and reach your sales goals faster. Training, clear selling points and differentiators from your competitors will help back that up. Measure the results of your process and keep a close track of your sales pipeline to see how prospects are moving through each stage. By doing so, you can continue to optimise both your process and pipeline to get the best results.
Your pipeline helps you make better decisions and ensures your team is taking every action possible to move your best leads along. It's a powerful tool in your SPM program.
Territory planning is also critical to any sales program. After all, how you segment your accounts will play a large role in the potential of your sales pipeline and how well your sales team manages the leads you have.
To manage your sales territories effectively and to segment your accounts for the best results, there are a few do's and don'ts you should understand first:
Before planning out your territories, thoroughly understand your organizational goals. Are you looking to explore new territories or expand on those you already have? Are there new products coming down the pipeline that will affect your overall target audience (and therefore the segments you sell to)? Are you looking to go more upmarket or explore a small business or midmarket solution instead of concentrating on enterprise? Decisions like these will affect your sales teams' efforts--which means you want to keep them front of mind when you're mapping out your territories and quotas.
Territories are usually based on geography, but can also be separated according to other criteria--from industry to customer type. So don't just fall back into what's always been done. Instead, determine what's best for your team and goals. By thoughtfully planning out your territories, you set your sales team up for success--and put your organization on track to reaching its sales goals.
Not all territories are created equal--and neither is every sales rep. Some account executives are simply more experienced, or better at their job, and your sales program will be more successful if you recognise their different strengths. To get the most out of your most promising territories, assign them to your most promising reps--and give them the quotas and incentives to inspire them to make the most of that potential.
Before making major changes, though, understand your customer base. Look at sales data over time to understand what the sales trends are and what segments have the most growth potential. Analyze your current segments, identifying the strengths, weaknesses, opportunities and threats that exist in your current territories. Then make any changes thoughtfully--so that they're decisive and iterative. Too much upset too often can make it more difficult for your sales team to develop relationships and accomplish their goals.
With the right territories in place, though, you set your sales team up for success. Of course, there are other best practices you can also draw on to make your entire SPM program thrive. Let's look at those next.
A few best practices can help you achieve your best SPM results and ensure your program runs successfully and gets the best results. Keep these tactics in mind as you build out yours:
Quality communication is a mark of any good business process, and the same can be said for your SPM program. By keeping communication open between your sales leaders, reps and other team members, and by considering everyone's ideas on how to make your program and processes better, you can better learn what's working and what's not. This will improve your decision-making abilities and help you make changes to your sales process along the way.
Giving your entire sales team access to the numbers they need to keep track of their progress will let them see how well they're meeting their goals and what still needs to be accomplished to get there. But more than that, letting them in on your sales management strategy and telling them why you're focusing on specific products or markets will help them thrive as they do.
In order to use incentives to motivate your team, you first need to know what exactly motivates them. Are they ultra competitive? Some type of gamification may push them to come out ahead. Are they team driven? Team incentives that take into consideration every person who helps push a sale through could be the best bet. Just don't forget your own organization's code of ethics along the way. You want to inspire your team to meet their goals without losing sight of what your company stands for in the process.
Scenario modelling and what-if analysis can be powerful tools for your sales leaders, helping them better understand whether or not you're on track to meeting your targets, whether deals are likely to be made or not and if the right goals were set in the first place. But to effectively make scenario modelling an integral part of your SPM program, you first need software to support it. Which is where number five comes in ...
The right technology can help you keep track of your SPM program and measure its results. You'll be able to see in real time how much progress your sales reps are making at meeting their targets, calculate incentives and understand where prospective deals are in the pipeline--and how likely they are to result in a sale. Your technology should let you keep track of sales data as it happens, turn that data into insights and look ahead for future planning--hopefully with the help of a sales dashboard that lets you visualise everything more clearly.
You don't want to let your SPM program get stagnant. Markets change and your sales process needs to change with it--which means your SPM program should always be a work in progress. As you measure your results and analyze what you could be doing better, you'll be able to identify new territories and markets worth exploring, sales reps that aren't up to the task, quotas that are too high or too low and so on.
Of course, there's another critical best practice: making sure your sales enablement efforts align with your sales planning and forecasting. By doing so, your sales team becomes better prepared to take on whatever goals and challenges they're set to face next.
By enabling your team with the content, training and processes they need to move prospective customers through the sales pipeline, you make it easier for them to reach their quotas--and, in turn, make it possible to meet your organization's revenue goals. But all sales enablement programs aren't the same. The best ones are aligned with your entire SPM program--starting with sales planning and forecasting. To make sure yours is fully aligned, start with the following:
Dropping your future plans on your sales team without any preparation isn't going to help them achieve their best results--or get you to your sales goals quickly. Introducing new goals, products or markets can come with a learning curve. That's why it's important to give your team the time and resources they need to get through it. As soon as you understand your future goals, design and build out an enablement plan that will put your team on track to achieve it--including any training or content they need and plenty of time to absorb it.
Enabling your sales team is just the start. Marketing needs to be pursuing the same goals as sales so that they can assist them in the best way they can. Your customer success team has to understand your sales initiatives so they'll be ready to support the new customers you sign. And everyone from strategy to your product team should be ready to support your efforts, ensuring that everyone is working towards the same objectives. That might mean expanding your enablement goals beyond sales to include other key teams as well.
Sales training should be a regular part of your enablement process. That means it should never stop. Training on new products will get your reps up to speed and ready to sell. One-on-one coaching and call shadowing can help new sales reps pick up your process and learn more about your market. And a virtual sales enablement platform can let your sales team stay up to date on any new services, processes or content you have available to them. Together, this kind of training can empower your entire sales team to meet their goals and keep moving your organization forward.
Another piece to the SPM puzzle? Your sales incentives.
When done right, your incentive compensation management (ICM) program will motivate your sales team to move leads through the sales pipeline and meet their quotas--ultimately helping you achieve your business goals and better financial results.
But there are several different types of ICM programs to choose from and not all will be right for your business. The trick is to choose the program (or programs) that best meets your needs as well as your organizational culture:
By drawing on ongoing sales and revenue data, an ICM program can help you determine just the right incentives to spur your sales reps on, while tracking how close they are to reaching their goals. And by giving sales reps visibility into their progress and letting everyone view changes as they happen, the best ICM programs offer a clear line of sight throughout the entire process. They also measure the effectiveness of your incentives to ensure they're contributing to your overall SPM objectives.
As with most modern business processes, SPM relies on measurement to keep performance on track. The sales metrics you follow will help you make better decisions as you continue to drive sales and profits forward. Here are some of the most critical metrics for sales performance:
Understanding your average deal size--calculated by dividing your total number of deals by the total dollar amount they represent--can help you understand the potential of new deals in the pipeline as well as the risk they represent. It also lets you track changes you want to make to your target audience and market.
Large deals that exceed your average deal size, for instance, may seem like an excellent opportunity but are also more likely to fall through--making it more difficult for a sales rep to make their quota. By comparing the opportunity to your average deal size, you'll recognise that risk early on. On the other hand, if you're purposely looking to land larger deals, you can use your average deal size as a way to track that goal.
Quota attainment can be a useful metric in determining the successful implementation of your SPM program--telling you whether you're setting the right goals, building the best team or mapping out the right territories.
Tracking how many of your sales reps are meeting their quotas can help you evaluate whether those quotas are set too high or too low, whether territories are mapped out in the most effective way possible and whether you're offering the right incentives to motivate reps to meet their goals.
Your win rate--otherwise known as your conversion rate--looks at the percentage of leads that become actual sales. The win rate you're able to accomplish will depend on your product, price and the market you're selling in. Upmarket or higher-priced products, for example, often come with lower win rates.
Understanding your win rate will help you better feed your sales pipeline and determine how many leads you'll need to accomplish your sales goals. It can also help you better visualise when sales are changing--if your sales team is achieving better sales results or the opposite--allowing you to identify any new challenges or market evolutions that might be affecting your results.
Not surprisingly, revenue is a critical metric for any sales team. In fact, there are several revenue metrics that can help you determine the effectiveness of your sales team, including profit, the percentage of revenue attributed to new business, the percentage of revenue attributed to upsell and cross-sell and the percentage of revenue attributed to renewals. By examining metrics like these, you can better ascertain your sales team's strengths and weaknesses, decide where to focus your energy and resources and calculate realistic growth goals--while making more accurate future predictions against them.
To accomplish your sales goals effectively, it's important that your team stays productive. That's where sales productivity metrics come in--helping you determine whether everyone on your sales team is putting in the work to make your targets happen. Popular sales productivity metrics include percentage of time spent selling, percentage of marketing collateral used by sales reps and percentage of leads being pursued.
Overall, a successful Sales performance management program can help make the difference between sales success and failure. Which means getting it right is critical to your business. Keeping it running smoothly will help ensure your business stays on track toward your revenue goals.