Sales performance management: Process, components, tips & more
Selling is about more than just delivering a great sales pitch. If you want your company to succeed, you need all the ingredients that help make each sale successful: An excellent product, a great sales team, and a system that enables that kind of success.
Let’s focus on that system. This article will look at sales performance management, its main components, and why it is essential. We’ll also discuss how you can implement a sales performance management system to set your sales team up for success.
Ready? Let’s begin.
What is sales performance management?
Sales performance management refers to the range of processes geared towards improving sales productivity, effectiveness, and performance. These include sales professionals monitoring and training, territory management, and incentive compensation management. Although sales performance management involves multiple processes, they are interdependent and form one cohesive overall system.
Source: Open Symmetry
With sales performance management, you use data to identify issues that inhibit your sales team’s development and create effective strategies that optimize the entire sales process. The idea is to ensure that all sales team members are meeting the organization’s goals and objectives.
Why sales performance management is important
Sales performance management helps a sales organization achieve success in several ways.
Forecasting sales trends is possible with the valuable data an organization can get from sales performance management. That can help inform decisions on the right sales commission structure and rates for sales professionals.
Suppose the organization predicts a sales representative will close 100,000 deals in a year. The company can determine what commission rate is acceptable to maximize profits without compromising employee job satisfaction.
Sales performance management also ensures a more robust sales rep pipeline and employee development. A sales performance management plan gives structure to your training process and helps align it with the organization’s business goals. The result? Highly effective and efficient sales professionals who excel at work, meet targets and ensure the company reaches its organizational goals.
Main components of sales performance management
There are three components to any sales performance management strategy: field planning, determination of commission structures, and metrics tracking. Let’s look at each of these in this section.
The first component, field planning, refers to how a sales organization divides the existing market and ensures its sales teams fit. This includes
- determining how to organize accounts,
- how to assign sales professionals to various territories,
- setting quotas, and
- capacity building.
With effective sales planning, organizations maximize the potential of every region and account. It also helps reduce employee attrition since good sales planning yields satisfied salespeople.
It’s important to determine the right commission structure because this motivates sales professionals. A great incentives system
- optimizes a sales representative’s capacity to earn and advances the organization’s bottom line, and
- is malleable and adapts to the changing dynamics of the market and shifting business priorities.
Metrics tracking ensures a sales team is on track to achieving its goals and objectives. That includes
- pricing and discounting,
- pipeline management, and
- sales forecasts.
You might also use an employee timesheet to determine how long it typically takes to close a deal, thereby measuring your team’s productivity. Through valuable sales insights that a sales performance management solution generates, a sales organization can improve almost all sales metrics, including the deals closed and the revenue earned.
How to implement a sales performance management process
Now that you know how important sales performance management is, let’s look at how you can implement a process that works. The idea is to empower your organization to turn data into strategic insights that will ensure continued growth.
Decide the performance metrics to assess
You need to have your overall sales team objectives clear before implementing a sales management process that delivers results. You have to make sure that these objectives are simple and align with the organization’s overall goals.
Here are some of the performance metrics you might track:
- Quota attainment: This refers to the percentage of the sales target reached. To get a complete picture of how your team is doing, you should measure this for each sales representative as well as for the team as a whole.
- Sales Productivity: This is the rate at which your sales representatives reach their quota. The quicker sales professionals close a deal, the more productive they are.
- Rate of conversion: This is the percentage of leads who become paying customers. It’s best to track this individually and across the whole team. By following the conversion rate, you can determine the quality of your leads. You can also assess whether or not your team has the necessary resources to turn leads into customers.
With your objectives clear, you can determine the performance metrics to assess whether each team member is on track to helping the company succeed.
Get your team’s buy-in for your objectives
Once you’ve decided your objectives and performance metrics, communicate these to your team and get their buy-in. If they don’t know the goals, they won’t know where they should be focusing their energies at work. You can also get their feedback and determine whether they believe those objectives and performance metrics are achievable.
Make sure you listen to your team members and take into account their concerns. If some of your team members don’t like the idea of being assessed for sales productivity, for example, explain the ways that these metrics align with company objectives.
But make sure the quotas and benchmarks you will be evaluating them for are SMART: specific, measurable, attainable, relevant, and time-bound.
You can determine this by looking at your team’s performance in the first few weeks after implementing the new system. If your team members don’t seem to reach sales quotas no matter how hard they work, these might not be feasible and may need to be adjusted. If many surpass the targets without any difficulty, then your set quotas may be too conservative.
Develop skills of your sales team
Don’t send your team members into the field without equipping them with the skills they need to succeed. You’ll need to invest time and effort in training and coaching them.
Organize seminars to improve your team’s specific set skills. Invite other sales professionals who excel in closing deals or are experts in sales prospecting and invite them to talk to your team about sales techniques that will help them reach quotas. You can ask your team what specific skill sets they’d like to improve and address those issues in your next training sessions.
The idea is to set your team up for success so they’ll be highly efficient and effective sales professionals who meet your team’s targets and help the company achieve its business objectives.
Give regular feedback to sales reps
You need to give regular appraisals of your sales representatives’ performances so they’ll know how they’re doing in terms of reaching individual benchmarks and contributing towards team goals. Are they hitting their targets? Are they maximizing the potential of each territory?
There are software solutions available that can show in real-time how much revenue sales representatives have brought in over a specified period and how far they are from their quotas. These advanced tools can even show what deals the representative will need to close to maximize their earning capacity and how likely a deal is to close. These tools can help sales representatives strategize in the field and motivate them to do better.
Get input elsewhere, too
Sales performance management isn’t just about training your sales representatives to be more efficient and effective. It also involves other vital processes geared towards operational efficiency. In other words, don’t commit the mistake of focusing only on managing people. Look at the systems in place, too, and constantly strive to optimize sales ops. You’ll get the best information if you seek input from all your team members.
Ask around about the new compensation structure. Does it work for sales representatives? How about territory allocation? Are you maximizing the use of your sales teams in the field? Do they need any additional training or support that you’re not providing?
The idea is to get feedback from the people affected by the processes and make adjustments if necessary. Under sales performance management, all systems need to run at an optimal level for the individual reps and the organization to succeed.
The bottom line
Sales performance management is crucial to the success of a sales organization. At the heart of it are people and processes, all of which need to work at optimal levels. In sales performance management, everything is interdependent. So when people fail, the company fails. When a process fails, the company and people do too.
Follow the steps above to implement a sales performance management process that works. Use advanced software that can manage all these processes and people in a single platform. You’ll need a tool that collects data efficiently and tracks your sales team’s progress towards achieving its and the company’s objectives.
Put in the effort and invest some time. It will be worth it! Remember, the key to success is to view the entire sales organization as a unified whole composed of people and structures. And those need to complement each other so you can achieve the best results.
Owen Jones is the Senior Content Marketer at ZoomShift, an online schedule maker app. He is an experienced SaaS marketer, specializing in content marketing, CRO, and FB advertising.