Sales Performance Management (SPM) is a data-driven approach to planning, managing, and analyzing your company’s sales performance.
Latest figures suggest that sales performance management is a “must-have” system for sales teams in today’s fast-paced market.
According to OpenSymmetry:
- Companies yet to embrace SPM typically see only 25% of their reps achieve their sales quota goals.
- In contrast, over 81% of sales reps achieve their annual quota at companies that apply SPM.
- Plus, these companies have 3x higher annual growth in revenue compared to others.
In this guide, you’ll learn what sales performance management is, why it’s important for both inside and outside sales teams, and how to implement it in your organization.
Plus, there’s also a quick guide on what features to look for when considering sales performance management software.
- What is sales performance management?
- Why is SPM important for inside and outside sales teams?
- Benefits of sales performance management
- How to Implement a SPM Process
- What look for in SPM software
What is Sales Performance Management?
Sales Performance Management (SPM) is the practice of overseeing and guiding sales professionals to achieve organizational goals and objectives. A robust SPM process includes training, developing, and monitoring an individual’s progress so that they can plan and set their own goals.
SPM should not be confused with Incentive Compensation Management (ICM), which allows you to automate and improve your incentive compensation management and processes. Structuring your incentives and compensation is only one (important) part of the entire SPM system.
Other parts of SPM use data to optimize planning, improve processes, and align stakeholders across all of your sales functions, such as capacity planning, territory mapping, incentive design, and sales forecasting.
Why is SPM Important for Inside and Outside Sales Teams?
Sales Performance Management (SPM) combines back-office processes, like sales planning and compensation, with front-office sales functions. Each part of the organization wants different things.
For instance, the sales teams want leaderboards, competitions, and gamification to ensure they hit their quotas. But the finance and sales operations teams want a planning process that rewards reps and grows company revenue.
But for teams to work together effectively, they need a single, integrated SPM platform that eliminates guesswork and puts everyone on the same page.
1. Sales planning and administration
Sales planning and administration is a back-office function that covers creating, balancing, and assigning sales territories.
Without an SPM system, companies have to rely on different data sources such as CRM and finance systems. Naturally, this is an error-prone and laborious process resulting in territory groupings based on country or zip code. Territories are unbalanced, and sales quotas are unreasonable, which dents sales reps’ morale and triggers churn.
But with a centralized and connected SPM system, you get the opposite. Planners can create optimized territories and quotas based on combined geographic data and historical performance. This data-informed approach helps them build balanced territories and fair quotas, which, in turn, leads to happier sales reps and improves sales performance.
Better sales planning sets the individual sales reps and organization up for success
2. Compensation planning and administration
Planning and administering sales compensation plans is complicated..
Administrators have to get the balance just right — compensating sales reps too much can damage the bottom line, but paying them too little can demotivate them. Likewise, simple plans are easy to communicate but don’t account for problematic behaviors, while overly complex programs can confuse sales reps.
Without an SPM, administrators have to create many different plans based on data from multiple sources. And even when they’re published, it can be difficult to track performance throughout the year.
But a single, connected SPM system gives teams a complete, up-to-date view to analyze sales compensation plan performance.
Administrators can quickly see which plan components are costing the business, but failing to generate revenue. If they need to change things, administrators can use SPIFS, bonuses, or accelerators to get sales back on track.
3. Sales distribution and execution
Sales distribution and execution are critical front-office components of sales performance management that rely on the back-office planning to be in place. Think about it:
- How long does it take your company to plan and administer sales compensation plans?
- Are your sales territories balanced and assigned appropriately?
- Are quotas aligned to achievable targets and accepted by sales reps?
If sales reps are waiting for their territories or questioning their quotas, they’re usually not focused on selling, which means they have more to do later.
An SPM system with built-in review and approval workflows means sales leaders can collaborate with finance and sales operations to speed up the planning process. For example, an experienced sales manager can suggest external factors that might impact a territory so that the planning teams can investigate and make any necessary adjustments.
An SPM system enables a business to make informed, data-driven decisions to meet its sales and revenue goals.
Benefits of sales performance management
We already mentioned in the intro that companies who’ve embraced SPM get 3x more revenue than other companies. But what are the other benefits of SPM?
Better predict future sales
Sales performance management tracking provides essential data that lets your company forecast future sales trends and employee compensation rates, especially those on commission-based compensation structures.
For example, if a sales rep earns 18% commission for each deal they close, and they’re projected to close $85,000 in sales for the quarter, then your finance team can allocate $15,300 in commission payroll for that rep.
Better train sales reps
Whether you have experienced or new sales reps in your team, employee development is a significant benefit of having a sales performance management process in place. An SPM plan adds structure and accountability to your sales training.
For instance, you could include these elements in a sales rep development plan:
- Complete mandatory training for sales enablement tools.
- Interview company sales leaders to understand operational scope.
- Read additional thought leadership material by sales professionals.
- Attend an upcoming sales seminar or conference.
Better territory assignments
Sales performance management data helps you assign each territory to a sales rep based on their skill set and experience level plus the client requirements. For example, you can make sure that your top-performing sales reps work on the most valuable accounts.
Better compensation structures
According to Gartner, sales performance management systems helped reduce overpayment/underpayment, saving organizations 3% to 5% in compensation expense. Plus, an SPM plan aligns the compensation structure with your overall business objectives aligned and keeps your sales team motivated.
How to Implement a Sales Performance Management Process
Now you know why SPM is important for sales teams and the benefits it brings to your organization, let’s take a look at how to implement a sales performance management process that gets results.
Identify sales performance metrics
The first step is to identify your sales performance metrics. These metrics must align with your overall business objectives. That way, individual reps know that they’re making a valid contribution to the business.
Here are some performance metrics to consider using for your sales reps:
#1. Lead-to-opportunity conversion rate
A standard metric is to measure how many leads your sales reps convert into customers. At the end of the day, you want paying customers on your books, so this performance metric is definitely aligned with your business metrics.
If you find the conversion rate is not as high as expected, then you can look into the reasons why. Perhaps the offer isn’t attractive, or maybe the sales rep is not selling the benefits.
#2. Sales quota attainment
Looking at your conversion rates can give you an insight into how many deals you need to close to reach your targets.
But sales quota attainment shows you how close you’re coming to those targets. Tracking this metric will give you an insight into how well your team is performing as a whole and on an individual level.
You can also compare it with other metrics, like lead to close rate, to see if the quotas are realistic or if they need to be modified to keep sales reps motivated.
#3. Sales productivity metrics
Sales productivity metrics record the rate at which your sales reps reach their quota — i.e. the quicker they reach their quota, the higher their productivity.
Examples of sales productivity metrics include:
- Percentage of total hours spent prospecting.
- Percentage of total hours spent on data entry.
- Percentage of closed-won deals (how many closed deals resulted in a sale over a specific sales period).
Communicate goals with the team
Once you’ve identified what sales performance metrics you’re going to use, you need to inform your team. This communication process allows your sales reps to digest the information and provide their feedback.
At this stage, you need to have an open dialog to make sure your sales team is on board. If they have genuine concerns, you can make the necessary adjustments. On the other hand, you can also explain some of the reasoning behind the goals and how they match the overall business plan.
For each sales rep’s performance plan, you can also let them set their own development goal where they’d like to improve.
Provide training and feedback
Now that your team’s goals and development plans are sorted, you need to identify what training resources and tools each sales rep requires.
It’s important to allocate time in their schedule for both formal classroom training and individual learning. You’ll also need to assign any mentors or SME’s who can provide mentoring and training.
Make sure their performance plan includes learning and development targets as well as sales performance quotas.
When it comes to feedback, you’ll need regular performance reviews that cover things like:
- Review documented goals.
- Relevant feedback on successful projects.
- Constructive feedback on areas to improve.
- Overall performance summary and rating.
Cut and assign territories
The next step is to divide and assign territories to maximize sales team efficiency.
It’s important to make sure your reps don’t tread on each other’s toes, that they all have enough prospects to work, and that top-performers are working the most valuable accounts.
Image: Mapping sales territories with Spotio.
You’ll also want to view performance by territories to ensure your resource allocation is appropriate.
Create a healthy level of competition
Sales reps thrive off competition, and there’s nothing better to keep them motivated than a sales leaderboard. You can create various leaderboards based on your performance metrics, such as appointments, wins, conversions, or revenue. Plus, you can run separate competitions and performance incentives.
Whatever you choose, leaderboards give reps real-time figures on how they stack up against team-mates.
Monitor rep productivity
Finally, you need to monitor your reps’ daily performance to see exactly what they’re doing. By tracking their activity, you’ll know when to train them based on skills, rather than effort.
Are they getting around their territory, making the expected number of visits but failing to close the deal? Or are they taking too long to reach appointments and missing out on sales?
Monitoring sales rep productivity increases accountability in the field.
What to Look for in Sales Performance Management Software
If you’re going to manage and optimize the sales performance in your organization, then you need the right tools.
Sales performance management software automates and integrates sales processes with other operational and financial data to improve the performance and efficiency across the organization.
Here are some features to look for when selecting your sales performance management software.
Sales rep transparency
Tracking your sales reps in the field increases trust and accountability. Having an open, transparent system to track their movements lets you judge when you need to coach them based on skills rather than effort.
For example, if they’re putting in the miles and getting to all their appointments on time, you know they’re putting in the effort but may need a little coaching to help close more deals.
Sales compensation management
You want an accurate compensation system that allows you to manage and pay your sales reps fairly based on the performance against their goals, and also lets them track their on-target performance too.
Sales quota management
You’ll need a way to track historic and forecast future quota targets based on relevant and accurate data from one system rather than disparate entities.
Sales territory management
Your sales territory management software should allow you to divide territories strategically to maximize sales team efficiency. You’ll want the ability to create territories and allocate the best sales rep to each territory so that you can generate the most revenue.
For example, Spotio’s territory mapping feature helps reps squeeze the most value from each sales territory. Managers are able to cut and assign territories by geographic boundaries (state, county, city, zip etc), or by drawing on a map:
Colorized pins also make it easy for reps and managers to spot new and existing customers on the map. Pins can then be sorted by status – no answer, contacted, call back and not qualified – to best fit the desired workflow for the day.
Sales leaderboards are an essential gamification feature as they motivate your sales reps to out-perform their colleagues. Check your software can:
- Create leaderboards for the metrics you want to improve, such as calls, appointments, wins, or revenue.
- Give sales reps real-time tracking into how they’re performing against teammates.
- Run competitions and incentivize performance.
Sales performance analytics
It’s paramount that you have a clear, accurate view of your sales performance metrics. Otherwise, you’re just taking a “best guess” approach.
Sales performance analytics provide clear insights so that you can make informed decisions and hit your targets. You can also use the data to forecast future campaigns so that quotas and targets are more realistic and achievable.
Image: Pipeline dashboard inside Spotio.
Improve Your Sales Performance Management Today
Sales performance management has been proven to increase revenue for those companies who’ve embraced it.
Using a modern, integrated SPM software allows you to optimize planning and improve processes across all of your sales functions, including forecasting, territory mapping, quotas, and compensation.
Try Spotio to manage and improve the performance of your outside sales teams.