Sales performance management (SPM), is defined as a set of analytical functions that optimize the operational efficiency and effectiveness of sales processes.
SPM helps ensure that every member of the sales team is driven to achieve the company’s long-term goals. Some of the important operations that are an integral part of SPM are advanced analytics, compensation management, territory management, and quota planning and management.
Sales Performance Management Best Practices
Sales leaders leverage SPM tools and strategies to optimize the effectiveness and efficiency of their sales teams.
Developing a comprehensive sales performance management strategy is a challenge as there are several interconnected parts that have an impact on each other. As a result, most agile sales leaders take a holistic approach to SPM where it is viewed as a common set of concerns instead of an assembly of disconnected parts.
Sales performance management aims to foster a positive environment in an organization where sales team members exceed expectations on a continuous basis. The company enjoys faster growth and improves job satisfaction as well as customer satisfaction scores.
To fully benefit from sales performance management, however, you need to establish a system of best practices to encourage Sales and other teams to work together towards organizational goal attainment.
Here are five sales performance management best practices that you can leverage to develop a robust sales management system for your sales org:
Define What Sales Performance Means for Your Team
The meaning of sales performance can vary across organizations based on their priorities. In some companies, generating new leads is considered a part of sales performance while others may consider only deals closed.
To better channel the efforts of your sales team, you need to clearly define what sales performance means for your team. This is where you must consult your leadership team to understand long-term and short-term goals. Thereafter, you can define the sales performance parameters for your team.
Once you’ve decided the right approach to SPM for your sales team, it is vital to communicate your expectations to every member of the team. These expectations can be in the form of sales products or sales activity or even a combination of the two.
You can start this process by defining sales quotas for every salesperson and key metrics to be monitored, including leads generated, leads closed, proposals sent, and revenue generated.
Along with individual sales quotas, you also need to define team quotas which are a total of individual quotas. These quotas must be in sync with the organizational goals and desired revenue amounts. Make sure to have ongoing communication with your team to ensure that they fully understand the requirements and vision of the company.
Set measurable Goals and Objectives to Track Progress
By setting sales goals and objectives that are measurable, you can efficiently track the progress of your sales teams.
Measurable sales goals offer clarity on expectations and priorities, enhance sales processes, and motivate team members. Ensure that the sales goals you set are realistic and data-driven but at the same time are challenging enough to keep motivation high.
You must define annual sales goals, individual sales goals, team sales goals, and individual activity goals. One of the best ways to set measurable goals and objectives is to use the SMART methodology: sales goals that are specific, measurable, attainable, relevant, and time-bound.
Once you have set these goals, develop a methodology to track the progress of sales teams and sales representatives.
At this stage, determine the key metrics that will help you measure the progress in achieving these goals, such as average revenue per user (ARPU), annual recurring revenue (ARR), win rate, quota attainment, and percentage of revenue from new and existing customers.
Implement a system to gather feedback from team members and customers
Another crucial aspect of sales performance management is developing and implementing a system to collect feedback from your team members as well as the customers. While as a sales leader you can formulate a strategy and communicate it to your team members, it is the salespersons who must execute it on the field. Collect their feedback, analyse it, and use the results to optimize the sales processes.
There are various ways to gather feedback from your salespersons such as surveys, emails, or written reports. But one of the most efficient methods is integrating a CRM or ERP system with your tech stack.
This seamless integration will allow you to gather feedback in real time. When you gather feedback from your sales team, you can ascertain how well they are performing, what are the bottlenecks they are facing, and what additional resources they require. By incorporating this feedback in your sales plans, you can enhance the efficiency of your team.
Customer feedback is equally crucial as you can identify the scope for improvement in your products or services. For example, if you manufacture industrial power solutions and your customers have issues related to the availability of spares, it means that you need to focus on making the spares easily accessible for customers.
This can be done through the optimization of the dealer network or by offering free one-day shipping on suitable products. You can collect customer feedback through surveys, questionnaires, phone calls, or emails. Alternatively, a CRM system would deliver better results while collecting customer feedback.
Celebrate successes and learn from failures
One of the hallmarks of a balanced sales performance management plan is ensuring a positive culture and following positive values at the workplace.
If you want your team to perform at optimal levels, you must eliminate personnel-based barriers that come up due to issues like employee burnout or high turnover. If you fail to do so, a lot of salespersons will leave the company or will fail to give their best efforts due to a toxic work culture irrespective of their job function.
Build a culture in the company where you celebrate successes, learn lessons from losses and promote team collaboration.
This approach will not only help you retain the best talent in your team but will also serve as an excellent recruiting tool to attract new talent. Also, remember that organizational success depends on sales performance which in turn depends on an engaged workforce.
For example, if a high-performing salesperson is unable to achieve the sales quota for one quarter, you need to discuss the issues that resulted in this problem. This would help the salesperson understand that the company values them and is willing to offer support when required.
Continuously improve processes and practices
In the era of rapid technological development, sales processes and practices can quickly grow inefficient. For example, a new update from Google can make your existing sales practices redundant overnight.
Before the pandemic struck, face-to-face meetings were considered necessary to close deals but now, even B2B customers prefer video conferences to finalize deals. Sticking to outdated sales processes is ultimately beneficial to your competitors.
One of the most important aspects of improvement in sales processes and practices is to identify the tasks that can be automated. This would allow your salesperson flexibility to acquire new skills to master the digital sales channels and focus more on their core operation, i.e., selling.
Offering regular training opportunities at work helps your team stay sharp and up-to-date.
You must measure the efficiency of every sales process or practice that your team follows to gradually replace inefficient processes.
These can range from customer prospecting, sending emails, making calls, and entering data into the CRM. Through continuous improvement in your sales processes, you can also keep the motivation level of your salespersons high and drive them towards achieving their goals.
These five sales performance management best practices are a good place to start — but you drive the biggest impact by tackling it as a mindset shift.
Read Forrester’s guide to the SPM landscape to delve deeper into the latest trends, methodologies, and top vendors in the SPM space.