Sales performance management is an essential process that aims to boost employee effectiveness, operational efficiency, and, ultimately, revenue. It’s become somewhat of a buzzword among organizations looking to maintain a competitive advantage and help their reps meet (or exceed) their goals.
But successful sales performance management requires much more than just offering incentives to salespeople or investing in a new, shiny sales tool. Getting it right means providing the right resources and support to your reps at every turn, measuring and analyzing key data, and making informed, consistent improvements along the way.
Here, we’ll dive into the components of sales performance management, why it’s crucial for organizations, and how the right software can improve the process.
Sales performance management (SPM) encompasses a variety of interrelated sales processes, all of which work together and impact one another. According to Gartner, SPM capabilities include (but are not limited to) sales incentive compensation management, objectives management, quota setting, advanced analytics, gamification, and more.
That all sounds like a whole lot of sales jargon, but at its core, SPM is about making sure your sellers actually have what they need to achieve and surpass their goals. Thanks to a constantly growing, competitive global marketplace and increased customer expectations, the art of sales has evolved. Thus, the techniques to manage sales performance have needed to evolve as well.
Long gone are the days when simply throwing incentives at reps was enough to ensure success. Today’s sales organizations need a strong, holistic approach and powerful tools to optimize each, individual part of the larger business operation. SPM technology offers the tools needed to increase sales productivity through data-driven decisions.
It’s no surprise, then, that the global sales performance management market is expected to reach $3.2 billion by 2026. Businesses who fail to leverage SPM tools and strategies will likely be left behind by their forward-thinking counterparts.
An organization’s sales performance management strategy is built upon three major components. Each of these factors helps sales managers and leaders determine how they’ll drive performance to remain competitive and profitable:
By properly measuring overall sales efforts and individual sales activities, you can start to understand what works and what doesn’t. Sales insights go far beyond whether or not reps are meeting their quotas; they also help you identify the specific things that drive the right outcomes (like positive interactions, meetings, and pipeline). How well are your messages landing with target personas? Simple metrics like reply rate won’t give you the full picture, but comprehensive insights backed by powerful data can help you accurately gauge buyer sentiment and make meaningful improvements.
Creating an effective sales plan requires a detailed breakdown of previous data, objectives, strategic direction, capacity, forecasts, and more. This is essential for determining account segmentation, territory allocation, and goal-setting, and it helps you prepare your teams to stay ahead of market changes. A proper sales plan doesn’t operate in a vacuum: it’s used collaboratively with marketing and business plans to reach both broad and specific goals.
While incentives alone are not enough to ensure maximum performance, they should certainly be a part of the larger SPM puzzle. By analyzing real-time data, you can better align your sales compensation plans with your goals. Whether you’re looking to acquire new accounts or boost sales of a particular product, it’s important to incentivize reps around the results you want to achieve. A sales performance management solution helps you understand how your current compensation plan drives performance and pivot when goals change.
To adopt a modern SPM strategy, and organization needs some kind of sales transformation initiative. Digital sales transformation drives sales performance because it focuses on aligning processes, technology, and people in an effort to scale both efficiently and productively. That readiness to adapt and evolve helps ensure a stronger sales performance management practice, and one that’s backed by the right tools and processes for streamlined operations.
SPM impacts each department within an organization and—reciprocally—each department within an organization can impact the sales performance management strategy. Because sales performance management uses key data to help leaders build robust strategies, companies who implement the approach can benefit in a variety of ways:
Sales performance management focuses on using reliable data (along with automation, centralization, and other transformation initiatives) to develop goals for sellers that align with company objectives. Sure, it’s important for reps to reach their own sales quotas, but it’s even more essential that teams collaborate cross-functionally to work toward the same goals.
SPM helps companies to do just that. A strong strategy helps you understand and improve day-to-day operations (for both back-office workers and sales reps alike), so everyone is always on the same page. The result is a more productive, efficient workforce that has everything they need to reach those collective goals.
Implementing a sales performance management strategy means leveraging technology that offers pipeline transparency. Some SPM tools offer easy-to-access dashboards that shed light on daily sales activities and performance across the entire pipeline. And when you can see exactly what’s going on in real-time, you can course-correct any issues before it’s too late.
A key part of any good SPM strategy is collecting and analyzing actionable metrics (e.g. deal size, rep forecast, engagement activity, etc.), so investing in a tool that supports the process gives you a bird’s eye view of all things sales.
The visibility that comes from successful SPM also encourages recognition and support among team members. When reps see that their colleagues are performing well or struggling with certain tasks, they can motivate, congratulate, and learn from one another. That level of connectedness creates a strong, growth-minded company culture and drives engagement, retention, and performance.
Accurately predicting future sales trends, eliminating workflow bottlenecks, reducing data silos, and making data-driven business decisions are all critical parts of a healthy sales operation. SPM gives structure to the processes your teams follow, and measures their efficacy along the way. You can then use that knowledge to make consistent improvements that streamline operations for a more efficient, productive business.
Intelligent SPM tools eliminate manual data entry, which increases accuracy and saves time. They centralize data, automate workflows, and provide complete transparency so your teams can spend less time on burdensome, administrative tasks and more time selling. They also support consistent, accurate forecasts that help you efficiently plan for demand, modify your sales process, adjust employee compensation, and close more deals.
If you’re just beginning your sales performance management journey, it can seem like an overwhelming feat. But there are some tried-and-true steps to help get you started with implementing a successful process:
Modern sales organizations know that manual methods for sales performance management just aren’t going to cut it—they need intelligent, robust tools that help take the guesswork and inefficiencies out of the equation.
As you evaluate your options, it’s important to remember that SPM software should meet your unique business needs and challenges. In short, don’t buy a solution just because it offers flashy capabilities.
To ensure a greater ROI, choose software that promises:
A strong sales performance management strategy can increase efficiency, boost employee effectiveness, and drive revenue. By implementing the right process and tools, your business can easily measure and improve performance for a competitive edge.
Outreach's Sales Execution Platform supports sales managers with powerful tools that provide complete visibility into key deals, sellers, and teams across the the sales pipeline. With Outreach, managers can understand how reps are tracking against their goals, see where they need to adjust to hit their revenue targets, and take action — all within the same platform.