What is Sales Performance Management? (3 main capabilities of SPM)

Whether you’re a sales manager looking to improve your team’s performance or a business owner trying to understand how to drive revenue growth, understanding sales performance management is key.

In this article, we’ll dive into what sales performance management is, why it matters, and how you can implement it in your own organization to achieve your sales goals.

What does sales performance management mean? (Three capabilities of an SPM)

Sales Performance Management (SPM) generally refers to the data-driven approach for better planning, managing, and analyzing an organization’s sales performance at scale. It provides valuable tools and best practices that enable and motivate sales teams, that drive results and achieve targets, and maximize the return on investment in sales.

Sales performance management is often broken down into the following three capabilities:

1. Planning and Forecasting

Sales Planning and Forecasting is the process of defining where and when the organization can sell its products, who should sell them, and how to best meet the demand expected for those products.

At this stage, it is about strategic segmentation and organization of accounts and territories, while allocating sellers and teams to optimize revenue generation. Being effective during this process is vital to ensuring that salespeople are informed and motivated to achieve their quotas and have the information they need to reach their accounts.

In a nutshell, planning, and forecasting boils down to territory management and quota management that maximize sales rep performance and help achieve better sales results. It also provides considerations for efficiently identifying and realigning sales territory coverage gaps or unassigned accounts to ensure that sales teams are not missing any opportunities in the marketplace.

Challenges:

Traditionally, most organizations use spreadsheet solutions to create and monitor their sales estimates. Considering how territory and quota planning is complex due to fragmented data metrics (e.g. historical and projected), complex hierarchies (e.g. products and territories), and require the input of various persons and teams, this method often limits the organization’s full potential. It is a very manual and slow process, and provides relatively little visibility into important performance metrics and trends, all while being prone to the risk of data inaccuracy.

2. Incentives Compensation Management (ICM)

Commissions, bonuses, and other incentives are designed to provide sales teams with chances to grow and generate more revenue. They tend to be the backbone of sales teams – a well-designed compensation structure enables sales reps and provides that extra push to see sales through.

Just designing a great incentive and compensation program is not enough. It takes effective management and delivery to see performance metrics and achieve organizational targets. In today’s age, sales reps expect and demand transparency in their sales performance and incentive metrics. This establishes a layer of trust between them and the organization while also motivating the individual with information and insights.

When compensation processes are riddled with errors and issues, this trust can be damaged severely. As a result, sales reps tend to spend much time reviewing their metrics and submitting a lot more inquiries – all time wasted that could be spent on chasing leads and closing opportunities.

Challenges:

With the inherent complexity and variety of compensation plans, effectively administering incentive compensation is not an easy process. The process entails large data sets that require rigorous validation, numerous and often complex steps and formulae to calculate bonuses and commissions, inputs, adjustments, approvals from various personnel, and much much more. Additionally, without any reporting, this complex process becomes hard to digest and reciprocate. These common challenges are avoidable with the right technology solution designed to enable sales teams with automation, reporting, and much more.

Read more: Why shouldn’t you just use spreadsheets as a Sales Performance Management tool?

3. Sales insights through Analysis and Reporting

With data analytics, organizations can achieve a deeper understanding of their data and performance metrics. You likely have a lot of data that can be analyzed to better understand your customers, vendors, channel partners, sales cycles, products, etc. Converting this data into relevant insights supports sales reps, teams, departments, and sales leaders and enables them to make informed decisions and change their sales strategy accordingly.

It’s worthwhile to do an audit of the data that is available and then consider what else you might want to measure. The data that you collect will depend on what you want to accomplish.

Some commons insights that can be drawn are:

Sales opportunities: Identify areas of growth for optimal channeling of sales reps and products to address market demand and development. With pattern and trend analysis, we can obtain a profound view of performance metrics in order to detect unmet demands and identify growth opportunities.

Buyer journey: Sales analytics shed light on where your prospects stand at each stage of the buyer’s journey. You gain knowledge about when and why people buy, allowing you to improve sales strategy and make the conversion from prospect to customer more efficient.

Product gaps: Sales insights help analyze your organization’s new and current product lines and how they are sold in the market. Where can current products expand their outreach? How can this valuable data be used to push sales further?

Pipeline performance: Sales insights enable you to see the performance of your sales team. Better-performing sales reps translate to a robust pipeline filled with opportunities and a clear action plan.

Challenges:

While traditional reporting tools are adequate for static reporting, they fall short of providing access to real-time data or interactive dashboards that can be sliced and diced by end users. This lack of real-time information impacts the sales team’s ability to make decisions faster and gain a competitive advantage.

Here is where modern applications provide an edge for today’s sales organizations. They provide accurate reports and dashboards to enable your teams, but also couple the power of artificial intelligence (AI) and machine learning (ML) to provide predictive value by providing the best path to get to your sales numbers.

Benefits of sales performance management

One of the advantages of SPM is the ability to predict future sales trends more accurately. Precise tracking provides data to forecast future sales and reps’ compensation rates, especially those who are paid according to commission-based compensation structures.

Another benefit of SPM is employee training and development. A sales performance management process allows for more structured and targeted people training and development initiatives.

Sales performance management also allows for more accurate sales territory assignments. The data that SPM surfaces helps assign sales territories to each sales rep based on their unique sets of skills and prior experience.

Lastly, SPM ensures fair and rewarding compensation structures. By avoiding over- or underpaying salespeople, they are kept focused and motivated. Additionally, compensation structures are aligned with overall business objectives.

What is a sales performance management software?

Sales performance management software is a suite of solutions that enables companies to drive high performance and maximize revenue by providing vital data, insights, and tools. With the help of such software or solutions, businesses can create incentives that motivate the behaviors needed to achieve their goals.

By using a sales performance management software like Varicent, companies can set smarter goals and design territories to maximize their revenue potential. This software provides AI-driven insights that help businesses make better decisions and outdo their previous performance.

A Sales performance management software is an essential tool for businesses that want to stay ahead of the competition. With the help of this software, companies can track their sales performance, identify areas for improvement, and optimize their sales processes.

What does a sales performance management consultant do?

‘A sales performance management consultant is an expert in the field of leading SPM (Sales Performance Management) solutions. They are knowledgeable about the different features and capabilities of each solution and can help determine which ones are important for your company’s sales operation.

One of the main tasks of a sales performance management consultant is to assess your company’s current sales performance management process and identify areas for improvement. They will work with you to develop a customized solution that meets your specific needs and goals.

In addition, a sales performance management consultant is aware of the different configurations and customizations that are possible for each solution. They can help you navigate the various options and select the best one for your business.

Hiring a sales performance management consultant can save you time and energy. Instead of spending hours researching and comparing different solutions, you can rely on their expertise to guide you through the process. They can also provide training and support to ensure that your team is fully equipped to use the new system effectively.

Overall, a sales performance management consultant can be a valuable asset to your company. They can help you streamline your sales process, improve performance, and ultimately increase revenue.

What is the size of the sales performance management market?

The global sales performance management market is projected to reach $3.2 billion by 2026, with a compound annual growth rate of 13.8% during the forecast period. SPM involves monitoring and directing sales processes to improve performance, which can be achieved through software programs.

The sales performance management software simplifies various activities in corporate performance management and motivates behavior that boosts sales. The primary aims of the SPM process are to guide and encourage salespeople to set objectives and satisfy customers. SPM software includes elements such as goal setting and planning, feedback, skill development, and performance review. It is also useful for monitoring information about sales quotas, territories, incentive compensation, job evaluation, and forecasting.

Final Say

An ideal SPM solution provides a user-friendly interface where you can design and manage quotas, and territories, administer, process, and report on compensation metrics, drive complex workflows, and much more. It enables the organization in many ways by connecting people, processes, and data.

If you want to learn more about how your organization can benefit from SPM solutions, download our FREE ebook on this topic and connect with our teams.