What is Sales Performance Management?

Sales performance management, or SPM, is a set of methods, systems, and tools used to keep an eye on, rate, and direct the work of sales teams. The primary purpose of sales performance management is to set up a planned, dependable, and efficient sales process to help sales team members make the most of their opportunities to help the business grow its profits.

SPM is more than just tracking how well each salesperson is doing. It means setting up a smooth routine throughout the sales cycle with standard tasks, methods, and tools. This means giving each team member or department clear goals, providing good rewards for meeting those goals and checking in with feedback and coaching to ensure everyone is on track.

In this way, sales performance management is an ongoing process. People in charge of SPM projects are always looking for ways to improve things and make the necessary changes so that sales teams can reach their full potential.

Synonyms

• SPM
• Sales performance measurement
• Performance management in sales

Why managing sales performance is important

It’s essential to manage sales reps’ performance, the sales group as a whole, and the main internal processes that bring in more money.

Managing the sales pipeline

Companies that look at the flow of leads through the sales pipeline can figure out where the leads stop and how to get more deals.

Sales leaders can see how many new leads and chances their reps bring in, how long they spend at each stage of the deal cycle, and how many deals they close.

Performance metrics make it clear when there might be issues with specific reps or the company. This helps management be more proactive in reaching its business goals.

If the sales manager sees that one of their team members is having trouble, they can ask questions, give advice, and help that person work through any problems. People in charge of sales can look at the sales process to see what’s wrong and fix it before things get worse if all sales reps fail to close deals or the number of new leads drops.

Trying to guess the sales

Accurate sales forecasting is a must for setting realistic budgeting goals, finding new revenue streams, and making a more unique offering.

Executives and investors won’t be able to make intelligent decisions about the future of their business if leaders don’t manage sales performance well. This is because they won’t understand future sales trends well enough.

Monitoring sales measures and putting your historical data in one place gives your sales intelligence models better data. This helps the leaders of your company get a better picture of how things are going now and in the future.

Training and Developing Sales Staff

After three months, the average salesperson forgets 84% of what they learned in sales training. Most companies that spend money on training don’t have the systems to back it up.

Sales performance management helps managers keep track of their reps’ progress, find knowledge gaps, and make plans specific to each salesperson on the team. It also helps managers make sales playbooks that their sales reps can use at every stage. As long as managers keep track of success over each sales period, SPM helps them coach and develop their reps and gives them better things to discuss during sales QBRs.

Pay for a sales rep.

It’s not a secret that sellers want to make money. If the payoff isn’t worth it, the constant rejection, long hours, and high-stakes sales goals aren’t worth it.

Sales performance management helps sales managers keep track of each rep’s and the team’s performance. This lets them set goals that reps can reach, plan their pay correctly, and give rewards for great work.

Keep sales reps on board.

Surprisingly, 35% of sales reps leave their jobs yearly, much higher than in other areas. How sales reps are trained, how commissions are set up, how efficiently operations are run, and how much help they get from leadership all affect how long they stay with the company.

Reps are much more likely to stay on board if they learn how to sell correctly, get paid enough for their work, follow a straightforward process, and get helpful feedback. Leaders who actively participate in sales performance management ensure their sellers have the tools to go above and beyond their sales goals and stay interested in their work.

Pros of Managing Sales Performance

SPM lets sales managers see everything about how their team is doing, which helps them sell more and make more money for the company.

Advantages for the Company

• An accurate picture of sales and desire. Businesses can take advantage of chances, make the best use of their resources, and avoid strategies that might not work if they can make more accurate predictions.
• A mindset that is focused on results. Companies can create a culture of continuous improvement and get their workers to work together to reach shared goals by setting clear goals, rewarding top performers, and giving targeted training.
• Decisions made by departments are based on good information. The information about how healthy sales are going is helpful for many parts of the business, like marketing, product development, banking, and human resources.
• They are working together across departments. Different departments can work together better when they know the organization’s goals and progress. This ensures that everyone is working toward the same goals, leading to more sales and general success.

Pros for sales managers

• Extra benefits for top reps. A successful SPM program makes it easier to find top reps and gives them extra benefits like promotions, bonuses, and more.
• Training plans with clear goals. Once leaders know which reps are doing a good job and which aren’t, they can make training programs focusing on specific areas where people need to improve.
• Always get better at what you do. Setting monthly, quarterly, and yearly goals and keeping an eye on the KPIs that measure them helps managers ensure that things keep improving and change their strategies as needed.
• More engaged and long-term employees. When sellers get the praise and attention they deserve, they are more involved and driven to do a better job.
• Meeting business goals as a team. Ultimately, sales leaders are rated by how well they help their team meet the company’s sales goals. Tracking sales performance gives them the tools and information to improve their sales methods, change incentives and targets, and lead their teams to success.

Good things for sales reps

• Good relationships with people in charge of sales. By making the selling process more open, reps can build good relationships with sales leaders through mentoring and working together, which sets them up well to reach their long-term goals.
• Accurate tracking of sales success. CRM software and analytics tools let sellers keep track of their performance, which helps them find ways to improve and go beyond their goals.
• The most effective and efficient sales possible. Reps can do their jobs better by managing their time, learning new things all the time, and actively listening if they know where buyers leave the deal cycle, how long it takes to close, and what sales tactics buyers respond well to.
• Advancement in your career and job happiness. People who work in sales and can look at their performance and take steps to improve it have more chances to make more money and move up in their careers than those who can’t.

What Are the Different Parts of SPM?

Six major parts of sales performance are made better by the sales performance management process. These are account segmentation, compensation and incentives, pipeline management, quota management, forecasting, and territory planning.

Plan for sales

Sales planning includes all the steps that need to be taken to prepare for sales performance. The following are ways that performance numbers help with sales planning:

• Splitting up accounts
• Setting up sales areas
• Setting goals for sales
• Making the sales plan
• Making buyer profiles
• Looking at customer information and past sales
• Building a sales stack that works together
• Bringing new reps on board, teaching, mentoring, and growing them

The planning part comes before any sales effort and gives sales reps a complete picture of the market they are trying to reach and helpful information they can use to improve their strategies.

Structure of Sales Compensation

Managing sales incentives helps sales reps stay inspired and make more money. A sound pay system, which includes a salary, a commission structure, stock options, and other benefits, motivates salespeople to meet their goals and the financial security they need to stay with the company.

Data from Indeed shows that the average commission is around 20% to 30% of the total deal value. Most businesses pay higher commissions for bigger deals and lower commissions for smaller ones. However, some pay a flat rate or a share of the company.

Trips, bonus rewards, or other perks that show appreciation for their work could be added as extra benefits.

Data on sales

During the whole process of performance management, sales statistics are used.

• During the planning stage, analytics give information about target markets, competition landscapes, and groups of possible customers.
• Once the deal is done, sales reps use analytics to learn more about how buyers act, boost sales output, and keep track of their sales pipeline.
• Data from past SPM projects is used to make predictions and gives reps and managers a chance to reflect on what they did.

At every stage, choices and strategies are based on insights gleaned from analytics. This helps sales teams work smarter and more efficiently.

Different Kinds of Software for Managing Sales Performance

A lot of the time, sales performance management software isn’t a separate product. Instead, tools like CRM have features that can be used for sales performance management.

Here is a list of different kinds of software that can help you handle your sales performance:

CRM

Customer relationship management, or CRM, keeps track of customer interactions and handles data about them. It gives managers information about how well their sales reps are doing so they can teach them and make their pipeline management better.

Sellers use CRM to track their actions and move deals through the pipeline. Leaders and management also use it to review how well their teams are doing and make reports showing how close the whole team is getting to their income goals.

Engaging with Sales

Platforms for sales interaction, such as Salesloft and Outreach, help sales reps connect with and follow up with leads. They give reps intelligent automation tools that let them tailor their outreach and make business processes run more smoothly.

Sales leaders can use these platforms to keep track of reps’ performance over time and measure KPIs like the average response time or the talk/listen ratio. This is possible because reps can save their sales contacts and templates. People in charge and sales reps can also look at old deals to learn what worked and what didn’t.

Making sales possible

Sales enablement tools make things easier for reps by giving them access to sales information and materials. Customer data and buying patterns are also shared so that sales reps can make their pitches fit the needs of each prospect.

Sales enablement software usually has unique features that make one part of the sales process more accessible. These features can simplify content editing, videoconferencing, and transcription or proposals.

These tools help sales reps learn more about their customers and improve their sales methods, leading to better sales performance.

Information about revenue

Platforms for collecting revenue data, such as Gong, are necessary for analyzing and predicting sales. They give you information about what customers say, their choices, and how sales generally go.

AI-driven analysis looks at data like sales calls, queue movement, and how quickly customers respond to get a complete picture of how customers talk to reps.

These insights come in numbers (like “85% of your sellers who meet quota respond within 24 hours”) and pictures, which can be used to improve sales processes and guide coaching sessions.

How to Put an Effective Sales Performance Management Plan Into Action

It depends on how well the people who work in sales performance management (SPM) carry out their SPM strategy and whether or not it helps the business close more deals.

To set up a sales performance management plan that works, follow these steps:

Make both short- and long-term goals.

Setting clear goals for the company (and, by extension, the team) is the first thing needed to make SPM work.

To make goals that you can reach, look at your qualitative business objectives (for example, “enter Market Segment X”) and see how they match up with your past data and sales forecasts. This will help you figure out what a “realistic” goal might be.

Next, match your quantitative goals (for example, “increase year-over-year sales by 20%”) with those of the other people on your sales management team.

Set up a framework for your business goals.

Your reps and your tech stack make up your sales organization framework.

Putting order into the first one means doing the following:

Setting realistic sales goals for each team member and making sure they meet them

• Setting up roles and tasks for the team and explaining what success means in each role
• Giving leads to different teams or salespeople based on their skills, experience, and past performance
• Making plans for how to communicate so that sales reps can stay in touch with management throughout the sales cycle
• Setting up one-on-ones, reviews, and check-ins every three months

For the second one, you need technology that helps your SPM efforts. Most companies already have CRM, a sales organization’s most essential tech piece. However, adding productivity, analytics, and training tools can save you time and help you get a better picture of performance.

Here are some examples of tools that help with SPM projects:

• CPQ (set up, price, and quote)
• Software for sales support and engagement
• Platforms for hiring and onboarding
• Systems that help with managing learning
• BI tools and tools for showing data
• The Deal Room

Bring all of your tools together.

Your internal processes and tools must be integrated to work together smoothly. Otherwise, data silos are bad because they cause chaos and cost time and money. After all, workers must move information by hand from one system to another (or lose it).

When picking software, think about how well it works with the other technologies you already have. Choosing goods that can automate or improve your workflow is best.

Keep an eye on the right KPIs.

Sales KPIs give managers an objective, measurable way to see how well their reps meet their goals.

The following are some famous SPM metrics:

• The rate of lead response
• The rate of lead growth
• The size of a typical deal
• The average amount of time to close
• Stages of the sales funnel (open, in progress, and finished)
• The number of demos scheduled and held each month

For longer-term analyses, churn rate, customer lifetime value (CLV), and average revenue per user (ARPU) show how well your sales reps can find, nurture, and close good leads for the business.

Make a plan to reward people.

For making a sales goal, a sales rep gets extra money or a reward on top of their commission. This is called a sales incentive. 79% of the time, sales organizations that use reward plans can meet their performance goals.

Here are some examples of incentives:

• A trip that pays for everything
• A bonus for making big sales
• More money for commissions
• More paid time off
• Cash prizes

“Get in the middle.”

It’s not enough to keep track of data; you need to use it to make choices and help your sales reps do their jobs better.

Managers can see where they need to teach their sales reps or change their strategies before they lose more deals to the competition by looking at trends over time.

“Moving in the middle” is how most sales managers do this. This means they focus on turning average workers (i.e., the middle) into sales superstars.

This plan is based on the idea that more people are better than one. A company may be able to survive with just a few good sales reps, but it will never be able to grow.

Since top performers usually work alone, management benefits most from their development efforts in the middle of the pack.

Check and measure your SPM projects.

Your SPM approach will work well and be successful in the long run if you measure and evaluate it regularly. Do regular evaluations to find places to improve, make the necessary changes, and keep track of your work toward your goals.

When you look over your plan, think about the following:

• Looking at data. Look at the performance data you’ve gathered through tracking to see how your team is doing and find where they can improve.
• What your sales team has to say. Talk to your sales team about how they felt about the SPM strategy, training programs, and the help they received.
• You are comparing things. To determine how well your SPM strategy works, compare your company’s sales performance to industry standards and that of your rivals.