The market is more competitive than ever, and it takes more than a killer product or service to make money. Even well-known products don't sell themselves. To succeed in today's saturated market, you need solid sales strategies and the right tools to beat the competition. Cue sales performance management!
What is sales performance management (SPM)? It's a technique that lets you develop sales strategies covering every facet of the sales cycle. It's about optimizing your efforts, streamlining how you sell, and analyzing performance to improve efficiency across the board. Ultimately, SPM helps you manage sales performance and give your teams everything they need to succeed. It involves creating compelling data-driven strategies that support your sales organization and its bottom line.
Examples of a Sales Performance Management (SPM) in Action
The definition of the sales performance management strategy seems complicated, and its meaning has evolved. However, the concept is more straightforward than it first appears, and it's unique to every company's needs. In this example, we'll break down SPM best practices to show you how it works in the real world.
The easiest way to look at SPM is to divide it into its three tenets: Sales planning, sales incentives, and sales analytics.
The first piece of the puzzle is sales planning. For this priority, the goal is to determine how your sales organization will split up the market. It's where you plan to sell and what slices of the market would be most beneficial to you.
Successful sales leaders know that casting an ultra-wide net isn't the way to approach sales. It's about defining where your team will have the most impact and strategizing how you'll stay one step ahead of the evolving market.
Sales Team Structuring
Team structuring is more critical than many sales managers realize. You want to put your salespeople in the best position to succeed. While top performers will likely do well no matter where you put them, most of your representatives have distinct strengths and weaknesses.
A big part of sales planning is structuring your team in a way that helps them find success. Not only does it help empower them and boost their confidence, but it also helps your bottom line. Stick skilled sellers with challenging accounts and let your newbies improve their sales performance with easy clients.
This strategy can help reduce attrition and maximize revenue.
Territory or Market Segmentation
Segmenting your market is sales planning 101. It's one of the most important parts of sales planning. Again, it goes back to fine-tuning your priorities and creating unique strategies based on the sales challenges of each segment.
With market segmentation, you might create unique profiles and personas. There are many forms of segmentation, including behavioral, psychographic, and demographic. No matter how you separate the market, you can use the data you gather to create an impactful action plan.
The same goes for territory segmentation. However, this separation is about geographic location. Assigning sales territories helps your team divide and conquer while supporting the bottom line.
Finally, there's account allocation. Creating individual accounts can focus efforts on one buyer when defining the sales process. It ensures that the client gets a top-notch customer experience by positioning yourself as a trusted business partner rather than a vendor.
Account allocation involves divvying sales and assigning the right sales teams to compatible clients.
The next priority of a good sales performance management program is incentives. Sales incentives are a significant part of any sales organization. It's what motivated your sales reps to go above and beyond!
From the perspective of a salesperson, incentives are about maximizing income potential. But for a sales leader, incentives are about strategy. Not only do they advance the bottom line, but they can help shift priorities and push for stretch goals.
Sales Commission Structuring
Developing a sustainable sales commission structure is the first thing you should do when dealing with incentives. The commission is how your sales teams make money. Think of it as their standard compensation. It motivates your reps to do a good job and meet sales goals.
It sounds simple enough, but sales leaders around the globe will tell you that the type of commission they offer makes a big difference. There are several commission structures to follow. You can offer base pay plus a commission, model commissions based on overall revenue, a straight commission plan, etc.
The tricky thing about commissions is that they need balance. There should be enough to motivate your team every time they start selling. But, there should also be room for flexibility to accommodate the changing market.
Incentive Compensation Management
In the sales world, incentives typically refer to those sweet extras. Commissions are what your salespeople earn from doing their job. While it does push them to work hard, what incentives encourage them to go beyond the sales forecast?
That's where incentives come in. You can have bonus pay, prize-based rewards, extra time off, etc. Incentives are great for developing sales strategies and adjusting to market dynamics.
Evaluation of Incentive Effectiveness
Incentives work best when they share a connection to sales performance metrics. Successful leaders will constantly evaluate the effectiveness of incentives to refocus sales strategies. Things change quickly in the market, and you must use incentives to keep up.
If something isn't working, you should be able to identify that fact by looking at individual sales reps and the team's overall performance. Use that data to capture new opportunities, improve operational efficiency, and bring out the best in your sales reps.
The final priority of sales performance management is sales analytics. Here is where the definition of SPM truly shines. It's where you'll look at complex data to improve your sales approach. There are plenty of ways to use sales performance metrics. But it's easier than ever to gain insight thanks to artificial intelligence and SPM solution platforms.
Track Sales Data
Tracking sales data can do wonders to improve how you do business. The metrics you'll monitor here revolve around the products and services you provide. It's a great way to see how successful your offerings are and what potential buyers think of them.
With sales data, you can take steps to boost revenue. For example, you could fine-tune sales forecasts, adjust pricing, start new promotions to move units, and more.
Analyze Sales Performance
Sales performance analysis gives you valuable insight into how your team is doing. You can set up key performance indicators to monitor a wide range of metrics. These include velocity, close rates, deal sizes, and more.
With it, you can determine the organization's overall health and see where you can use improvement. It's an excellent way to spot new opportunities, realize holes in your strategy, and make changes that benefit the big picture.
Derive Prescriptive Analytics Insights
Prescriptive analytics uses data to determine the best course of action to meet your goals. The beauty of sales performance management is that you already lay the groundwork to gather necessary data. You have already gone through the steps to optimize your operational efficiency and see the best results possible.
But with prescriptive analytics, you can take things even further. It's about putting that data to good use and making solid decisions that rely on more than just gut instincts. The data doesn't lie, and using it to formulate the right approach can make all the difference.
Motivate Your Sales Team to Take Flight with Flockjay
Sales performance management is essential for any modern sales-focused business. There's so much competition out there that "winging it" is no longer an option for sales professionals. SPM is the ultimate form of strategy, helping you plan an impactful sales approach.
Check out Flockjay to learn more! Flockjay is an all-in-one platform with all the tools you need to turn your sales department into a well-oiled sales machine. Train your team, share knowledge, and use data to guide your way!