What is Sales Performance Management?

There are several key trends in sales and sales management but one particular trend is especially exciting and transformational – the trend towards Sales Performance Management (SPM). SPM is an innovative discipline of sales management that is focused on driving more optimal sales performance with next-generation tools and metrics-driven best practices.

Here are the 5 essential elements of SPM, which overlay the 5 elements of sales management:

  1. SPM Strategy: methodology, communication, execution, process
  2. SPM Optimization: continuous improvement of sales effectiveness and efficiency
  3. SPM Organization: hiring, training, culture, structure and compensation
  4. SPM Metrics: measurement of performance improvements
  5. SPM Technology: next-generation Sales 2.0 tools that enable higher sales productivity

SPM applies more focused and advanced strategies, a more productive organizational structure, next-generation technologies and rigorous metrics that are benchmarked to produce superior results and offer sustained competitive advantages to the company.

Why is SPM important? Over 81% of sales reps achieve their annual quota at companies that emphasize SPM, while lagging companies typically see only 25%  of their reps achieve these quota goals. Additionally, these best-in-class companies that apply SPM also have 3x higher annual growth in revenue than lagging companies.

Sales Performance Management marries the traditional discipline of sales management with a more rigorous, focused and metrics-driven approach to optimize resources and improve sales performance. Ultimately, this leads to generating repeatable and predictable revenue. SPM is focused on improving the performance of your sales organization and your sales team’s effectiveness as well as efficiency. It increases productivity, streamlines sales processes and drives desired sales behaviors to achieve the best results.

A sales manager will focus on typical areas of sales management, like quota setting, territory management, training, hiring and onboarding and sales coaching. But SPM adds an additional layer on top of sales management. It instills a more rigorous focus on increasing performance with a continuous process of optimizing sales effectiveness plus analytics. In an SPM environment, reps are trained consistently, measured rigorously and driven to adopt repeatable behavior so that everyone can be measured using the same yardstick. SPM also requires the use of metrics beyond traditional ones that sales managers used to analyze sales team performances.  These metrics are used in defined performance reviews and, more importantly, are benchmarked against best-in-class companies. There must be organizational buy-in from senior executives to ensure that everything is aligned, that the SPM culture works and that the team can hit those exacting metrics.

Benefits of SPM for Companies

Why do companies consider implementing Sales Performance Management? Perhaps the growth in top-line revenue was below the company’s expectations. Other issues that contribute to the dissatisfaction with  traditional sales management and ultimately serve as catalysts for senior executives to consider implementing SPM include high sales team churn, growing sales cycles, inaccurate sales forecasts and a lack of alignment with marketing, where the invested capital in lead generation is not paying off in increased sales.

Make no mistake about it; SPM takes a substantial step beyond traditional sales management. It is grounded not in Sales 2.0 but really more in the “Sales 3.0″ world now (yes, we are way ahead of where Sales 2.0 began shaping 10 years ago), requiring cutting-edge technology with better predictive analytics and performance monitoring. These enabling technologies include more advanced Voice over Internet Protocol (VOIP), such as from InsideSales.com, whose dialer allows managers to be more metrics-driven by tracking Dials:Deal downstream metrics (which was not possible before in the previous age of Sales 2.0). A product like InsideSales.com enables dials right out of the CRM, empowering reps to do more at a higher level in less time.

Other Sales 3.0 technologies include high-performance selling or social selling tools like Salesloft,  InsideView or YesWare to connect to the right target buyers, high performance lead management and lead scoring tools to improve productivity, sales enablement portals for knowledge management, team social networks for better collaboration, sales coaching technologies and various advanced add-ons for the CRM to optimize effectiveness and efficiency at every step of the sales process. Additionally, SPM and Social Performance Management technologies such as Work.com are available today in the Sales 3.0 world, driving sales performance through considerably better sales coaching, motivation and team alignment. SPM is enabled by technologies that were not available in the Sales 2.0 age.

Finally, SPM requires a Kaizen / CANAI approach that emphasizes constant innovation. It demands a culture that encourages experimenting and failing fast to find new alternatives to generate revenue better. It focuses on what really moves the needle, stripping everything else away. SPM forces sales managers to pause, think and rethink. They have to measure more than typical sales metrics, with new sales performance metrics that edge out more and more in every new selling period. SPM sometimes causes the Schumpeterian “creative destruction” in your sales organization. It forces you to trim and reset. It may force you to invest a lot of dollars into new, unproven sales technologies, all for the sake of being leaps and bounds ahead of where you were previously – and the competition. It requires taking risks in the pursuit of better results. SPM is a discipline for a whole new breed of sales managers who operate as engineers in the science of sales.

It might be more challenging, more demanding and more daunting for sales managers, but Sales Performance Management is what the best-in-class sales organizations need to succeed and build sustainable competitive advantages today, beginning with the sales team.