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What is Sales Performance Management and Why is it Important?

Published on November 14, 2021
Last modified on July 28, 2022
Sales Performance Management

In today’s competitive business world, sales performance management is extremely important.

Sales performance management is a process that helps companies achieve high levels of sales and results through the use of resources. This includes people, processes, and technology. 

This article will discuss what sales performance management actually means and how it contributes to its success.


What is Sales Performance Management?

Sales performance management (SPM) is an approach to improving individual and team selling effectiveness throughout an organization by using data analysis, surveys, reports, and other sources.

It’s important because it enables organizations to understand what works best in hiring practices, training methods, and company culture to achieve better results for both employees and customers alike.

It is typically measured by total revenue generated, number of new accounts or leads taken on, number of potential deals that moved into the contract stage, cost-per-sale measures (costs associated with generating each sale), and customer satisfaction scores.

It focuses on setting both team-level and individual performance targets to motivate all players throughout the organization. A quota-based compensation structure maximizes teamwork while keeping individuals focused on their own goals to achieve the team’s objectives


Importance of Sales Performance Management

Sales performance management can be established as a measurement and reporting system for tracking the sales process. It includes managing all the processes involved in building demand, delivering products or services, and measuring results.

One of the main purposes of sales performance related to CRM is associating each customer with their revenue contribution to target profits. The important aspect here should not be that we forecast revenues but rather manage to forecast margins. 

Forecasting budgets becomes much easier when you know your revenue and margins because you have made yourself accountable to your targets from an operating perspective. Here are some reasons why sales performance management is important.


It keeps your sales strategy transparent

Yes, indeed. One of the most important benefits of sales performance management is its transparency. With metrics data being so easy to use, it’s hard not to become habituated with tracking your performance daily, weekly, and monthly. However, it will help any sales professional affect positive changes in behaviour by seeing the state of their business day-to-day.

SPM also helps teams feel connected to each other through real-time alerts on missed opportunities, declines or declines accepted, plus much more – this can be hugely comforting when you are in a tough moment in your career or team


Give salespeople analytics

Keeping track of individual performance is key to generating a culture of high achievers among the sales team. Managers should evaluate salespeople for their productivity and customer response by both type and number of inquiries, as well as the amount of phone time they spend on each call.

Fortunately, today’s sophisticated software can now show salespeople in real-time how much money they’ve made over any given period and how far they are from their goals. In addition, the finest program enables salespeople to generate “what-if” calculations to determine what contracts to focus on to maximize their profits.


Creating and administering sales compensation plans

It might not be easy to plan and administer sales compensation plans to achieve corporate objectives. Companies want to get the most bang for their buck, but they must balance expense and complexity. Spending too much money damages the bottom line, but spending too little will drive salespeople away.

A single system that is natively linked can provide teams with a single source of truth and a comprehensive view to evaluate sales compensation plan performance. 

Administrators may quickly identify plan elements that are costing the company but aren’t delivering revenue. If the analysis reveals lower profits or potential areas for growth, managers can utilize sales performance management.

Sales execution

Sales execution is a critical component of sales performance management. It’s the ability to execute the plans you’ve created for your customer, whether that involves closing more deals or using the strategies you’ve deployed to achieve your goal.

Too many deals go unclosed; too few strategies are deployed; not enough focus on execution because there’s too much focus on tactics—these are common pitfalls. And they’re ones that managers can help their reps avoid by ensuring they know what success looks like and how to get there before returning to routine business activities.

The quicker finance and sales operations can circulate these plans to the sales force, the faster sellers will start selling. This helps avoid low motivation, increase performance, and shorten selling dates.


Use advanced software

Best leaders are those who can analyze data with advanced software. The only way to accomplish these is by utilizing sophisticated software that links the various elements of a sales strategy and provides real-time calculation capabilities.

Using advanced software can help with various aspects of the sales process. For instance, analytics programs monitor and provide information on competitive pricing and assess whether or not a business is charging more or less than its competitors on similar products and services. 

Other factors such as buyer behaviour (who, what, how) can be analyzed to forecast demand for your products and determine what new offerings might be worthwhile for you to investigate. 

These insights can then be turned into cost-effective tactics that evolve iteratively over time in tandem with data feedback from ongoing campaigns. Hence, putting the entire sales strategy on a platform as a single source of truth can help in many activities.


The Bottom Line

Executive and management metrics and analytics from the sales performance management technique will provide a clear picture of what is working and where problems exist. 

You may optimize the system to enhance processes, methodologies, and incentive plans throughout your business so that they reward the appropriate activities and behaviours as a result of this knowledge.

An SPM solution gives you real-time data so that you may track, plan, and react to the ever-changing commercial environment, incorporating new company objectives rapidly.

There are many different software programs on the market that claim to help you manage your sales performance. So double-check that it connects all salespeople and processes.

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