Today, many businesses are still struggling to achieve an integrated automated system for sales management. Meanwhile, market leaders are quickly moving to a fully automated approach that emphasises sales performance as a key factor in driving growth.
Sales performance management (SPM) is fast becoming a major global trend. Its forerunners were incentive compensation management (ICM) solutions, adopted by businesses to boost sales staff performance. SPM goes much further, is more multifaceted, and delivers a wider range of benefits and opportunities.
Improved sales and efficiencies
Central to the SPM model is cross-departmental integration and operational uniformity. Once integrated, in addition to improving sales, SPM can reduce internal dependencies while improving flexibility and resource allocation. It can allow for accurate territory planning and reporting, help to instil best practices, ensuring consistency and compliance and, moreover, reduce the cost of ownership.
A key challenge for businesses is ensuring that their SPM strategy is right for their sector and market. In addition, it is essential for businesses to assess the effectiveness of their end-to- end SPM strategy, not just on a departmental basis but also across the wider organisation. It’s helpful that the return on investment (ROI) data from SPM is so accessible and readable. Research shows that SPM can reduce errors by 90%, processing times by 40%, and IT/admin staffing requirements by over 50% (Gartner, 2010).
In order to gain the most from adopting SPM, businesses must first understand the concept, including its constituent parts as an operational model.
How will SPM make a difference?
SPM offers a range of measurable benefits as it streamlines business processes across departments, partners or channels, these include:
- The alignment of sales force instincts and behaviours with corporate strategy. l Accurate and informed decision-making.
- Improved business efficiencies.
- Above all, improved sales performances.
SPM represents a combination of operational and analytic software capabilities that develop efficient sales capabilities through integrated functionality. The system both motivates and empowers sales teams to deliver positive results in terms of revenue and margins. The holistic, integrated SPM model can be difficult to understand at first. So in starting, try to imagine it as a building: the roof is your sales strategy, from which you get an overview of the market and its conditions, to pinpoint where you might gain advantage. The foundations, underpinning the structure, are made up of your technology, business intelligence and processes.
On the foundations stand SPMs five operational pillars – supporting the building:
- The recruitment of top sales staff.
- The training, coaching and development of the sales force.
- The management of the sales process through CRM and configure-price-quote (CPQ).
- Territory alignment and quota setting.
- Incentive plan design and administration.
The triple-layered foundation of SPM addresses end-to-end sales performance management across the organisation – encompassing people, processes and tools and managing the activation of data in relation to each:
- Enabling technologies: integrates and manages the technology behind SPM. This includes data integration, the maintenance of reference data and rates, and the on-going application of upgrades – also essential technical support and vendor management.
- Business process management: streamlines essential operations including process management, data verification and payments, the management of operational schedules, executive report generation and update planning.
- Business intelligence: uses data to predict outcomes and enables accurate and timely reporting. It addresses business strategy; plan effectiveness, design planning, model forecasting and benchmarking.
The five pillars
Implementing point solutions for the five operational pillars of SPM can create benefits that directly impact on sales performance. Broader investment across the pillars can also create significant business gains. The pillars will vary in terms of interpretation and significance depending on the business and sector but here we will explore them at their highest-level definition:
- Candidate selection and on-boarding: this is a flexible talent acquisition model with clear competencies. Selection is supported by role specific online assessment using relevant competency mixes, with software supporting differentiation at this level. On-going automated on-boarding is delivered through online form completion, three months objective setting, and performance management integrating with HR systems.
- Training and coaching: continuous talent development is overseen through an online performance-tracking model linked to a learning management and HR system. This facet addresses succession planning and long-term preparation for talent development, along with cost effective interventions.
- Sales process: many ICM systems now integrate with systems like salesforce.com to provide clear visibility of the impact of pipeline delivery on commission payment potential. Sales process management needs to be highly visible to motivate the sales force. In addition, within this aspect, CPQ proves a highly efficient approach to proposal management.
- Territory alignment and quota setting: again, the most advanced approaches to SPM enable real-time scenario planning and quota adjustment. When sales regions and forces overlap thousands of products together with complex crediting rules, this capability becomes invaluable.
- Sales incentive design and administration: this sits at the core of old ICM. Team incentive strategies, supported by automated commission calculations that are flexible, motivational and aligned to sales targets lead to better sales performances and deliver greater cost efficiencies. In addition, solutions are more scalable and flexible; even companies with less than 50 employees will see return on investment from the replacement of excel spread-sheets with integrated systems.
A culture shift
When a business is assessing the effectiveness of its SPM strategy a distinct growth pattern in terms of engagement and return should be discernable over time. This will demonstrate how SPM is impacting on strategic planning. If results are not forthcoming, the likelihood is that the business has the problems that commonly hamper effective SPM integration. Such issues include a slow rate of change in the business’s operational culture and practices and a lack of engagement with the system across departments. A clear feedback loop of targets and performance is required.
To deliver success, there is an onus on the business to engage with the SPM model through day-to-day practices and reach maximum operational efficiency. Engagement is essential in giving management the business-wide insights they need. In tandem with this, the organisation must be able to assess the effectiveness of its strategy in terms of people, processes and tools – especially when it is diverse in focus.
OpenSymmetry’s 2012 survey into the use of SPM technology found that 45% of businesses were not effectively evaluating their new systems. When a business fails to engage properly with SPM, it can quickly lose sight of its strategy and subsequently the benefits of its investment. There is an onus on management to oversee this shift in culture. They must monitor how staff cooperates in relation to SPM: on the most basic level by simply syncing issues and resources. Businesses need to track the ROI from SPM and use this to ensure that all elements are being delivered.
Articulating a clear future vision of its sales function is a key challenge faced by businesses. Successful SPM integration depends on setting out a clear reasoning around why everyone should commit to the new sales strategy. This should be managed through an inter-organisational training program to inform sales teams about SPM from the outset. Full employee engagement means a uniform approach across the organisation and a minimisation of result distortions from systematic errors – commonplace with old spread-sheet techniques.
A clear incentive strategy is important, employing a balanced emphasis, combining hard number crunching with soft- focused, qualitative returns such as positive customer feedback.
The benefits of automating compensation include the capacity of the sales force to track their performances and commission pay-outs through an online portal. It reduces the time spent shadow accounting that could be spent selling. Moreover, ROI from SPM can only come to fruition if the salesperson trusts the technology and there is strong internal governance in place.
Strong governance of SPM is required to ensure that returns are not diluted. For example, existing incentive scheme strategies must be protected until alternatives have been tested using the new system. Moreover, senior company stakeholders such as the sales director or financial director have a responsibility to oversee the governance of SPM implementation and management.
SPM is here to stay
SPM requires investment but delivers fast ROI through higher sales performances; it enables better people management, lower employee attrition and heightened staff engagement.
The model also enables businesses to keep up with their competition by accessing the strategic information available through systematic data analysis. This stream of insight lets them monitor, measure and forecast sales and market trends while providing an invaluable overview of sales team performances and efficiencies. Moreover, it streamlines business processes and shortens operational cycles – saving time and money while enhancing overall output. It also helps businesses adjust to change, comply with emerging regulations and manage fluctuating economic circumstances.
With a reported multi-sector growth in implementations of 25% year-on-year, SPM has become an essential business tool – one that is certainly here to stay.