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As a
sales leader, your ability to develop and retain your sales reps is important
to your company’s bottom line and future success. Employee retention in the
sales field continues to be an issue. In 2018, the average sales professional tenure was reported to be 1.5 years,
down by half from 2010.
Furthermore,
the average sales professional turnover rate is 35% — a dramatic
number compared to the average turnover rate of all industries, which is just
13%.
When
your sales reps are building the skills they need to feel prepared and
successful in their roles, they are more likely to report job satisfaction and
feeling valued by their employer — factors that make them less likely to jump
ship.
Looking
to set your sales team up for this kind of success? You can achieve it with a
structured sales performance management process.
What is sales performance management?
Sales performance management is the process of ensuring each
member of your sales team is working to achieve organizational goals and
objectives. A robust sales performance management process can include training,
monitoring progress, and developing new skills for sales professionals.
Now
that you're clear on what sales performance management entails, let's talk
about why it is so important to implement it into your standard operating
rhythm.
Why
Sales Performance Management Matters
Having
a sales performance management process in place is crucial for your team’s
overall success. There is often a disconnect between the level of effort sales
reps put into their work and the tangible outcome seen by sales management and
the company at large. Let’s talk about why your organization needs to implement
a sales performance management strategy.
1.
Helps predict future sales trends
Sales
performance management tracking can provide valuable data enabling your
organization to forecast future sales trends and employee compensation rates —
particularly for commission-based compensation structures. For example, if a
sales rep earns a 15% commission for each deal they close, and are projected to
close $100,000 in sales for the quarter, then your finance team will anticipate
an allocation of $15,000 in commission payroll for that rep.
2.
Allows sales reps to build their skills
High-performing sales teams are twice as likely to provide ongoing
training to reps than low performing teams. Whether you have sales
reps on your team who are new to the field of sales or seasoned sales people
ready to learn more advanced selling techniques, employee development is a
major perk of having a sales performance management process in place. A sales
performance management plan adds structure and accountability to your training
process.
Here
are some elements that could be included in a sales rep development plan to
help them build their skills:
·
Required training for sales enablement tools
·
Informational interviews with sales leaders within their company
·
Supplemental reading from sales thought leaders
·
Attendance at an upcoming seminar or conference
3.
Builds a stronger sales rep pipeline
With
structured performance management plans in place, your organization will have
the framework to build a pipeline of sales reps with valuable skills who are
effective and efficient at driving sales for your company. Having clear,
visible goals and incentives builds well-rounded sales professionals.
4.
Performance-based compensation
Organizations
with sales performance management processes report more accurate compensation
figures, saving between 3-5% in employee over and under-payment expenses.
Having a set performance management plan keeps compensation structure and
overall business objectives aligned, resulting in a more motivated sales team.
How to
Implement an Effective Sales Performance Management Process
At this
point, my guess is you’re sold on the importance of sales performance
management. So, let’s talk about how to implement a sales performance
management process that gets results.
1.
Decide what performance metrics you want to assess
To
create an effective sales performance management process for your sales team,
simplify your overall business objectives and make them relevant to the
individual contributors on your team. On a macro level, you should already have
a clear understanding of what high-level success metrics your
organization is being measured against.
Performance metrics should measure each individual’s tasks and activities
in relation to how well they serve overall business objectives. Here
are some performance metrics to consider for your sales reps:
·
Individual Quota Attainment - The
percentage of the sales target reached for each sales rep in a given month or
sales period. This data can be helpful for benchmarking. If you find your
entire team is having a hard time reaching their targets, the goal may be too
aggressive. Conversely, if your entire team is hitting or surpassing quota
without question, your goal may be too conservative.
·
Conversion Rate - The
percentage of leads each rep converted to paying customers. For example, if a
rep has 100 active leads, and was able to convert 20 of them to paying
customers during a sales period, they would have a personal conversion rate of
20%. Keeping track of this metric for each rep (along with an average for your
team) can provide valuable data about the quality of your leads and if your
team has the resources to properly nurture them for the sale.
·
Sales Productivity Metrics -
Sales productivity measures the rate at which your reps are able to reach their
quota. Generally speaking, the faster reps reach their quota the higher their
productivity. To measure sales productivity, look at the following metrics:
·
Percentage of total hours spent prospecting
·
Percentage of total hours spent on data entry
·
Percentage of closed-won deals (how many closed deals resulted
in a sale over a specific sales period)
2.
Communicate objectives to your team and get their buy-in
Now
that you’ve established what metrics you’ll use to understand your team’s
performance, it’s time to communicate these goals to your team to get their
buy-in. This is important for multiple reasons. First, your team can’t reach
their goals if they don’t know what those goals are. Second, this gives space
for your reps to provide feedback on what and how they are measured.
If you
experience pushback from reps about specific goals you’ve set, give them space
to voice their concerns. For example, reps may not agree with some of the
benchmarks set (feeling the goals are too aggressive or conservative), or may
not agree with measuring some areas of performance at all. It is important to
take the concerns of your reps into consideration and make sure your team
understands how their individual goals relate to overall business objectives.
In this
situation, work with your reps to adjust goals as needed, or include your team
in the goal-setting process from the beginning. For each rep’s performance
plan, you can also allow space for them to set their own stretch or development
goal based off areas they’d like to improve upon. Some sample language you can
use when getting rep buy-in include:
·
“These objectives are
necessary to ensure we’re reaching our goals as a team.”
·
“We will be
implementing this new structure this quarter, and can revise per your feedback
after this trial period.”
·
“This performance
management process will keep our team aligned with the company at large.”
3.
Coach and develop reps to build performance-improving skills
Once
your team’s goals and development plans are in place, make sure your reps have
the tools and resources they need to succeed. Many reps have identified skills they want to build or improve upon, such as effective
prospecting or presenting in front of groups. Seize upon these interests and
teach them.
You
don’t have to be the person who teaches them but you can be the person who
creates space for your reps to learn and develop. That could include keeping
reps accountable for attending trainings, introducing them to a mentor, or
connecting them with a teammate who excels in the area they’d like to develop.
4.
Provide performance feedback to reps on a regular basis
For
your sales performance management process to be effective, consistent performance reviews should be held. Including
performance reviews in your regular operating rhythm is important to monitor
and track the success of your sales team. A well-rounded performance review should include the following:
·
Documented goals the employee is being
assessed for - Talk to your reps about how they performed in regard to the
specific metrics outlined in their performance review plan. Goals could include
hitting 70% of their quota for the quarter or having a higher average deal
value than they had the year before.
·
Relevant feedback from previous reviews or
projects - If your sales reps have implemented feedback from a previous
review or have shown growth in a specific area, this information is important
to include. For example, if your employee has developed their soft skills after
receiving constructive feedback the year before, include that in their
performance review as a win.
·
Direct feedback on employee’s successes - How
have your employee’s strengths benefited their performance? Provide examples to
reinforce the behavior. For instance, if your employee has strong project
management skills, document how these skills have benefited their ability to
close new business or supported the sales team with implementing a project.
·
Constructive feedback for the employee’s
opportunities for growth - What opportunities does your employee have
for improvement? Provide examples of situations where they could have handled
things differently and resources for achieving this growth. For example, if
your employee is struggling with cold calling, provide tangible advice or
hands-on training that can help them improve in this area.
·
Summary or rating outlining the employee’s
overall performance - Provide an overall rating or summary statement. Did your
employee meet expectations? Generally, it helps to rate employee performance on
the following scale:
· 1 —
Does not meet expectations
· 2 —
Needs improvement
· 3 —
Meets expectations
· 4 —
Exceeds expectations
You can
use this sales performance review template to guide you through
the process.
Sales
Performance Management Software
Using
sales performance management software automates tracking your sales team’s
progress towards organizational goals and identifies processes promoting and/or
inhibiting the effectiveness of your sales reps.
Sales
performance management software automates and integrates sales processes with
helpful data to improve performance and efficiency across the organization.
To
implement sales performance management software, consider some of the following
features in your search.
·
Sales incentive compensation management - Tools
to fairly and accurately pay your reps based on performance against their
goals.
·
Business goals and objectives documentation - A
platform that allows you to clearly document and share business and individual
objectives with the members of your team to improve performance.
·
Quota management -
Accurately track and forecast future quota targets based on relevant data.
·
Sales territory optimization - The
ability to support strategic territory mapping and efficiency.
·
Advanced sales performance analytics -
Clear, accurate reporting of the pertinent metrics that matter most.
·
Sales gamification - An
interface that can turn performance data into a game to drive sales rep
engagement — often includes features such as leader boards, top lists, and
other recognition opportunities.
As more
organizations make sales performance management a greater priority, more
software solutions with a robust set of features will become available. Here
are some recommendations.
1. Xactly
Image source: Xactly
·
About: Xactly seeks to automate
and simplify the incentive compensation process for sales teams. They pride
their software on being over 99% accurate for forecasting and performance
management data.
2. Anaplan
Image Source: Anaplan
·
About: Anaplan’s sales
performance management software allows sales organizations to develop robust
go-to-market strategies, using their team’s performance to drive planning.
Image Source: IBM
·
About: IBM’s sales performance
management software solution helps sales teams improve performance and
operational efficiencies. Their areas of expertise include compensation
planning and territory management.
Image Source: SAP
·
About: SAP CallidusCloud
focuses on helping sales organizations reach peak productivity. With tools to
facilitate employee coaching, KPI tracking, and sales rep assessments, your
sales reps will feel supported and included every step of the way.
Image Source: Oracle
·
About: Oracle’s Sales
Performance Management application highlights sales rep accountability, guiding
reps through skill-building task lists and training modules. The tool also
features a white space analysis feature, so sales teams can focus on accounts
with the highest revenue potential to achieve revenue goals.
6. Optymyze
Image Source: Optymyze
·
About: Optymyze offers a suite
of solutions to help sales leaders and reps drive performance. Their offerings
include integrated compensation management, sales quota tools to keep reps
engaged, and sales territory management software to maximize revenue potential.
Proper
implementation of a sales management process can drive efficiency and overall
effectiveness for your sales organization. Check out the five important sales metrics every rep and manager should
be tracking to learn more about sales performance.
Originally
published Oct 2, 2019 7:30:00 AM, updated October 02 2019
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