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What is Sales Performance Management?
Sales performance management (SPM) is the set of processes, systems, and tools used to monitor, measure, and manage sales teams’ performance. The main goal of sales performance management is to create a strategic, consistent, and effective sales process that will help sales team members maximize their contribution to a company’s top-line growth.
SPM is more than just tracking individual sales performance. It involves creating an efficient workflow with standardized activities, processes, and tools throughout the sales cycle. This includes setting clear objectives for each team member or department, developing proper incentives for meeting those goals, and providing feedback and coaching to ensure everyone is on track.
In this sense, sales performance management is a continuous process — leaders in charge of SPM initiatives find opportunities for improvement and make necessary changes so sales teams can reach their full potential.
- Sales performance measurement
- Performance management in sales
Why Sales Performance Management Matters
Sales performance management is important for individual reps, the sales organization as a whole, and the overarching internal processes that drive revenue growth.
Sales Pipeline Management
Looking at how leads move through the sales pipeline helps businesses understand where they drop out of the process and how they can win more deals.
When sales leaders examine their reps’ performance, they can see how many new leads and opportunities they bring in, how much time they spend at each stage of the deal cycle, and how many deals make it to closed won.
Performance metrics underscore potential problems with individual reps and macro trends across the entire organization, helping management take a proactive approach to achieving its business objectives.
If the sales manager notices one team member beginning to struggle, they can ask questions, provide coaching, and help their team member work through any issues. If all sales representatives are failing to close deals or there’s a dip in new leads coming in, they can look at the sales process itself, identify the root cause of these problems, and turn them around before they worsen.
If leaders don’t manage sales performance effectively, executives and investors won’t have a good enough understanding of future sales trends to make informed decisions about their company’s future.
Continuously monitoring sales metrics and centralizing historical data feeds better data into sales intelligence models, helping company leadership paint more accurate pictures of their current operations and future prospects.
Sales Training and Development
The typical sales rep forgets 84% of their sales training after three months, and it’s because most companies that invest in it don’t have the infrastructure to support it.
Sales performance management helps leaders track reps’ progress, identify knowledge gaps, and develop tailored plans for each individual on the sales team. It also helps managers create sales playbooks, which their reps can refer to during each step of the sales process. Assuming managers track performance over each sales period, SPM helps them continuously mentor and grow their reps and gives them better talking points during sales QBRs.
Sales Rep Compensation
It’s no secret that sellers are in it for the money. Constant rejection, long hours, and high-stakes sales quotas aren’t worth it unless the potential payout makes them worth it.
Sales performance management helps sales leaders measure reps’ individual and team-wide performance, allowing them to set attainable quotas, plan their compensation accordingly, and provide appropriate incentives for stellar results.
Sales Rep Retention
Average sales rep turnover is astonishingly high (35%), especially compared to other departments. Sales onboarding, commission structure, operational efficiencies, and ongoing support from leadership all play a role in sales rep retention.
Reps who learn how to sell properly, get paid enough for their contributions, work within a well-defined process, and receive constructive feedback are far likelier to stay on board. Leaders who proactively approach sales performance management ensure their sellers are equipped with the resources they need to exceed their sales goals and stay engaged in their work.
Benefits of Sales Performance Management
SPM gives sales leaders full visibility into their team’s performance, helping them sell better and contribute more to their company’s bottom line.
Benefits for the Organization
- Better sales and demand forecasting. A higher degree of forecast accuracy allows businesses to capitalize on opportunities, optimize resource allocation, and avoid strategies that may fail.
- Performance-driven culture. By setting clear goals, recognizing top performers, and providing targeted training, companies can foster a culture of continuous improvement and motivate employees to work towards common objectives.
- Informed decision-making across departments. Sales performance data provides valuable insights for various departments within the organization, including marketing, product development, finance operations, and human resources.
- Cross-functional collaboration. The shared understanding of the organization’s goals and progress allows different departments to work together more effectively, aligning their efforts to support sales growth and overall success.
Benefits for Sales Leaders
- Rewards for top-performing reps. An effective SPM program makes it easier to spot top-performing reps and reward them with promotions, bonuses, and other perks.
- Targeted training programs. Once leaders know who their top-performing and underperforming reps are, they can create tailored training programs that target specific areas for improvement.
- Continuous performance improvement. Managers can ensure ongoing improvement and adjust their strategies by setting monthly, quarterly, and annual benchmarks and tracking the KPIs that quantify them.
- Higher employee engagement and retention. When sellers get the attention and recognition they need, they are more engaged and motivated to get better results.
- Teamwide achievement of business goals. Sales leaders are ultimately judged on how well they help their team reach the company’s sales objectives. Sales performance management tracking gives them the tools and resources to refine their sales methodology, adjust quotas and incentives, and lead their teams to success.
Benefits for Sales Reps
- Positive relationships with sales leadership. Making the selling experience more transparent helps reps build positive relationships with sales leaders through collaboration and mentorship, creating a strong foundation for achieving long-term targets.
- Accurate sales performance tracking. Sellers can track their performance using CRM software and analytics platforms to identify areas for improvement and exceed personal goals.
- Maximum sales efficiency and efficacy. When reps know where buyers drop out of the deal cycle, how long it takes to close, and what sales strategies buyers respond well to, they can focus on time management, continual learning, and active listening to excel in their roles.
- Career progression and job satisfaction. Sales professionals who can analyze their performance and take action to improve it see opportunities for increased earnings and upward mobility compared to those who don’t.
What Are the Components of SPM?
The sales performance management process improves the six main components of sales performance: account segmentation, compensation and incentives, pipeline management, quota management, forecasting, and territory planning.
Sales planning encompasses all the activities involved in preparing for sales execution. Performance data informs sales planning in the following ways:
- Account segmentation
- Forming sales territories
- Setting sales quotas
- Developing the sales playbook
- Creating buyer personas
- Analyzing customer data and historical sales
- Building an integrated sales stack
- Onboarding, training, mentoring, and developing reps
The planning phase takes place at the beginning of any sales initiative and helps sales reps form a comprehensive view of the market they are selling into with actionable insights that they can use to refine their strategies.
Sales Compensation Structure
Sales incentive compensation management helps sales reps stay motivated and earn more money. An effective compensation system — including salary, commission structure, stock options, and other incentives— incentivizes salespeople to reach their targets while providing them with the financial security they need to stay on board.
According to research from Indeed, the average commission sits between 20% and 30% of the total deal value. Most organizations offer higher commissions for high-value deals and lower commission rates for smaller ones, but some use a flat rate or equity stake in the company as compensation.
Additional incentives might include trips, bonus rewards, or other perks that recognize their performance.
Sales analytics play a role throughout the performance management process.
- In the planning phase, analytics provide insights into potential customer segments, competitive landscapes, and target markets.
- After execution, sales reps use analytics to understand buyer behavior, improve sales productivity, and manage their sales pipeline.
- Historical data from SPM initiatives feeds predictive analyses and lets reps and managers look at their activities retrospectively.
Every step of the way, analytics-driven insights inform decisions and strategies, allowing sales teams to work smarter and increase efficiency.
Types of Sales Performance Management Software
Sales performance management software isn’t usually a standalone product — platforms like CRM have built-in features used in the sales performance management function.
Here’s a look at different types of software that have a sales performance management solution:
Customer relationship management (CRM) manages customer data and tracks customer interactions. It provides insights into sales performance, allowing managers to coach reps and improve their pipeline management techniques.
Sellers use CRM to log their activities and move deals through the pipeline, leaders use it to review team performance, and management uses it to generate reports that show the entire team’s progress toward revenue goals.
Sales engagement platforms like Salesloft and Outreach help sales reps engage and nurture leads. They provide intelligent automation tools for reps to personalize their outreach and create more efficient workflow processes.
Since reps can save their sales interactions and templates in these platforms, sales leaders can use them to track performance over time and measure KPIs like average response time or talk/listen ratio. Reps and managers can also look back on past deals to see what worked and what didn’t.
Businesses use sales enablement tools to make life easy for reps. These platforms give reps access to sales content and collateral. They also provide insights into customer data and buying trends so that reps can tailor their sales strategies to each prospect’s needs.
Sales enablement software typically offers unique features that streamline one element of the sales process, such as content curation, video conferencing and transcription, or proposal generation.
By leveraging these tools, reps can learn more about their buyers and refine their sales processes to improve sales performance.
AI-driven analysis evaluates data like sales calls, pipeline movement, and customer responsiveness to create a comprehensive view of how customers interact with reps.
These insights include statistics (e.g., “85% of your sellers who meet quota respond within 24 hours”) and visualizations, which can be used to refine sales processes and inform coaching sessions.
How to Implement an Effective Sales Performance Management Strategy
Whether or not sales performance management lands a company more Closed Won deals depends on how well its members execute their SPM strategy.
Here’s how to implement a sales performance management strategy that actually works:
1. Set short- and long-term objectives.
The first step to effective SPM implementation is setting clear objectives for the company (and, by extension, the team).
To set attainable goals, examine your qualitative business objectives (e.g., “enter Market Segment X”) and compare them to your historical data and sales projections to get an understanding of what a “realistic” goal might look like.
Then, work with other members of the sales management team to align them with your quantitative targets (e.g., “increase year-over-year sales by 20%”).
2. Create structure around your business goals.
There are two sides to sales org structure: your reps and your tech stack.
Creating structure for the former involves the following:
- Setting attainable quotas for each team member based on quantitative sales targets
- Establishing team roles and responsibilities and defining what success looks like in each role
- Distributing leads across teams or reps based on their expertise, experience, and/or historical performance
- Mapping out communication processes so reps remain connected to management throughout the sales cycle
- Scheduling one-on-ones, quarterly reviews, and check-ins
The latter requires a technology that supports your SPM initiatives. CRM — which most companies already have — is the center of a sales org’s tech stack, but adding productivity, analytics, and enablement tools can help you save time and measure performance accurately.
Some examples of software that support SPM initiatives include:
- CPQ (configure, price, quote)
- Sales enablement and engagement software
- Recruiting & onboarding platforms
- Learning management systems (LMS)
- BI and data visualization tools
3. Integrate all your systems.
For your software and internal processes to work together in one fluid motion, they need to integrate. Otherwise, they do more harm than good — data silos are a recipe for chaos, and reps will waste time manually transferring info from one system to another (or lose it altogether).
When choosing software, consider its integrations, prioritize products that sync with your current tech stack and automate or add value to your current workflow.
4. Track the right KPIs.
Sales KPIs provide an objective, quantitative indicator of how well reps perform relative to their goals.
Some common SPM metrics include:
- Lead response rate
- Lead conversion rate
- Average deal size
- Average time to close
- Sales funnel stages (open, in-progress, closed)
- Number of demos booked/delivered per month
For longer-term analyses, customer lifetime value (CLV), average revenue per user (ARPU), and churn rate indicate your reps’ abilities to target, nurture, and close prospects that actually move the needle for the company.
5. Create an incentive plan.
A sales incentive is a spiff or reward a sales rep receives on top of their commission for meeting a sales goal. Sales orgs that use incentive plans report a 79% success rate in reaching their performance goals.
Examples of incentives include:
- An all-expenses-paid trip
- A bonus for closing big deals
- Higher commission rates
- Additional PTO
- Cash rewards
6. “Move in the middle.”
Sales performance management isn’t just about tracking data — it’s about using it to make decisions and improve your reps’ performance.
By analyzing trends over time, managers can pinpoint areas where they need to coach reps or pivot their strategies before more deals are lost to the competition.
Most sales managers approach this by “moving in the middle” — that is, focusing primarily on developing core average performers (i.e., the middle) into sales rockstars.
The idea behind this strategy is that there’s strength in numbers. A few strong sales reps might be able to carry a company, but they’ll never be able to scale it.
Since top performers typically operate with autonomy, the middle of the pack is where management sees the highest ROI on their development efforts.
7. Measure and evaluate your SPM initiatives.
Regularly measuring and evaluating your SPM strategy ensures its effectiveness and long-term success. Conduct periodic assessments to identify areas of improvement, make necessary adjustments, and track progress toward your goals.
Consider the following when evaluating your plan:
- Data analysis. Analyze the performance data collected through your tracking techniques to gain insights into your team’s progress and identify areas for improvement.
- Feedback from your sales team. Gather feedback from your sales team regarding their experiences with the SPM strategy, training programs, and support provided.
- Benchmarking. Compare your organization’s sales performance against industry standards and competitors to assess the effectiveness of your SPM strategy.
People Also Ask
What are the responsibilities of a sales performance manager?
A sales performance manager is responsible for developing and implementing SPM strategies, tracking the performance of individual reps, mentoring sales teams, and monitoring overall progress toward business goals at the individual and team level.
How can KPIs be used in performance management?
KPIs play a critical role in performance management because they quantify sales activities and provide objective, data-driven metrics for measuring performance. With the right KPIs, sales teams can identify areas of improvement, set attainable goals, and measure progress toward those goals over time.
What are the 5 stages of performance management?
The five chronological stages of performance management are planning, monitoring, development, rating, and rewarding, respectively.