5 Sales Performance Management Best Practices for New Leaders

The best sales leaders all have one thing in common: A systematic, data-driven approach to sales performance management.

We work with Fortune 500 companies to improve their sales performance and effectiveness, and here are some sales performance management best practices we see the best sales leaders follow.

What is Sales Performance Management & Does it Matter?

Sales performance management (SPM) employs a data-driven sales planning, managing, and analysis approach. A structured SPM strategy should include clear goals and objectives, an efficient sales process, and practices that set your sales team up for success. 

The best sales leaders have one thing in common: They excel at data-driven sales performance management. #sales #spm Click To Tweet

Here’s why your sales organization needs to implement an SPM strategy: 

It builds a better sales pipeline – With the right strategy in place, you will have the framework needed to convert more leads into sales. 

It improves sales forecasting – A sales performance management system can provide valuable analytics, allowing your organization to predict future numbers better. 

It reduces turnover – The right strategy aligned with the right incentive opportunities will better engage your sales team and increase retention. 

It improves sales rep performance – A performance management strategy keeps your sales reps motivated, helping them drive more revenue for the company. 

It makes compensation management easier – With an SPM system, your organization can better design, execute, and optimize your variable compensation plan. 

Sales Performance Management Best Practices  

Sales management is more than ensuring your team meets its goals and objectives. It requires a holistic approach incorporating several best practices to build a system that works for you.

Let’s look at five best practices for your sales performance management strategy.

3 Key Objectives of a Sales Compensation Plan

1. Base your decisions and strategy on data

Your data is the key to consistently high sales performance.

Too many sales performance decisions are based on gut feel, rigid frameworks, and competitor benchmarking. But the marketplace is constantly evolving, and your customers are not necessarily the same as your competitors. Your sales performance and incentive strategy must be agile, flexible, and unique to take full advantage of that.

Forma.ai is a simulation engine that allows our customers to balance territories and quotas based on real potential and deliver the right incentives at the right time to get the best from their sales team. It helps them quickly identify why territories or individuals are underperforming and map out dozens of potential scenarios to evaluate the impact of changes before they are ever rolled out.

2. Determine Sales Goals & Expectations  

Sales management requires clear communication from the sales leader. You are responsible for ensuring that each sales team member knows their goals and expectations. That includes their individual and group requirements. 

Communicating your sales compensation plan and performance goals is critical to success. Reps need to know their performance metrics and believe in their ability to achieve them. Sales compensation dashboards are one way to do this, as long as you can maintain them without draining resources.

A data-driven approach means defining sales quotas based on real territory potential and workload, not top-down revenue goals or gut feeling.

Your sales reps may also have individual career aspirations that can help you set goals outside of their quota. As long as their goals align with company objectives, it’s essential to consider them. High-performing companies are twice as likely to offer personalized training opportunities, which may interest growth-minded sales professionals. 

High-performing companies are twice as likely to offer personalized training opportunities, which may interest growth-minded sales professionals. #sales #salestraining Click To Tweet

3. Motivate Your Sales Team  

One of your key priorities in sales performance management is motivating your sales team. That happens with a core sales compensation plan. Organizations with best-in-class sales compensation have more engaged and productive sales teams that produce better results and lower turnover. 

Some businesses motivate their sales reps with sales incentives beyond the core compensation plan. That can include Sales Performance Incentive Funds (SPIFs), President’s Clubs, or sales kickers. These incentives can help close sales gaps, achieve short-term goals, and improve sales performance and rep engagement. 

Alternatively, you can motivate your sales team with non-financial sales incentives like recognizing them in the workplace, creating a strong purpose for their job, or allowing for healthy competition with other reps. Understand that each person requires a different motivation method to keep them engaged, and it’s your job as a sales leader to unlock it. 

5 Tips to Optimize Your Sales Compensation Plan

4. Put Your Sales Process First  

There is no sales performance to manage without focusing on the sales process. That is your systematic approach to managing your sales pipeline. Your team must ensure that each pipeline stage is given attention, including prospecting, lead generation, nurturing, and closing deals. Your job is to assign each step to a salesperson and communicate the assignments to each team member.

The sales process also includes managing accounts after the deal is closed. Your customers provide selling opportunities through upselling and cross-selling that a salesperson will have to work, and you must focus on all sales process stages to maximize your sales pipeline.

As a sales leader, you should consistently evaluate your team’s sales process. Consider how many new leads they earn, their upsell and cross-sell rates, their sales cycle length, or their client acquisition rates. Have a discussion with them on their process and how they take leads down the sales funnel. 

Again, the best way to do this is by building data models that allow you to identify better opportunities in the pipeline, customers that could be upsold, and even how many reps to commit to a new market when scaling.

5. Ask for Feedback  

If you want to go fast, go alone; if you want to go far, go together. The same can be said for your sales team. You must include your team if your sales performance management strategy delivers results. Surveying and discussion allow your sales reps to share their view of the obstacles they face and ideas about where to improve, giving you a better idea of what’s working and what’s not and how they perceive the plan overall. 

Management by Oblectives: Advantages and Disadvantages

Strong communication is the foundation of any good business process, and your sales management strategy is no different. As a sales leader, you must reciprocate feedback effectively and meaningfully. Be receptive to what your sales team offers and make them a part of the process from the beginning. Use performance data at every opportunity to compare it with qualitative sales rep experience for the best results.

6. Automate as many low-value tasks as possible

Sales Performance and Incentive Compensation Management is not easy. There’s a reason 58% of sales managers say they have difficulty completing their work tasks in the given time. The good news is there are tools and technologies available to help you automate the process. 

Using SPM software allows you to automate and integrate your sales processes with valuable data to improve performance and efficiency in your organization. 

Here are some of the key benefits of sales performance management software: 

  • Sales Compensation – AI-driven SPM platforms can help you build a sales compensation plan and accurately pay your reps based on performance. 
  • Sales Motivation – Providing teams with a robust incentive program and real-time transparency motivates them to go above and beyond their quotas. 
  • Sales Optimization – SPM software will analyze your business for a suboptimal mix of accounts,  revenue, potential, and workload across territories to optimize your targeting strategy.

Unify Sales Performance Management

For your sales performance management (SPM) strategy to be successful, you must create a holistic system that encompasses many, if not all, of these best practices. 

Your goal as a sales leader is to lift your team’s performance while generating more revenue for the organization and creating a better work environment. 

It won’t happen overnight, but your team will have success with the right SPM strategy in place. 

Book a demo here to learn more about how Forma.ai automates and optimizes sales performance management to drive better results for your business.

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