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Why sales performance management is so important?

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If there is one thing we have all realized this year, it is the need for flexibility. It is not the largest firms that survive in uncertain times, but rather those who are most positioned to adjust with the least amount of disturbance to their operations. As a result, the necessity for a sales performance management system is increasing as more organizations want to boost their agility, optimize their planning, and grow their income.

However, more than half of businesses are now transforming to sales performance management tracking and feel they are not advancing quickly enough. So what can companies do to assist speed adoption, or where should they begin if they haven’t already?

benefits of sales performance management

What is sales performance management?

Sales performance management process is a data-driven strategy for planning, managing, and analyzing sales performance at scale, generating revenue, and sustaining an enterprise’s industry leading position. It looks for an answer to a major question; how to improve sales? And it is rapidly becoming a vital tool for companies seeking to operate in today’s fast-paced industries.

Sales Performance Management (SPM) is the process of supervising and mentoring sales personnel in order for them to accomplish corporate goals and objectives. A thorough SPM process entails training, development, and evaluating an individual’s progress toward planning and setting their own objectives.

Sales performance management definition

Sales Performance Management (SPM) is a collection of interconnected, operationalized sales processes targeted at increasing a sales organization’s performance, productivity, and overall quality. SPM, at its most fundamental level, increases the operational effectiveness of B2B sales functions through digitization, standardization, and other techniques.

Historically, the term ” Sales Performance Management” has had a variety of connotations, frequently being used synonymously with “Incentive Compensation Management” (ICM). However, it is critical to understand that these two terms are not synonymous. ICM helps you to automate and enhance the management and procedures associated with incentive payments.

It is a critical component of the broader idea of SPM, which leverages data to optimize planning, streamline processes, and align partners across all of your sales operations, including capacity management, territory modeling, incentive structuring, and sales forecast.

Planning & Managing

Administration Of Compensation

Distribution & Execution

Why is Sales Performance Management important?

In a competitive market, the manner in which a business gets its products or services to market is just as critical as the products or services themselves. Even the finest products are rarely self-promoting, you need a solid strategy for improving sales performance. On the other hand, a strong sales staff, when combined with an effective sales performance management tool, can sell almost anything and accomplish their sales goals easily.

Recognizing this, the most productive sales managers reinvent not just the items they offer, but also the methods through which they sell. Sales executives may differentiate their companies from the competition by reinventing how they sell, regardless of the product or service they provide.

This is why SPM is critical: it enables sales executives to design sales strategies that span the whole sales cycle and have an influence on every aspect of the sales process. By effectively managing the different facets of the sales performance management process (incentive schemes, analytics, projections, and so on), sales executives may adopt innovative tactics and approaches that contribute to the success of their sales organizations.

SPM integrates inside sales activities such as sales planning and remuneration with outbound sales functions. Each division of the company has distinct objectives. For example, sales teams desire leaderboards, contests, and gamification in order to guarantee that they meet their targets. However, finance and sales departments desire a planning process that compensates sales representatives and increases business income.

1. Managing & Planning

Operational sales management (sales account planning) is a back-office activity that entails the creation, allocation, and sales territory management. Without an SPM system, businesses must rely on a variety of data sources, including CRM and financial systems.

Obviously, this is a time-consuming and error-prone procedure that results in territorial classifications depending on nation or zip code. Ineffective sales management styles such as unbalanced territories and excessive sales targets erode sales rep morale and contribute to attrition.

However, with a centralized and networked SPM system, the reverse occurs. Planners can develop optimum areas and quotas based on previous performance and integrated geographic data. This data-driven strategy enables them to create balanced territory and equitable quotas, which results in happier sales representatives and increased sales success. So, improved sales planning positions both individual sales team members and the company for success.

sales performance management functions

2. Administration Of Compensation

The process of designing and implementing sales compensation schemes is complex. Executives must strike the perfect balance – overpaying sales people can hurt the bottom line, while underpaying them might demotivate them. Similarly, basic strategies are easier to convey yet overlook harmful habits, but too complicated programs might be perplexing to sales representatives. The important thing is accurately analyzing the sales performance management data.

Without an SPM, sales managers are forced to develop a plethora of unique plans based on data from a variety of sources. And even when they are released, tracking sales performance metrics throughout the year can be challenging.

However, a single, integrated SPM system provides teams with a comprehensive, up-to-date view of sales compensation plan success. Management can immediately see which plan elements are incurring costs but not generating income. If necessary, administrators can reintroduce incentives, or accelerators to reintroduce sales.

3. Distribution And Execution

Sales distribution and execution are key elements of sales performance management that are contingent upon effective strategic planning. Consider the following:

  • How much time does your firm spend on planning and administering sales compensation plans?
  • Are your sales regions properly balanced and assigned?
  • Are quotas linked with realistic goals and supported by sales representatives?


If sales representatives are waiting for territory or questioning their sales quota goals, they are often not focused on selling, which implies they will have additional work later.

A sales performance management system with integrated review and approval procedures enables sales executives to engage with finance and sales operations to expedite the planning process. For instance, an experienced sales manager might identify external variables that may have an effect on a territory, which the planning teams can study and adapt as appropriate.

A SPM system helps a B2B company to make data-driven, educated decisions in order to achieve its sales and revenue targets.

sales performance management software

Sales performance management is not just a software

Certain sales performance management software vendors market their product or service as the quick cure for your issues. The fact is that technology is only an instrument, and the instrument is only as valuable as the strategy and procedures it is applied to inside your business and organizational structure.

Therefore, using a sales performance management software will not magically boost your sales. First, you need to understand the significance of sales performance analytics. Then, you can research the best sales performance management solutions, and choose one of them for your organization.

The benefits of the Sales Performance Management

By using a methodical sales performance management approach, you may increase the effectiveness of your team. You can anticipate the following:

More effective sales pipeline

As sales representatives develop their abilities and become more aligned with your strategy and processes, their pipeline will reflect these changes. You will see the effects in the yearly sales performance metrics.

Qualified prospects

The same variables that boost sales pipelines also boost the quality of the prospects contained inside them. Reliable sales data improves the quality of your prospective customers and helps you to reach your sales goals.

Enhanced sales analytics

The correct approach, when combined with the appropriate technology, enables the identification of crucial leading and lagging indicators and key performance indicators (KPIs) and their proactive tracking.

Accurate prediction

By using a complete sales performance management system, you will be able to get valuable insights. With the appropriate insights, you can more accurately forecast quarterly revenue.

effective strategy

Improved Sales Territory Management

Many sales organizations trust sales performance management today. A thorough SPM system teaches your team what works in certain areas, allowing you to more efficiently allocate representatives and oversee their performance.

Improved ROI (Return on Investment)

When your whole sales system is aligned with your plan and processes, you can focus your training efforts on providing the best support possible for your employees.

Increased Profit Margins

Along with increased win rates, a completely aligned SPM system will assist your salespeople in creating value and promoting the appropriate solutions to the right clients, resulting in increased sales margins.

Successful sales performance management enables organizations to continuously outperform their competitors. To manage your team members’ sales performance successfully and help in their growth, you must take a comprehensive strategy and empower your sales team’s most essential players—your sales managers.

Final words on sales performance management

For sales executives wanting to gain an advantage over their competitors, the ability to do sales planning and modeling using predictive analytics is critical. Without sales performance management, executives have a tough time testing future situations and determining which courses of action would be most effective.

With sales performance management, company executives may plan what to do in a variety of scenarios for effectively driving sales performance.