Sales Performance Management: It's More than Just Compensation
OREANDA-NEWS. November 10, 2015. Sales performance management has typically been categorized as being about compensation management, which is quickly changing with a variety of software tools to improve day-to-day execution of the sales process. With 42 percent of sales people missing quota, and sales people spending only 35 percent of their day actually selling, according to CSO Insights, there is a burning issue with sales productivity that needs to be addressed.
If you zoom backwards in time to the old way of selling and managing salespeople, there was very little technology to help enable a sales team. There was no way to know how many client conversations a salesperson was having, how many opportunities were being created, how many opportunities had progressed to a key stage of the sales process, or the mass amounts of other metrics that can be analyzed today. And if you do have this data, how do you know what’s good so you can set goals and measures so salespeople know what is expected of them and what they need to put them on the path to hitting their sales goals?
When I think about effectively managing the performance of salespeople, I like to think of the selling clock. Every salesperson, whether they are a top performer, a middle performer, or are struggling at the bottom, they’re all working a 40 to 50-hour work week. But how are they spending their time? Are they really spending their time on what matters? We all know that salesperson who always looks busy and active, but for some reason can’t seem to get anything closed.
The real success is managing sales performance is going to be enabling your salespeople to know where they need to be spending their time to be successful, and having the visibility to know if they are continually spending their time on what matters. Sales results will be the output of those day-to-day decision on how to spend your time.
I love to use the analogy of having a healthy lifestyle. We all know exactly what we need to do, but don’t always do it. Think of what Fitbit has done to help enable people to be more healthy. They didn’t crack the code on what it takes to be healthy. They didn’t even invent the ability to track your activity. What they did was create a highly engaging, continuous feedback loop on the behaviors and activities that lead to a healthy lifestyle. Most people want to be healthy - and there are plenty of rewards for it including active time with your family, feeling good about yourself, feeling good about how you look, lower medical bills, etc. So the incentive on the end result is there, but too often the discipline around what leads to that result are missing. Sound familiar? Re-read that last sentence and you’ll see — the same thing can be said about sales.
A good salesperson lives and breathes a bit differently than most: There’s a certain focus they possess, and they’ve decided to choose a career of ultimate accountability where generally half of their income is determined by their performance. That focus drives them to do as much as they can to close a sale, but also results in getting so focused on the end result that they lose sight of doing what matters day-in-and-day-out. Ever finish a quarter strong and felt great about yourself and then took a gander at next quarter’s pipeline and got a punch in the gut? While sales performance management used to be mostly about just commission and compensation, today it needs to change to a more holistic view of how salespeople spend their time.
So the obvious question becomes, “So what should salespeople focus on day-to-day?” This is going to be unique to every company, as well as different roles within your sales organization. For example, if you have an inside sales team, the way they spend their time is going to be quite different than a field sales team working on big deals with longer sales cycles. However, every salesperson works their customers and prospects through a sales funnel. The labels and definitions of each stage of that funnel, as well as the time it takes to get through each stage will be just be different.
As a directional starting point, here’s a common flow of of the steps of the sales process — all of which you want happening every day versus in peaks and valley quarter-to-quarter:
- Prospecting – Email, phone, via social media, networking, asking for referrals
- Conversations – Phone conversation, email interaction, coffee meetings, or even running into someone at a kids sporting event
- Meaningful conversations – a quality discussion with the right contact
- Creating opportunities – creating a qualified opportunity
- Advancing opportunities – advancing those opportunities through key milestones of the sales process
- Closing – final steps of negotiating and winning business
- Onboarding – ensuring the client is setup for success
By no means is this an exhaustive list of what a salesperson does, but it’s a good view of the many steps within the sales process and how a salesperson spends their time. There are seven items on this list, but just one of them is “closing.” If that’s the case, why do salespeople and managers spend so much of their energy managing around closing? What about everything else on that list? How do you define “good” for those other activities? How do you know if you are on track or behind?
If sales leaders effectively managed around sales performance, more time would be spent on:
- Examining the conversation-to-win rate
- Ensuring your salespeople are having meaningful conversations with VP-level prospects
- Looking at which team members are better at prospecting and identifying mentoring opportunities
- Moving opportunities through the key milestones of the sales process
Closing will always be the ultimate measure, and is how salespeople should be paid. However, when you can get your salespeople focusing on the behaviors and activities that will lead them there, the results shine through.