Sales Performance Management Best Practices
A few years back I was attending a session at the Staffing Industry Analysts Executive Forum. The speaker made the comment “in the staffing industry we’re too quick to hire and too slow to fire.” That quickly struck a chord with me. I thought to myself, “that is 100% spot on.” I have been guilty of it and I know many if not most of my peers have been guilty of this as well. Yet, isn’t it common sense that when you have a rep who is under performing, you put them on a PIP and either they make it or they’re managed out?
So why is it so challenging to manage sales professionals? If you think about it, the role of the sales professional and the performance metrics they’re measured by are crystal clear. It boils down to, “did you hit your number?” Every sales person goes into the office each morning knowing exactly where they stand. Or don’t they? Let’s take a look at sales performance management best practices and how you can get the most out of your sales team.
What is Sales Performance Management?
Sales performance management (SPM) is the overall practice and process of developing sales reps so that they can improve their sales effectiveness and achieve their goals and objectives. Some of the key components of SPM include new hire on-boarding, goal setting, quota and sales funnel management including regular performance reviews, incentive and compensation, sales forecasting, activity management, coaching, training and motivating the sales rep as well as holding reps accountable to performance outcomes. SPM is about driving the desired sales behaviors that produce the expected outcomes (goals). The key of course is tying this all together. Let's examine how top performing sales organizations use SPM to drive business results and improve sales effectiveness.
Common Attributes Among Top Sales Performers
Best in class sales performance management organizations figure out what the common attributes are across their top performers. They figure out which behaviors are associated with their most successful sales people and they institutionalize that behavior and build methodologies to mold their new sales reps around those behaviors which enable them to quickly “ramp up” new hires and develop existing sales reps. On the other hand, laggard organizations, who fail to do this, are made up of individual sales reps, each of which sells according to their personal style and comfort zone. These organizations typically get 80% or more of their revenue from their top few reps while 60-80% of the reps are average performers and the rest are underperforming. The bigger issue however is these organizations don’t understand the common behaviors shared between their top reps and therefore can’t replicate the behavior. This is one of the major reasons why many small but growing organizations struggle to their scale their business. They don’t know what to replicate.
Formal & Structured Performance Reviews
Sales leaders who practice best in class sales performance management consistently deploy a formal and structured performance review and feedback process with their sales reps. These sales leaders have a clearly defined set of performance metrics and criteria that the rep is evaluated on. Keep in mind that this process goes well beyond the simple and all too common conversation of “you need to increase your activity.” Instead, they nurture and develop their talent through active coaching and positive reinforcement vs. simply “managing with the stick” (or the carrot for that matter). Best in class organizations also measure their sales reps against both quantitative and qualitative goals. In fact, a recent Aberdeen Group study showed that 60% of best in class companies have terminated sales reps that were over quota for non-performance issues such as behavior or lack of team work. In short, best in class companies are willing to fire high-performing jerks. Average organizations were only willing to do this 46% of the time and laggard organizations 40%. Are you willing to fire a high-performing jerk?
Leaders Provide Positive and Public Recognition
Those who practice and lead best in class sales performance management are also much more actively engaged in publicly supporting the success of their sales teams than those leading underperforming sales teams. Elite sales organizations are 33% more likely than all other organizations to objectively conduct win/loss analysis on completed sales deals-often leveraging a third party consultant for the objective feedback. This proves that best in class sales organizations are far more willing to face reality including constructive criticism in order to figure out how to replicate success.
Centralized Repository of Sales Assets
DemandGen conducted a study (Breaking Out of the Funnel) of 103 executive buyers who purchase B2B products and solutions and 95% of the respondents said the solution provider they chose “provided them ample content to help them navigate through each stage of the buying process.” Acting in kind, best in class sales organizations are aligning sales, marketing and sales operations in order to create and make available best practices, sales assets, sales playbooks and experts for sales people on a just in time basis. New technology is begining to emerge where sales organizations are now embedding their sales process, methodology and sales assets into their CRM or ATS tool to empower their sales people to execute best practices across each stage of the sales cycle. In fact, I'm in the middle of a building a software product now that will do just that (more information to follow in the coming weeks). The old days where sales cultures where indicative of individual sales reps “hording information” are quickly being replaced by millennia’s where sharing information and generating content is part of their core. And if we have learned anything from both the research and actual buyer behavior, sales professionals need quick and easy access to a centralized repository (ideally within their CRM/ATS) to the right sales assets in order to engage in a meaningful conversation with a customer.
New Hire On-Boarding Program
Sales organizations that commonly send their sales reps to Presidents Club are far more likely to have a formalized new hire on-boarding program for new sales reps than those who don’t. The more efficiently and effectively you can get new sales reps to adjust and adopt your cultural norms and performance expectations and learn the knowledge, attitudes, skills and behaviors to be successful the quicker you will see productivity. But on-boarding is not just about “quickly ramping up new reps.” It’s also about building your brand and employee retention. If on their first day of employment your new sales rep has to fill out fifteen different forms, and doesn’t have a computer or email set up, that leaves a bad taste and sends a bad message. A new hire on-boarding program is also not a one day or week event, but a process that starts during the interview process and may continue for the first 180 days of employment or more. The degree to which organizations can make their new hires feel welcomed into the organization and prepared for their new job, the faster they will acclimate and contribute to the overall success of the organization. Best in class organizations excel at this.
Sales Dashboards & Analytics
The relevance of sales performance dashboards should be obvious to any sales leader and any sales organization. Yet in my experience, encountering sales dashboards among IT staffing firms is not the norm but the exception. Most if not all CRM and ATS providers now offer visually appealing graphics and metrics that display the answers to the most basic questions such as “Am I going to hit my number,” and “during which stage(s) of the sales cycle do my reps need performance coaching?” Not surprisingly, the sales organizations and sales reps possessing easy access to this information are more successful than those who don’t. Sales organizations leveraging customized sales reporting including sales funnel analysis, win/lost analysis, and sales forecasting can also more effectively coach and develop their sales reps. Those who don’t are faced with the difficult task of making important business decisions based off subjective data where they rely exclusively on their “gut.”
As you can see, sales performance management is much more than simply assigning a quota, providing "shadow training," and giving a rep a phone and company brochure. Best in class sales performance management is about incenting, motivating, and coaching sales reps. It's also about arming those on the "front lines" with the sales assets that they need in order to successfully execute each step of the sales cycle. Lastly, SPM includes replicating & rewarding the desired sales behavior and leveraging data for making informed decisions around pipeline management, sales forecasting and quota management. Sales reps, managers and owners achieve far greater success in terms of quota attainment, retention and sustainable growth when they apply these practices.
To learn more about performance management including sales coaching and how to hold team members accountable through coaching and empowerment, download our eBook, How to Create a Coaching Culture.