You set targets for your sales organization and rely on all your team members to work together to hit them. But with so many moving parts at play, you need a reliable way to monitor sales activities, analyze results, and create action plans to increase performance. Enter sales performance management (SPM).

In this article, we’ll walk through how to set up a sales performance management process, tools you can use to save time, and tips for helping your team succeed.

What you’ll learn:

• What is sales performance management?
• Why is sales performance management important?
• Key components of sales performance management
• 4 tips for better sales performance management
• What to look for in sales performance management software

What is sales performance management (SPM)?

Sales performance management (SPM) is a process that helps sales organizations track, manage, and improve the work of their sales teams. This includes everything from forecasting to implementing training programs, monitoring activities, quota management, and incentive planning.

SPM focuses on guiding sales reps toward achieving company goals. It measures things like how well a team performs against targets, sales velocity, and sales cycle length.

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Why is sales performance management important?

Sales performance management is important because it supports your sales team’s overall strategy. At the center of that is efficiency; it aims to streamline and automate simpler tasks so sales reps can focus on selling and leadership can focus on improving business strategies.

I’ve seen SPM used to optimize a salesperson’s daily workflow, helping them get in front of customers more often and boosting sales opportunities. It can also help determine why certain sales reps are closing deals and others aren’t.

Maximizing impact is the new sales mantra, according to State of Sales research. Part of that is creating a more efficient sales team. A solid SPM strategy can help you:

• Fine-tune sales forecasts: Accurate forecasts require regular data analysis. When you have a deep understanding of the trends and patterns of your past sales performance, it becomes quicker and easier to forecast and budget resources.
• Align sales strategies with KPIs: Analyzing key metrics — like conversion rates, customer satisfaction, and churn rate — gives leaders a better view of sales performance. They can then develop strategies to address weaker areas and improve overall sales efficiency and effectiveness.
• Optimize sales processes: Data can point to which sales process steps take the most time or haven’t produced strong results so you can examine why. It may reveal certain knowledge gaps you can address with coaching as well as which workflow functions you can automate for higher productivity.

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Key components of sales performance management

A sales performance management strategy is like a puzzle. Each piece is unique and plays a specific role. But when you put them all together in the right way, these individual pieces create a unified vision. It can show your team what success looks like.

Here are the key components to think about:

Sales planning

A sales plan helps reps understand company objectives and gives them a roadmap for meeting them. This includes an outline of target customers, potential obstacles, and revenue goals.

Your team’s efficiency relies heavily making sure each rep is making the most of their skills, native talent, and experience, which is why sales territory planning is key. Territory planning matches your reps with the territories and customers they’re best suited and gives them strategies for closing more deals based on data — market trends, sales forecasts, and more.

For example, if your goal is new customer acquisition for a specific territory, you might plan to refresh lead nurturing sequences, expand partnerships in the area, offer special promotions, or host events to capture more new leads.

Sales compensation and incentives

To help keep reps motivated to meet the goals you set for them, you can implement various commission structures and bonuses. These monetary rewards help you recognize top performers and set the bar for success.

When your team needs an extra boost to achieve a specific goal or meet quota, incentive compensation plans — especially SPIFFs (Sales Performance Incentive Funds) — are a good option. Beyond increasing sales, they can strengthen morale and encourage teams to hit short-term goals by providing extra compensation beyond their base salary.

Quota management is also a critical part of SPM. It involves setting, tracking, and achieving specific sales goals over certain time periods. Done well, it helps keep reps motivated and rewards those who reach their goals. Effective sales quotas are realistic, data-backed, and aligned with company goals.

Sales training and coaching

To empower sales teams to hit quota, you need to ensure they have the training and coaching necessary to do their jobs. This isn’t just onboarding; this involves ongoing support from sales managers, call coaching, and continuing education on best practices and the latest sales techniques. (Read more about this in our article on sales enablement.)

Sales insights and strategies

The focus here is on what you sell and how much of it you can and will sell. It includes things like pipeline management, price setting, and go-to-market strategies — all of which rely heavily on data.

Your SPM strategy should be fluid, adaptable, and backed by data. You must regularly analyze your performance against your goals. If the results are falling short, dig into why and modify your strategy accordingly. Look at how your products, territories, customer segments, and teams perform to decide where you’re doing well and where you could improve. Then, decide what tactics to apply in weaker areas for better results.

For example, if you see that one of your products or services is underperforming compared with others, look into possible causes by reviewing deal data and insights stored in your CRM. Perhaps you need to adjust your pricing strategy or certain sales call techniques to address the problem.

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4 tips for better sales performance management

Sales performance management is ultimately about helping your team meet the goals of the business. Here are a few tips to set them up for success:

1. Be transparent with your team: When changing your strategy or shifting direction, communicate with your team. Explain the new targets and how you plan to meet them and be clear about what success looks like so everyone understands how they fit into the bigger picture. Make sure your reps have access to the data they need to be successful, such as tracking their progress toward meeting quotas.
2. Set high and attainable goals: Use data insights — past performance, market trends, and sales forecasts — to set realistic goals you feel confident your reps can meet. When reps feel capable of meeting goals, chances for success are much higher than if they don’t. Attainable goals not only help keep your organization moving forward, but they also contribute to positive morale.
3. Test, learn, and adapt: Learn from the past with sales analysis. By pinpointing what’s working and what’s not, you can see where opportunities exist to adjust sales strategies, improve onboarding processes, develop coaching plans, and increase overall sales performance across your organization.
4. Reward high performance: Rewarding high performance is a great way to keep your teams motivated, productive, and closing more deals. Recognizing achievements is not only a good way to promote employee retention, but it can also be a great way to set expectations and create examples of what success looks like.

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What to look for in sales performance management software

When choosing SPM software, you want a solution to help you become more efficient, productive, and effective at selling and meeting your sales targets. Let’s break down a few key features of Sales Cloud’s sales performance management software to show how it can help you do this:

• Automated plans and workflows: This feature allows you to build incentive compensation plans quickly and easily as well as streamline and automate complex commission workflows. You can also automate tedious manual processes — like admin tasks — so your team is free to focus on selling.
• Real-time reporting and dashboards: Create intuitive reports and dashboards in minutes and align organizational priorities to seller motivations. Empower your reps with visibility into commission trends, performance data, personalized analytics, and commission statements. These allow reps to track their progress toward goals and view potential earnings within the platform.
• Intelligent territory assignments: Designate and assign territories to the best-suited reps and allocate resources more efficiently with data insights and automation. Align your accounts, reps, and territories to business priorities and resources. Then, publish assignments within the platform when the plan is finished. You can also visualize your territory plan holistically and make adjustments based on forecasts to ensure maximum impact.

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Improve your sales performance management process for better results

Sales performance management is an essential piece of the puzzle for sales organizations. From setting expectations and implementing incentive programs to tracking progress and holding teams accountable, SPM helps you stay competitive and reach your targets. While creating an effective sales performance management plan takes time and effort, it’s crucial for your organization to thrive.