What is modern-day sales performance management?
Sales leadership has become unenviably complex. A number of conflicting and converging factors have combined in recent years, coercing sales leaders into having to reconsider their strategy for managing and improving the performance of their teams.
Many believe technology is at the centre of the complexity, and indeed, statistics seem to back this up. A 2015 study from Sales for Life found that 57% of a customer’s buying decision is now completed online before they are “willing” to talk to a sales rep, while 77% of B2B buyers don’t ever talk to a salesperson until after they have performed independent research into a product or service.
Added to this, 71% of prospects trust user-generated reviews on sites like TripAdvisor more than a salesperson in making a purchasing decision, while 72% use social media to research a company or product before making a purchase.
However, the upshot of the increasing use of technology on the consumer side is that more and more data is becoming available on the business side, and this is leading to a steady increase in those analysing and gleaning insight from information gathered earlier and earlier in the purchasing journey.
(APS/ Loudhouse: Putting Context at the Center of Sales Success)
According to the 2015 State of Sales report, there’s a 58% increase in planned sales analytics use from 2015 through 2016.Technology is undeniably a key vehicle in making people more productive, but according to Andrew Hough, director of the Association of Professional Sales, it can now regularly lead both customer and sales leader into losing sight of what’s required to enable a transaction.
“If you’re a sales leader you can share information, develop proposals, research clients more efficiently with technology. But the amount of data available is driving customers to believe they have more capability to meet their requirements through products and services. It’s in essence creating a ‘marketing war’; marketers are combatting the trends by putting every bit of information about a product or service up on a company website and customers now have about 60% of the knowledge they need on a purchase before they get to speaking to a salesperson.
“This has led to many companies thinking they need fewer salespeople, but the reality is, because the information is out there and customers are making decisions on their own, they’re not actually doing true discovery of what their problems are and the things that need solving.”
As a result, Forrester research says that around 53% of all buying processes end in no purchasing decision. This indecision has led some experts to state that, contrary to the current trends in automation (a 2015 BBC study stated that frontline sales roles face a 99% chance of being automated within the next 20 years), businesses should be investing more time developing more salespeople. That’s not to say technology shouldn’t play a part; but many believe it requires a happy medium of combining technology with more effective P2P training.
“The role of the sales leader should be assisting a sales team in identifying the opportunities that are not always obvious,” says Vernon Bubb, EMEA head of enterprise sales solutions for LinkedIn.
“Which accounts are the best fit for our products and services? Who within those accounts are most applicable for influence? 95% of people don’t answer or return cold calls. On average there’s 5.4 decision-makers involved in any B2B sale. Salespeople need to influence more people than they did in the past, but in an environment where people rarely take calls anymore. So, as a profession we have to rethink what we do day-to-day.”
How to lead fresh thinkers
According to Brent Adamson, Matthew Dixon and Nicholas Toman’s 2012 Harvard Business Review article ‘The End of Solution Sales’, this rethink has been underway for some time, especially in B2B sales, where leading reps undertake very different tasks to the traditional salesperson, including:
- Evaluating prospects according to criteria different from those used by other reps, “targeting agile organisations in a state of flux” rather than ones with a clear understanding of their needs.
- Seeking out a very different set of stakeholders, preferring sceptical “change agents” over friendly informants.
- Coaching those change agents on how to buy, instead of “quizzing them about their company’s purchasing process”.
But how does a sales leader set about coaching this type of approach in their team members? It’s no easy task. As stated in the Loudhouse Association of Professional Sales report, Putting Context at the Center of Sales Success, sales leaders have a “formidable to-do list”. Surveying 1,000 sales directors in the UK, it was found that top priorities for 2016 included raising productivity (73%), capturing new accounts (74%) and optimising lead generation (67%). But added to this, companies were also trying to simplify processes (72%), reduce the cost of sales (65%) and upskill reps (62%).
Andrew Hough states sales leaders should hone in on dividing their time into two areas:
- Enabling performance, support and coaching.
- Assessing how salespeople are moving through their sales funnel, assessing what causes a breakdown through the steps.
“The sales manager’s job is to try and bring a team of individuals who are compensated individually in the main, together, to share best practices and discuss commonalities their customers have to figure out how they can work better as a team,” he says. “But yet they still have their own accounts. So the reality of the situation is that if, as a manager, you can map out the steps in the sales cycle, and how you engage with customers, where and why, you can decide which of your salespeople are getting in earliest, setting the table with customers and avoiding the negative side of technology that we’ve already alluded to, in terms of the percentage of failed decisions.
The role of the sales leader should be assisting a sales team in identifying the opportunities that are not always obvious
“From that perspective, what you’re trying to pull out from each of the processes is, how are salespeople getting in to physically speak to the customer? And then as a result, are they taking this to a next level of co-creation?”
These aspects combine to create the need for sales leaders to map out their sales performance management strategy. And invariably, this is being driven by a need to apply more fitting metrics that weren’t possible before the advent of CRM systems, sales analytics and even social media.
“There’s more access to leading rather than lagging indicators of success,” says Vernon Bubb. “A lagging indicator of success is whether a salesperson hits their target or makes a sale. In the past, the leading indicators would be – how many phone calls did the person make; how many emails did they send; how many client meetings did they go to? But there’s not great correlation between the activity and the outcome.
“That’s why sales performance management was always so [historically] difficult – because it was very hard to predict who were ‘good’ salespeople. Now with analytics, and tools like Sales Navigator and the LinkedIn Social Selling Index, it’s possible to pinpoint – which of your salespeople are doing the most searches; which are connecting to the most customers; which are connecting to the most relevant influencers. These are much better leading indicators for whether a salesperson will be successful.”
Gleanster benchmarking research says one of the positive byproducts of new sales performance management is that actually, traditional sales operations metrics such as revenue, average deal size, reps achieving quota, and win ratios can still be gleaned from start to finish in the sales cycle. But this is wholly reliant on the technology being used properly.
“Some of the benefits of SPM do not align with tangible organisational goals, but rather job satisfaction. The biggest barrier to sales technology adoption from sales reps is the tool usability and the extent to which the technology is considered to be an intrusive “check the box for management” part of the rep’s day-to-day job,” the research states.
“SPM tools have two intangible benefits that can be difficult to measure but deliver a powerful boost to the return on investment. First, the tools help do away with cumbersome and manual spreadsheet processes that may be perceived as time consuming and inefficient by reps. Second, the tools help increase adoption of CRM because reps can model and forecast their compensation or get updates on the latest incentives from within CRM.”
So, in essence, a leader’s role around sales performance management is as much about convincing team members that they’re not being overly-investigated through the course of a sale, and to enstill a trust that analysis is being done to help improve performance through a buying cycle, as opposed to penalising salespeople for failing at any given stage.
“Savvy salespeople know how to work these systems to avoid overbearing levels of inspection,” adds Andrew Hough. “So what you need to do is have the proximity, but stress-test what comes out of your performance management systems in the real-time of what’s going on with your salespeople. And then you’re coaching your people to try and find the gaps in their deals and then you can take the intervention that’s required.
“The core tenant of sales performance management hasn’t changed. I would proffer a warning to leaders that the information coming in is something they can only rely on to some degree.”
Sales leaders must find a balance between their using technology to understand performance earlier in the sales cycle, and coaching performance based on a different set of skills in their team than the tradition.
Sales performance management remains vital to organisations, however. InsightSquared states that “over 81% of sales reps achieve their annual quota at companies that emphasise SPM”, while lagging companies typically see only 25% of their reps achieve these quota goals.
Gleanster also states that 84% of what they define as ‘Top Performers’ in sales have a 5 year roadmap for sales performance management investments. What’s involved in creating and delivering that roadmap will be a subject MyCustomer will aim to demystify in more granular detail over the coming weeks.
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Chris is Editor of MyCustomer. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News. He joined MyCustomer in 2014.