Last updated: Sales performance management solutions: 5 challenges an SPM solves

Sales performance management solutions: 5 challenges an SPM solves


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Summer in the US means watering the lawn, flowerpots and garden beds – something I sorely disliked when I was in high school. I recall dragging out the hose, hooking up the sprinklers, turning the water on, moving said sprinkler until I ran out of hose and had to move everything again, only for the hose to get kinked up. Upon purchasing my first home, one of the first improvement projects was a sprinkler system – no more hoses or manual sprinkling – only to find I missed a spot and lost several plants. I could use that time for other things, like weeding and feeding. Then came the smart sprinkler. I still don’t have one, meaning I’m inefficient with water use, and my neighbor’s yard always looks better. What does any of this have to do with sales performance management solutions? Stick with me.

Like my yard compared to my neighbor’s, organizations that continue to leverage their home grown or manual incentive payment solutions are inefficiently “watering” their incentive program. They’re also at a disadvantage to competitors who have adopted a purpose-built sales performance management solution.

Without one, these organizations are often surprised by higher than expected payouts or plans that didn’t meet expectations, impeding the organization’s ability to maximize its revenue potential and meet other goals. There are a myriad of root causes behind unexpected sales incentive outcomes, and many of them drive organizations to seek a purpose-built solution to solve these challenges. We’ll explore several of them below.

Sales performance management solutions: 5 business challenges that an SPM solves

  1. Regulatory and compliance: One compelling area is compliance, whether policy, audit, or regulatory – it’s easy for home-grown solutions to become non-compliant. Typical scenarios include significant findings in an internal audit or a Sarbanes/Oxley risk that the company must resolve.Legal claims from sellers or gaps in the compensation policy may also result in payments that could have been avoided if the right controls and solutions were in place. Finally, new regulations impact how organizations must treat incentive pay and those in the program.These regulations can differ country to country, by state, or province, and the solution must help businesses achieve compliance simply and efficiently. Sales performance management solutions offer many ways to maintain compliance, including pervasive effective dating, efficient management of personally identifiable information, and other data that’s considered regulated or within the control of other corporate policies.
  2. Insights into compensation spend and performance: Sales performance data are some of the most complete and highly interrogated in an organization. Leveraging that data to understand past, current and projected performance, optimize plans, coverage and quota has become an expectation for every comp admin team. It’s much more difficult to get to desired insights with home-grown systems or manual solutions.Sales leaders and their sales operations counterparts must be able to offer analyses into how spend is driving results and whether the results are aligned with expectations. Understanding coverage and quota inadequacies before it’s too late to affect the performance period outcomes is critical.Modern sales performance management solutions offer artificial intelligence that recommend changes, models those changes before making them and then enables users to target the desired changes when needed. With market disruption, this ability allows an organization to react quickly and maintain performance as well as sales experience, without breaking the bank.
  3. Business maturity and complexity: Often businesses that have outgrown their current sales comp design want to mature their plans, but processes and tools hold them back. Manual solutions don’t lend themselves to complex eligibility or crediting rules: ensuring effective dates are accurate across the board is next to impossible for large sales teams. (Perhaps an org had commissions calculations which no longer represent their goals).Introducing quotas, assigned territories, and rules of engagement drives further complexities.

    A sales performance management solution should maintain capability with market trends, enabling an organization to adapt while maturing and ultimately keep their solution for the long run.

    Sales role differentiation, adoption of omnichannel selling, and changing to subscription-based revenue models, amongst others, all have impacts on the maturity of compensation plan design, quota, and coverage, and must be manageable and compliant. Home-grown solutions may need big investments and only enable the “today”, while the org intends to keep growing and may need more maturity or complexity in their future plans.
  4. Time to market: Every year, organizations start their planning cycles again. Once sales compensation plans are designed, territories are aligned, and quotas set, salespeople need to understand their goals, as soon as possible. Results are directly impacted by how long it takes to deliver this information. In addition, organizations need to know who agreed to their plans and who didn’t.Completing the planning cycle, releasing plans, and tracking the completeness of the process is incredibly difficult with a manual solution, and only slightly better with something developed in-house. It can take a very long time to get the information into the hands of reps, and during that time opportunity is lost. In addition, the market might be disrupted during the performance period and changes necessary.Making these changes must take as little time as possible, along with tracking who accepted the changes. Finally, plan information should be communicated in as simple as manner as possible, making it easy for reps to understand their plan, quotas, and assignments. With a sales performance management solution, these things are possible for both reps and comp admins.
  5. Trust and transparency: Effective SPM includes the assurances sellers need to achieve their goals: their work is accurately recognized with both crediting and payments. A positive sales experience is required to keep a key strategic asset – salespeople.Sellers that don’t trust the process or their pay are at higher risk of attrition and lodge disputes that are the likely result of shadow accounting – the act of trying to determine what they think their pay should be on their own.

    Attrition is expensive, from onboarding costs to lost opportunity, and disputes and shadow accounting wastes valuable time that reps could be spending generating revenue and fostering positive customer relationships.

    Manual solutions often offer infrequent crediting and payment updates with limited details, eroding the trust sellers need to assure they’re accurately paid. SPM solutions enable more frequent credit and pay updates, as well as visibility into the details behind credits and payments. Making this information visually available – including via mobile – allows sellers to quickly assess current and potential performance, where and when they work.

Better outcomes, great CX, happier employees: Welcome to SPM

There are many reasons to seek a sales performance management solution. It may start out with one or two big reasons, like compliance and better target setting. The art of the possible is quickly understood as the organization looks deeper into what sales performance management solutions can and should deliver.

Offering a positive sales experience can be a key component to attracting and keeping top sales talent – something these solutions deliver. Organizations that leverage a purpose-built solution rely on the provider to continuously innovate in ways that support new compensation strategies and requirements.

Properly “watering” the sales performance management process, and those that benefit from it, with the right solution can provide higher yields and fruits of their labor.

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