Sales performance management
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Sales performance management (SPM) solutions provide executives and sales management with a clear view of critical sales data, such as what products were sold where, by whom and to whom, that enable quick and informed course correction to ensure the alignment of sales strategies to desired business outcomes.
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[edit] Difference between ICM and SPM
Incentive Compensation Management (ICM), focuses on the processes of collecting relevant sales transaction data, and all the supporting information required in order to calculate Sales Incentives. The output of the Incentive Compensation Management process is generally an extract file that can be processed by payroll. There is typically some management and operational reports that also part of an ICM implementation. Sales Performance Management is broader in scope. IT includes all the ICM functionality but also supports the broader topics of driving sales alignment. Quota Planning, Territory Management, Sales Analytics, modeling, reporting and planning are part of Sales Performance Management.
The goals of SPM are often to give management the ability to align incentives with corporate goals and effectively administer even the most complex compensation plans. SPM solutions extend ICM to give sales executives the ability to manage their sales investment as they would an investment portfolio. This includes the ability to strategically plan, optimize and measure sales compensation strategies and key program components such as compensation plans, bonuses, quotas, territory assignments and headcount to enhance sales performance and profitability.
[edit] SPM in the context of software applications
EIM, customer relationship management (CRM), human capital management (HCM), Sales force automation (SFA) and SPM solutions address important, but different, business functions. CRM, HCM and SFA systems typically don’t do any transactional processing of data and don’t contain data that pertains to closed sales deals. Also, CRM data is largely input by sales and services representatives, so it is not considered a system of record in terms of auditable results. ERP systems address transactional and mission-critical business areas, but those that don’t require the flexibility of SPM systems, since they are tightly controlled by laws and regulations.
SPM systems use data from other source applications from ERP, CRM and HCM systems. Common examples of ERP, CRM and HCM data used by SPM systems are transactional feeds from Order Management, new hire feeds from HRMS, and feeds out to Payroll and Accounts Payables modules.
What is Sales Performance Management?
Sales Performance Management has many different and broad definitions. From a software perspective, Sales Performance Management (SPM) is defined as a comprehensive solution that helps organizations drive sales alignment from strategy through to execution, while improving efficiency, accuracy and timeliness of the associated administrative processes. Sales Performance Management supports the business processes of Territory Management, Quota Planning, Incentive Compensation Management and Roster/Channel Management.
Implementing a Sales Performance Management solution ultimately leads to better management and utilization of sales resources.
Sales Performance management is about putting timely and accurate data in the hands of decision makers in order to aid them in making more informed decisions. Who sold what products at what price last month? What are our top selling products by region? Are commissions payouts in-line with expectations? Are my territories all covered effectively? How many reps are over 70% of quota and now on accelerators? These are just some of the questions that sales management ask every day. In most organizations there is no simple, consistent and accurate way to get the answers to those questions. The ERP has some of the information. The CRM has some of the information. The HR system has some of the information. Much of the rest of data is in emails, spreadsheets and legacy systems. Analysts who are charged with finding out the answers to these questions generally resort to a combination of extract files, Microsoft Access and Excel to pull the data together to provide the answers. Often the resulting report or analysis is incomplete, late, and suspect in terms of accuracy. The burden of pulling it all together makes even the simplest of requests a daunting task. When it comes to managing, processing and reporting on territory assignments, plan eligibility, quota attainment and commissions calculations the process looks much the same.
Sales Performance Management (SPM) help organizations understand and improve the performance of their sales organization by offering a complete solution to manage incentive compensation, roster management, territories and quotas. Most common sales performance systems provide capabilities to:
· Integrate data from a variety of disparate source systems (commonly ERP, HR, CRM, spreadsheets and legacy systems.) This eliminates a lot of data duplication, expensive and error prone custom ETL routines, multiple and inconsistent version of the data.
· Calculate results – the ability to take all the input data, and then match source data with eligibility rules, territory assignments and the plan components to derive accurate commission calculations.
· Create custom reports – with an embedded reportwriter. These include the ability to capability to generate personalized and branded commission statements, operational and management reports and analysis.
· Automate workflow processes – to ensure that all operational aspects of the commission management process are documented and effectively executed.
· Provide complete audit trails - The ability to track all of the actions, data changes and resolutions involved in Sales Performance Management processes. This includes plan acceptance, dispute, inquiry and resolutions, calculation expectations etc.
Organizations looking to implement a Sales Performance Management System should look for the following benefits:
- Aligning sales resources to organizational goals and strategies - Providing timely, accurate and actionable sales information in order to improve decision making - Streamlining the administration of incentive compensation management processes in order to reduce errors, costs and time - Provide increased visibility into the compensation process for audit, compliance and management oversight
The definition of Sales Performance Management differs slightly depending upon the perspective and background of the individual or organization. I have included Sales Performance Management (SPM) definitions from a few of the more popular sources and experts below.
Ventana Research Ventana Research defines Sales Performance Management[1] as a coordinated and integrated set of sales-related activities, processes and systems that help organizations meet customer revenue goals and objectives. Only those sales organizations that integrate people and processes tightly with information and technology are able to maximize their effectiveness, from top management, through finance and operations to the sales representative on the front line.
Ventana believes that Sales performance management today remains more art than science. They also believe this must change. Advancing the maturity of sales and thus its effectiveness and contribution to company success requires not just improved processes but ensuring that the people associated with those processes are evolving to become the sales talent that represents the best of your company. One of the essential underpinnings of this evolution is complete access to information about sales activities and to the metrics that most significantly track the performance of the sales organization.
Gartner According to Michael Dunne, VP Research of Gartner, in his note - Introducing the Concept of Sales performance Management[2], SPM represents the next generation of best practices for sales. It establishes a strong foundation for improving sales execution. Use this concept to better organize sales territories, quotas and compensation plans to increase sales.
[edit] References
- Introducing the Concept of Sales Performance Management; Michael Dunne; Gartner, June 2006
- Predicts 2007: Diversity Persists in the CRM SFA Market; Michael Dunne, Gene Alvarez, Robert P. Desisto, Kimberly Collins, William Clark; Gartner; November 2006
