Selling with Data #43 - Why seller performance management matters and how to do it right

Seller performance management has changed but not all sales leaders and organizations have kept up.

Some sellers and sales leaders cringe when they hear the words seller performance management. The negative reaction comes from sales leaders not managing the productivity of their own teams forcing executive leadership to take actions to improve sales productivity by stack ranking sellers and mandating actions. It doesn't have to be like this. Best in class companies, and top sales leaders, use sales performance management as an active process of feedback and development for their sales teams.

Let’s unpack this by first clarifying the difference between seller performance and seller performance management (SPM).

Sales performance is the performance of your sales representatives in relation to their ability to meet or exceed your company's revenue targets. As the name suggests, sales performance is a measure of how your sales professionals perform. Sales performance is measured over a specific period of time, often monthly, quarterly or annually, using KPIs that reflect the responsibilities of the salespeople against their goals.

SPM is a defined market category that includes incentive compensation management (ICM), territory management (TM) and quota management (QM). SPM allows companies to monitor and manage sales performance, with the aim of giving sellers the skills, knowledge and resources they need to hit, and ideally exceed, their sales targets.

Sales performance is the measure of how well sales representatives meet or exceed their quota. SPM is a market category.

Spotio says "Companies that haven't embraced SPM typically see only 25% of their reps achieve their sales quota goals. In contrast, over 81% of sales reps achieve their annual quota at companies that apply SPM."

Examples of companies that do Sales Performance Management well

As I researched this article, I found great use cases of companies like Microsoft, Adobe, IBM, Google, and others that have updated their SPM.

I especially liked this Adobe example.

Ten years ago, Donna Morris, then Senior Vice President of People's Resources at Adobe, identified the annual performance review process as complex, bureaucratic, and time-consuming. As a solution, Adobe eliminated stack ranking and annual performance reviews and replaced them with a frequent check-in system. This new system enables managers and employees to discuss goals and performance regularly. Adobe claims that since adopting check-ins, they have seen better results. As managers and underperforming employees started to talk more often, Adobe saw an increase in involuntary, non-regrettable attrition because team leaders are no longer putting off having tough conversations with people who aren’t cutting it. It’s not just about retaining talent – it’s about retaining the right talent.

Seems easy enough, but what should sales leaders do?

Measuring sales performance seems simple - big numbers are good and small numbers are bad. When you explore how this shows up for sales leaders, though, there are complexities. For example, what is the right amount of time for the seller to be in the role, the managers confidence to backfill, the size of the seller’s quota, the strength of territory? All these complications create a challenge for many sales leaders - the performance numbers are bad but instead of acting they don't. Ugh, if this is bad for the seller, the team, the company and potential customers, why does this happen so often?

My own experience across multiple companies and teams tells me the difference is the sales leader.

The best sales leaders:

• Care about the sellers and invest time and energy to provide feedback and coaching. After all, sales leaders’ success is based on the success of their sellers. It is more common for sales leaders to be measured on both their team’s achievement and also the percent of sellers on their team who are successful.
• Are great at radical candor and provide direct feedback with specific actions and observations, including ride alongs and shadowing.
• Are the first to identify when a seller will be challenged to be successful and are proactive about developing a coaching plan. If improvement is not happening, they work with the seller on a "soft-landing" in a new more suitable role, with empathy but also speed, to better align to the person’s skills.
• Know that their top performing sellers are watching them and are motivated when sales leaders are building a team of the best performers and removing the wrong people who are struggling and bringing down the team. A-players want to be part of a team with other A-players.
• Recruit new talent and consistently evaluate how a new seller can raise the average of their team. These leaders will make the case for going over their head count for a transition period if unstoppable talent is available but there isn't an immediate opening.

The laggard sales leaders:

• Confuse unconditional support with providing needed feedback and coaching. The difference between a family and a team - a family loves each other unconditionally but a team has to win.
• Make excuses to explain away under performance. Instead of feedback, coaching and taking action, they coddle, pretend and extend.
• Do not act to help underperforming sellers and instead wait for management to take action so they can avoid the situation and shift blame.
• Do not see the top performing sellers are demotivated by being on the same team as perpetual under performers and might cause top performers to quit. These sales leaders reacts to top talent leaving with more justification to retain underperforming sellers. This situation creates a self-propelling downward spiral, often only fixed by replacing the sales leader.
• Start recruiting only when a position is vacated and depend solely on recruiters.

Great sales leaders do the following things that the laggards don't do:

• Set clear and measurable goals: Sales teams need to have clear and measurable goals to work towards. Salespeople must understand their responsibilities, objectives and KPIs, and how these feed into the broader goals of the business.
• Provide regular feedback and coaching: Regular feedback is essential to improve sales team performance. If things are going great the seller should know. If things are not going great the seller should know. If an underperforming seller is surprised, the leader didn't do their job.
• Offer continuous learning and development opportunities: Training and development opportunities help sales teams stay current with industry trends and techniques. A sales leader should do everything they can to make all the sellers on their team successful, including access to training and development, including ample time and support to ramp up their skills.
• Take a clear and consistent approach to support their sellers, like regularly offering feedback and helping all sellers reach their full potential. They realize that their job isn't as much to grow sales as it is to grow sales people.
• Identify when a change needs to be made, and work with speed, professionalism and empathy to try to find the seller a soft-landing.
• Own the responsibility for handling seller performance management themselves, and deal with situations proactively, versus waiting for leadership to force the actions they should be taking.

Sales performance only works if sales leaders are active in recruiting the right people, tracking progress to give feedback and coaching and taking action to replace those who aren't right for the role.

What Is Sales Performance Management — And Where Is It Going?, by Forbes says: "Enterprises that fail to move with urgency in adopting seller performance management will risk their ability to recover, build momentum and drive growth as they continue to face mounting pressures and an uncertain future. And the risk of falling behind competitors who do prioritize an SPM mindset is very real."

Please leave your comments on how you approach seller performance management.

Good selling.