Are You Using Your Sales Performance Data Effectively?
In this digital age, we’re constantly hearing about the power of data. It is one of the most powerful tools in the business world. However, like any tool, the value of data analytics depend on how you use it. For sales organizations, sales performance data can be a useful tool to drive strategic planning and increase performance.
Using a sales performance management (SPM) solution to analyze sales performance data, organizations can gain vital insights into the landscape they operate in. With continuous sales performance analysis, companies can avoid reacting to performance issues, and rather, plan proactively to achieve sales and revenue goals. This ultimately allows for better sales, territory, and compensation planning; thus, a stronger sales organization as a whole.
Watch the webinar "CXO Fireside Chat: 5 Ways Data Can Elevate Sales Performance Management in 2019" to hear how Xactly has transformed sales performance beyond incentive compensation a year into the process.
Start With the Right Sales Performance Metrics
The first hurdle organizations face in using data effectively is measuring the right things. It might be tempting to assess sales reps based on the number of calls they make or the length of those calls. But if none of those calls turn into a closed deal, your reps aren’t really as successful as it seems.
Companies need to track metrics that provide valuable information that can be used to strengthen sales planning. As sales organizations and their product/service offerings become more complex, the list of metrics they track and follow may grow. But to start, consider the following metrics in your sales performance analysis:
- Quota attainment: In 2017, the average quota attainment was 55 percent and this number is continuing to fall (yikes!). The percentage of reps meeting quota gives you an indication of the health of your sales organization. Quota attainment helps identify troublesome areas, such as where rep performance levels drop off and the difference between top, middle, and poor performers. For example, if you notice that rep performance tends to drop off after they meet quota, you may need to examine if your incentives are truly motivating reps to meet and exceed their targets.
- Performance vs. Tenure: On average, it takes reps 12 months to fully onboard, and most reps reach their peak quota attainment potential between 2-3 years. The amount of time it takes your reps to get up and running is a reflection of their training. There should be a correlation between tenure and sales performance. Poor performance can indicate a problem with lead qualification as well as rep training/enablement, and in all cases should further investigated.
- Deal Close/Win Rate: Like the example above–a high number of meetings and calls may look impressive, but they don’t really count unless those calls become deals won. Your pipeline and lead response times will help identify problem areas in your sales funnel. This ultimately helps discover where deals are lost most frequently and understand how you can move prospects through sales funnel quicker.
- Commission Accuracy & Payout Time: Motivated, happy reps are key to a successful sales organization, and morale can have a big impact on sales performance. Commission payment errors and slow payout times can quickly extinguish rep motivation, and ultimately decrease performance. Ensuring reps are paid correctly and on time helps keep morale high. It also keeps reps focused on closing deals instead of spending time shadow accounting to ensure their commission check is right.
Watch the webinar "Shifting the Performance Curve: Identify Trends in Low Performers Before You Miss Your Numbers” to learn the key metrics that are often overlooked when evaluating the health of your sales org.
Drive Strategy with Sales Performance Data
When data drives strategy, the end result is a strong, integrated sales plan that will maximize sales coverage, motivate reps to meet and exceed quota, and increase sales productivity. When planned effectively, sales teams understand their true capacity needs, can align and create balanced territories, and build incentive plans that are cost-efficient and boost sales performance.
Sales Capacity Planning
Companies need the right amount of resources to meet their sales and revenue goals. Sales capacity planning ensures that you have the resources you need, account for turnover and attrition, and that you are prepared for any sales scenario—good or bad. First and foremost you need the right amount of sales reps to cover territories and close deals. Along with this, you need to understand your territory coverage needs and model for best- and worse-case scenarios.
Your sales performance data shows which territories generated the most revenue and your top sales reps, as well as areas you stand to improve. Start with your new sales and revenue goals in mind and work back to see what resources you need to achieve that. Model and plan out difference sales performance scenarios to understand the true impact and needs to hit goals. With that in mind, you can then design your territories, set quotas, and build incentives that will keep you on track to hit goals.
Sales Territory Mapping and Design
Your territories are the foundation of your sales plan. If they’re not balanced, you can set proper quotas and build strong compensation plans. Poorly-designed compensation plans result in unhappy reps, which hurts sales performance and can increase turnover rates. The best solution to ensure territories are balanced, cost-efficient, and provide equal sales coverage is through territory management software.
Automated territory planning allows you to combine internal and third-party data to provide equal sales opportunities for reps and balance coverage in each territory. In fact, companies using territory planning solutions have seen up to 30% higher sales performance than those not using automated tools.
Quota and Sales Compensation Planning
Incentives drive behavior. In sales, this equates to money motivates reps to hit and exceed quota. Your compensation plan is the driver behind sales performance. To do it’s job effectively, it must be aligned with company goals and competitive enough to attract and retain top sales talent. The best way to ensure incentives are aligned and competitive is through benchmarking.
Comparing internal pay and performance with industry data helps ensure your incentives are competitive and will motivate reps to hit their number. With the right pay mix and sales commission structures, you can design a competitive compensation plan that motivates reps and drives performance. In fact, companies benchmarking their pay and performance data for compensation planning have seen a 10% higher year-over-year increase in quota attainment than those not benchmarking.
Watch the webinar "A Toast to 2019: Cheers to Data-Driven Decision Making" to learn how to use benchmarking data elements like tenure and pay mix to identify when your team will hit optimal sales performance.
Use Your Sales Performance Data Effectively
With the introduction of artificial intelligence and machine learning (AI/ML) companies can take their data one step further to predict and reduce sales attrition to further improve sales planning. Xactly Insights helps sales leaders monitor sales performance more closely. It’s interactive dashboard breaks down data to the sales team, rep, and individual contract level and tracks performance trends. When Insights identifies downward trends and dips in performance, it flags the rep and notifies managers and leaders so they can take appropriate action sooner.
Data has almost unmatched potential as a business tool, but what’s crucial is that companies can use it to gain true insight into the measures that matter. Once you know more about your sales performance, you can take steps to improve it by incentivizing your team to take the right actions. Rather than awarding compensation with a broad brush, leaders can use data to identify what their business needs to do to be successful – and then incentivize the behaviors that achieve that.
2018 Sales Compensation Best Practices Study Executive Guide
We surveyed more than 200 companies on their sales compensation processes, approaches, and technology usage. Discover best practices, key insights, and industry benchmarks for comparison in our executive guide.