Posted by: drewdice | June 16, 2011

Transforming Sales Performance – Part 3

Following the post on the structural elements in building a high performing sales organization, in this piece, we will take a closer look at sales operations. Specifically, we will address:

• Compensation
• Technology
• Reporting and Metrics

Compensation
Much of the challenge organizations face with regards to compensation stem from a lack of alignment among the components of organizational goals, sales structure and then building the compensation programs to support the first two elements. Indicators that there are potential issues with a compensation program include, but are not limited to:

• Large variable compensation amounts are paid out and the organization is not attaining the needed level of profitability
• The mix of products/services sold do not match the ‘desired state’ of the organization
• Low producers/’c’ players’ earnings do not match their levels of production

Key elements to consider when looking at compensation for sales roles include:

• The critical roles and role excellence profiles designed by the organization that map to achievement of the firm’s goals. When there is alignment in these areas, and clarity with regards to what high achievement looks like in the various sales roles, incentive compensation can more easily line up with achievement
• Unintended consequences – for example, if greater incentive is placed on selling product/service “x”, what behaviors will that drive (and prevent)? In one case, we had a client whose sales team members focused more on selling what lined up with their incentive compensation, and less on what their customers actually needed, and the result was weakened customer relationships and loss of market share.
• What is the organization ‘solving for’? Many firms make annual changes in the compensation plan as a way to drive behavior and results. In line with much of Dan Pink’s research, many of the clients we serve have sales forces who are selling very complex solutions – this requires cognitive thinking and creativity, and traditional carrot and stick programs are often ineffective. The incentive compensation is one part of a greater system, including coaching, mentoring, career development, individual progress and passion – and these factors need to be considered before making changes to the compensation program.

Technology
So many times, I see organizations get hung up on which technology they should choose – and in this context, we’ll limit the discussion to SPM (sales performance management) and CRM (customer relationship management) systems, like Callidus, Varicent, salesforce.com, and the like. The reality of the situation, from my perspective is that it is really never about the actual technology. The real issue is that the chosen system must not only align with the previously mentioned components (elements of structure and intent), but also afford the firm flexibility and agility in ease of configuration and customization to provide the sales team and rest of the organization the needed transparency to make the right business decisions.
Additionally, a consideration for firms is whether software as a service is the right model for them. The answer (although you may hate it) is – it depends – on your organizational structure, cost considerations, desired levels of flexibility and customization, adaptability as your firm grows and evolves, just to name a few. At the end of it all, it still comes back to intent – where is the organization going, and how does this component connect to the other elements of the overall sales ecosystem.

Reporting and Metrics
As you might imagine, this component also directly connects to the previously mentioned elements. The ‘right’ reporting and metrics stem from the defined intent, and the structural elements that define the needed outcomes, by role, in the sales organization.
From there, sales leadership can better define the leading and lagging indicators that align with the needed outcomes. While this might sound elementary and, well, obvious, you may be surprised at how many organizations measure things that just don’t help organizations make better decisions and drive sales. Examples:

• Measuring solely lagging indicators, such as sales closed, revenue attained and market share gained. These are historical data points, and when considered in isolation, do not provide sales people or sales leaders the insights needed to more effectively drive business
• Making claims that organizational goals include shifting the focus to be more customer centric or consultative in selling approaches, and not establishing leading indicators to measure progress towards those outcomes (in some cases, we also see that the outcomes are not clearly defined, so there are multiple versions of the truth)
Also important with regards to reporting is to ensure that there is context given around the need and utility of the desired information. One reason why some clients do not realize the intended benefits from their CRM system is that the sales people view CRM as a management tool, not a performance enabler for the sales person herself. This is not the fault of the sales person, but of sales leadership.

As you might imagine, sales operations, much like the other components we have addressed in previous posts, go much deeper than just what we have shared here. This should, however, give you useful things to consider when continuing to build the high performing sales organization. Look for the final part of this series, sales strategy, coming soon.

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