Over the last several years organizations have been jumping on the Sales Performance Management bandwagon. But often implementations fall flat resulting in little insight and undetectable sales success. The problem isn't the software or technology. Nor is the problem a lack of desire of sales operations to deliver valuable insights. The problem is organizations are getting lost in the complexity of trying their hand at calculus when they are still practicing addition.
The way you implement a successful Sales Performance Management system is by working from the top down in a cascading manner. Along the way you assess progress to see where you need to focus improvement efforts. This incremental approach produces fruit quickly and provides a sustainable path.
Follow these 3 key steps when implementing a Sales Performance Management Program:
1. Build on Small Steps
Have you ever seen a major change initiative happen overnight that was wildly successful? No, so don't think that moving from point A to point Z is going to happen overnight and focus on small steps in the early stages.
Specifically, start by focusing on two figures…Customer Acquisition Cost (CAC) and Customer Lifetime value (CLV) because they are the two most important metrics to a sales organization. These metrics are code for how much revenue are we generating and how much does it cost us to acquire that customer.
2. Generate Confidence
Once you have determined CAC & CLV you can begin moving into the sub metrics of each. For example, CAC is the sum of the sales and marketing budget divided by the total # of customers acquired. Having calculated CAC you can now look at the cost of marketing versus the cost of sales in customer acquisition. Does it feel right? How does it match up against you peer organizations?
From there you can look at the components that make up the Marketing and Sales costs. Does you sales compensation appear too hire. What is the cost of customer acquisition for that single account executive or sales rep?
Cascading down the chain while identifying metrics and dashboards as you move along will build confidence in not only your ability to measure performance but solidify the contribution to the organization.
3. Consistently Assess
Consistent assessment of your sales performance management system will help you track progress to world class just like those stars you received every time you passed a multiplication test in grade school. For our clients we use 10 tests to evaluate Sales performance management programs:
- Control system – how are decisions reached and what role does data play in the process?
- Dashboard and reporting – what data do the sales managers and executives see?
- Automation – what connections exist between sales-related and other non-Sales applications?
- Data sources – from where does sales data originate and how is it collected?
- Analytics – how and who and when is data analyzed and what is done with the answers?
- Compensation Plan – what are the details of sales incentive pay and how effective is it?
- Talent Review – how do you assess sales rep performance and identify promotion candidates?
- Feedback mechanisms – how do sales reps register their input and make recommendations for change?
- Strategic interface – how does sales ensure that its activities and measurement system are aligned to the overall corporate strategy?
- System Compatibility – What are the existing corporate systems for the storage, manipulation, transfer, and reporting of sales information and what are the internal capabilities to leverage/modify these systems to accommodate changes to the business?
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