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Setting the Stage for SPM: What Are Sales Inefficiencies Costing You?

Sales Performance Management (SPM) technology, by design, is intended to be a catalyst for improved sales performance. Indeed, Aberdeen Group research shows that SPM users improve annual quota attainment at a rate 49 percent greater than that of non-users. SPM users also improve their profit margins at an 88 percent greater rate, year-over-year.

Aberdeen’s research has also shown, however, that at present only 20 percent of all surveyed organizations use SPM technology. In one light, this makes the benefits of SPM all the more enticing, as the system provides advantages untapped by 80 percent of other organizations. After all, SPM helps  remove strategic blind spots that obscure the way to high sales performance. SPM also facilitates the identification and removal of inefficient sales practices – i.e., time wasted on low-priority accounts, or sellers prescribed to “make more calls” when data might actually identify the need for training or coaching, not scads more hours spent in high-speed pursuit…for very little gain.

SPM

For the moment, competitors are unlikely to experience the benefits that SPM provides: keen observations, sharp insights, direct actions. By extension, they don’t have the advantage when it comes to boosting company revenue. What’s getting in the way of their adoption or SPM? It’s critical to answer this question in order to understand competitor inaction.

For one, the case for “better” (even better quota attainment or more favorable profit margins), can take a turn for the worse… if it implies to the organization that current sales performance isn’t good enough. In such an environment, an optimistic case for SPM technology can be met with indifference or negativity.

Executive dismissals of SPM might sound like this:

We’re getting by just fine at the moment; such an investment would be a luxury.”
“If you can’t hit your numbers with what you have, why should we invest in giving you more?”

 General misconceptions around SPM and its alignment with current sales activities might create an additional roadblock.

We are already working on Sales Enablement — isn’t SPM the same thing?”

Then, of course, there are barriers in terms of the perceived difficulty in implementing SPM.

“We don’t have the right skill sets to take this on right now.” Or “Our sales data is everywhere – it will be too hard to sync all those systems.”

Which is all to say, if your sales team isn’t improving, but your competitors’ sales teams are, the odds aren’t exactly in your favor.

Negative reactions aside, comparing the performance differentials between SPM users and non-users through a tactical lens reveals the clear costs and consequences that result from stagnation and the acceptance of mediocre results.

In past Aberdeen research, for example, the cost of replacing a single sales rep at a B2B organization averaged out to around $29,000. With SPM users reducing sales employee turnover at a rate of 3.92 percent year -over-year, they’re achieving an annual savings of $29,000 on every rep they retain (depending on the size of the sales team). Conversely, non-users increase annual turnover among sales employees by 1.11 percent per year, thus incurring costs that SPM users avoid.

As another example, the 49 percent differential in improvement of annual quota attainment is lost to companies who don’t use SPM technology. The point here isn’t that SPM will automatically boost sales performance (although research like Aberdeen’s SPM in Action: A Catalyst for Improvement report shows it will); instead, it’s that SPM can make the process of improving sales performance more manageable and sales goals more attainable.

To start the conversation around adopting SPM within your organization, emphasize that it’s a solution that enables objective improvement in sales performance. The technology takes a typical sales leader’s 90-degree field of vision (seeing only what can be seen by a single person) and expands it into a true 360-view of all sales operations. With such insight, top performing reps could be incentivized to aid struggling reps with shared compensation. Also, sales rep territories can be more accurately expanded or focused based on patterns and opportunities. Even the very way proposals are pitched, constructed, and presented can be personalized and perfected to fit specific situations. In other words, to make the best case for SPM technology and to illustrate the positive sales performance it engenders, return to the evidence. It lies in facts and patterns. SPM technology can turn sales performance around.

From organization to organization, there are almost always inefficiencies, weaknesses, or windows for human error in sales operations that carry costly consequences. These costs and consequences can include lost deals, excessive time to close, employee turnover, delayed onboarding, incomplete data – the examples go on and on.

Even so, the list of red-flagged focal points at any given organization, though painfully familiar, is often finite. Identify congruent inefficiencies or shortcomings your sales team experiences, and show how overcoming them can increase top-line revenue or bottom-line profits.

If an objection like “We don’t have the right skill sets to take this on right now,” comes up, it may mean that sales training and education is on the list of weaknesses. Thus, an argument can be made that SPM can actually identify and build on the skill sets professionals in your organization already possess but aren’t using to their full potential. In such a case, fostering internal competency, as opposed to bringing in additional external resources, vendors, or partners, may widen the room for profit.

The  first true step in getting ready for SPM technology is identifying where it can make the biggest difference in sales performance. In our next posts on SPM, we will discuss technical considerations and ultimate objectives after implementation.

Aberdeen Research – Best-in-Class Approaches to SPM

Best-in-class players not only automate incentive compensation, territory and quota management, but also embrace emerging trends and technologies.

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