I think 2016 will go down in the history books as a landmark year for sales performance management. For the global community, this year has been tough, worrying and downright crazy at times. However, if we allow ourselves to ignore that and focus on our own little world for a while – it’s been a very interesting, positive and productive year for the sales industry.
In general, the idea of “sales performance management” as a true discipline has become more mainstream. Accenture’s research on performance management from April 2016shows how much momentum is behind it. According to their report:
- “94% of surveyed leaders believe performance management improves performance”
- “79% of organisations have made changes to their performance management over the past 5 years”
- “89% of employees believe their performance would improve if performance management were changed further”
It’s becoming clearer and clearer: sales organisations need to continue to evolve to tackle the changing landscape. Here at Sparta, sales performance management is something we think about daily.
After 100+ personal discussions with VP Sales within the enterprise during 2016, here are the 3 things I learnt about sales performance management:
- Sales leaders are starting to understand the importance of employee engagement
- Sales leaders are starting to be more thoughtful when it comes to designing initiatives to motivate their sales teams
- Despite this, sales leaders are struggling with getting sales strategy from the boardroom to the sales floor
Let’s dig in.
1) Sales leaders are starting to understand the importance of employee engagement
2016 is truly the year that “employee engagement” went mainstream in the business world. Whilst it’s easy to ignore it and call it “the latest fad that everyone will forget about in 6 months time” – I promise you – employee engagement is real, and you need to be thinking about it.
There are plenty of problems with how companies go about improving employee engagement today, but the premise is simple: employees who are engaged in your company’s purpose, mission, leadership and goals should consistently outperform those who aren’t. If you don’t believe that, well… email me and let’s talk!
This year I probably spoke with over 100 VP Sales in leading enterprises. Almost all of them are thinking about employee engagement, and how they can improve it. Compared with even just two years ago, that’s a vast improvement. Sales leaders have understood that building an engaged sales force will have a measurable impact on their results and bottom line.
If nothing else, that’s a positive step forward for our industry, which has typically been about celebrating mavericks, “sell at all costs” and “if you perform, you can do what you want”.
2) Sales leaders are starting to be more thoughtful when it comes to designing initiatives to motivate their sales teams
In years gone by, sales leaders had a very simple methodology for keeping their teams engaged and motivated. Pay them generously on success. “Hit your target and you get paid well”. Simple as that. Easy to implement, easy to explain.
2016 is undoubtedly the year in which VP Sales started to be more thoughtful about sales compensation, what they reward, where the gaps are in the existing incentive models and what gives their teams the best chances of succeeding in the long term.
The truth is: the “you get paid well if you succeed” model kind-of sucks. Yes, if you crush target you must be paid well. I’m not opposed to commissions or paying people generously when they succeed.
However, the problem is, most teams have 10-20% of their sales reps hit target. What about the rest? Most importantly, what about the people who are “almost there” and end up at 70% of target every month/quarter?
In 2016, sales leaders started to understand that, their biggest opportunity for revenue growth is in helping “mediocre/middle” performers move upwards – not give more away (i.e. accelerators) to those who are already crushing it.
The problem with sales is – everything is about results. This year though, I felt sales leaders softening up on this issue. What about the people who try their guts out, do everything right, perform all the behaviours that you want, have satisfied and happy customers, yet fall short of their number? Should they be recognised and rewarded, or kicked to the curb whilst the small group of high performers are stuck up on the wall and paid huge bonuses?
The problem when you only celebrate success in terms of hitting target is – you leave the majority of your company out in the cold, the people who ironically are the ones who need your recognition, your coaching and your encouragement the most.
This year, we saw enterprises changing up their compensation models, start to pay bonuses based on behaviours not just outcomes and start tracking activities as opposed to just “Closed Won”. Exciting times, if you ask me.
3) Despite this, sales leaders are struggling with getting sales strategy from the boardroom to the sales floor
Despite the improvements I outlined above, the biggest challenge facing sales organizations heading into 2017 is how to actually implement a given sales strategy. Many sales leaders feel “trapped” inside their existing compensation models and feel they “encourage one thing” but “pay bonuses on another”.
The best example of this disconnect is trying to drive high customer satisfaction amongst your team, whilst still paying bonuses on sales. Many industries are struggling with this, and is most evident in B2C industries such as Telco, Banking and Insurance.
I believe 2017 will be the year in which global enterprises start to take a step away from purely sales commision models, and start to build additional incentives around the behaviours that align with strategy. Everyone knows the classic Drucker quote, “what gets measured gets done”, but very few organisations keep this in mind when thinking about why their salespeople do one thing, when they are told to do another. Again, I think this will be one of the huge shifts that occurs during 2017.
2016 has been a year of positives for the sales industry. We’ve started to reflect more, look at where we need to improve, and most importantly: big companies are being more thoughtful about their staff, how to keep them happy and focused, and have finally understood that, therein lies the key to increased sales performance.