Trade Promotion Management News

Sales performance management comes of age

Sales-performance-management-comes-of-age
A couple of weeks ago we reported Gartner research director, Patrick Stakenas saying in a blog that sales performance management (SPM) was a technology that had evolved greatly during the past three years inside of the larger framework of sales force automation. He has now fleshed out those comments with a Gartner Magic Quadrant on SPM, which shows that it is indeed a rapidly maturing technology.

In the MQ, Stakenas says: “The breadth and depth of SPM continues to broaden substantially to include key functionalities supporting sales and the utilisation of tools to assist in the behavioural management of salespeople.”

Gartner’s definition of SPM is that it “encompasses operational and analytical functions to automate and integrate processes for planning, designing, allocating and managing sales compensation, sales processes, territories, quotas and behavioural/training plans.”

SPM solutions “seek to improve the structure, focus and motivation of salespeople and channels to achieve targets for revenue and margin production ... [and] provide modelling and analytic capabilities for businesses to evaluate sales assumptions and diagnose trends in sales outcomes.”

Gartner says that sales incentive compensation management (ICM) applications usually represent the foundation for SPM solutions. These provide automated functions for calculating and reporting on commissions and associated variable compensation methods for sales channels.

Gartner estimates that, in 2012, more than $US1.8 billion was invested in sales applications that support SPM and sales processes. This figure includes money spent on professional services for SPM, compensation and SPM consulting services, and analytics for sales.

A Gartner survey found significant variation in uptake of the various components of SPM. Seventy-one percent of respondents are using ICM components. Thirty-eight percent are using sales appraisal and evaluation functionality. Thirty-one percent are using objective/quota management. Twenty-two percent are using territory management. Eighteen percent are using coaching systems. Eleven percent are using learning or training functionality. Nine percent are using hiring and onboarding functionality. Two percent are using gamification.

Gartner concluded that SPM requirements are unique for each sales organisation, based on the maturity and culture of the organisation in its use of technology, sophistication of sales practices and anticipated return on investment. “Large, complex sales organisations that support multitier, matrixed sales teams require role-specific functionality for inside field and strategic account salespeople, as well as scalability and performance attributes to manage large volumes of data.”

To cater for these diverse requirements SPM vendors have modularised their offerings and have adopted a range of delivery models. Their approach, Gartner says, has resulted in a mature and healthy market.

“Overall positive customer satisfaction across vendors and regions suggests that vendors have a solid understanding of sales requirements and the ability to deliver value. ... A growing number of enterprises are recognising the practical value of broader prepackaged SPM solutions for SPM functions, as well as for sales ICM, and they are increasingly investigating alternatives to custom-built solutions or spreadsheets.”

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