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Exclusive Q&A
We hear all the time that we’re existing in an age of information. If that’s the case and we have more data at our fingertips than ever before, why isn’t every sales organization operating at historic levels of efficiency?
The broad industry conversation about information at your fingertips has been impressive, but reality has fallen short in that many organizations are still not able to access all information as and when needed. Our research into sales analytics finds that scattered sales information is the largest impediment to sales effectiveness, cited by more than half (52%) of organizations. This situation is motivating management to make investments to improve the availability of sales information.
For sales organizations, even simple tasks such as getting information about a territory, accounts, opportunities and progress-towards-quota can require significant work by sales operations. For most organizations, the reality is that data sets about quotas, territory, pipeline and compensation plans are most often stored in separate systems, which means that the information needed to support analytics to guide sales efforts is not unified, impeding efficiency.
What is your current thinking about using analytics to guide sales and improve sales performance? How often should a manager review pay and performance metrics? How should compensation be compared and benchmarked?
Organizations have long touted the use of sales analytics to help the sales organization better understand how to improve its performance. But this has yet to become a meaningful priority; for example, by utilizing pipeline analytics to forecast sales and project bookings, sales professionals can better understand their progress towards quotas and incentives. Our research finds that improving predictability in the sales pipeline is the top focus of sales organizations’ analytics efforts, identified by 64% of participants. It is critical that organizations also investigate analytics related to pipeline conversion and win rates as well as territory and account potential to understand how best to optimize sales performance.
Sales organizations should examine performance towards quarterly targets on a monthly basis to determine where improvements need to be made. Doing so will help organizations determine the effectiveness of individuals and where they need guidance to improve. Individuals should be able to look at their progress towards quota and compensation goals every day of the week.
Many sales organizations struggle to provide front-line sales professionals and managers with a unified view of quota and territory performance and progress to on-target earnings (OTE). How would you advise sales organizations to best address this challenge?
For many sales organizations, the disparate sets of data on quotas, territories with accounts, pipeline progress and forecast progress to OTE are not integrated. The lack of unified information makes it difficult for sales professionals to assess their performance and determine what they should do to improve.
The situation also makes it harder for managers to mentor front-line sales professionals to help them develop an appropriate sense of urgency regarding areas for improvement so they might better achieve their sales-compensation potential. Sales organizations need to ensure they have a unified view of these metrics, for both their current performance and their forecast, to better understand if they are on the right path to reach their quotas. To do that they need to ensure they have technology that can provide this unified view of metrics.
What are some key areas to increase potential in sales performance?
Sales management should scrutinize sales team performance at all levels to determine the progress-to-quota attainment and understand specifically where expected goals are not being and/or will not be met. Having this information summarized by level and available on a daily basis requires bringing quota, bookings-by-rep and territory data together.
The next step is to determine where the sales forecast — based on individual historical performance and pipeline conversion — is applied to understand the progress towards reaching quotas in future time periods. Examination of these types of sales performance metrics can identify gaps, enable better understanding of how individuals and teams are performing and help prioritize where improvement should be made.
Sales contests and sales performance incentive funds (SPIF) can motivate engagement and guide managers as they determine who is improving and contributing. Also, contests and incentives can provide insight on why salespeople are not engaged or reaching their full performance potential. However, it’s important to note that these methods are most effective when they’re executed in a centralized and transparent manner so everyone can see how well they are performing.
Does pay equity matter in sales organizations? How can companies make sure that their pay-for-performance opportunity is evenly spread?
Yes, pay equity matters. Ensuring that compensation is fair as well as effective is critical for the optimal performance of the sales organization. Unfortunately, most organizations do not know whether they are paying their sales staff equitably according to role and experience. If sales leadership does not know where gaps or imbalances exist then they are ill-equipped to assess and ensure pay equity. In such situations it is likely that employees will discover issues that can lead to larger challenges, especially if the wage gaps involve gender or ethnicity.
With the right level of modeling and analytics that assesses employees by role and experience, existing and new sales professionals can be paid at equitable compensation levels. Additionally, managers can use this compensation data to compare existing compensation to industry and market distributions, which also can provide a better understanding of which sales talent might be at risk. Utilizing the metrics and then comparing pay across the sales organization will help managers gain visibility into pay-equity challenges.
To determine if pay-for-performance strategies are working in sales, management must evaluate the set of compensation components with respect to OTE, with the base, variable and accelerators determining if the sales organization is reaping the level of performance desired.
How does a sales organization move from benchmarking to an optimized action plan?
Benchmarking compares individual compensation to that of peers in the organization and the market. But knowing where compensation needs to be adjusted to address pay-equity gaps is only the beginning. The next step is to establish a communication plan and steps to adjust compensation. The approach to doing this must be one that does not insult those who currently are not paid at the appropriate levels. Addressing adjustments is critical to retain the confidence and trust in the sales organization. Finally, sales organizations must ensure that all new hires are paid at the appropriate levels from the day they start work at the organization. Examine if your sales organization is benchmarking performance in a continuous manner and assess the value of these efforts.
How does sales leadership balance time hiring versus mentoring its salesforce?
Balancing the time spent hiring and managing employees and mentoring them is not easy to perform continuously and consistently. Mentoring and guiding its sales professionals should be the top priority for every organization and the time spent in this way investing in a team’s future is critical.
Effectively mentoring individuals requires having good, analytics-based assessments that indicate in which areas to focus efforts. Our research shows that almost half (44%) of organizations view providing coaching to sales professionals as an essential management capability. Continuous review and improvement of the sales organization and its compensation is essential to ensure it is delivering the maximum possible value in its sales performance.
What are the biggest limitations of the analytics and tools used by most sales (and business) leaders?
The first limitation of analytics tools is that they typically cannot operate on the complete set of sales metrics that organizations need to assess improvements. The second limitation is that these types of analytics are typically historical in nature, looking to past performance rather than helping guide future actions. Another limitation is that the analytics and data often are presented in the form of visualizations and charts that are difficult to understand and that do not easily guide actions. It is no wonder that today only a quarter (28%) of organizations are satisfied with sales analytics software. Organizations can overcome these limitations by using forward-looking planning tools designed to operate on analytics that are specific to sales and well-integrated with sales processes.
What is the future for maximizing the potential performance of sales teams?
The future of sales performance will involve providing all the metrics and indicators to the front- line sales professionals and their managers. When performance indicators are in the hands of those who execute on sales plans then they can self-direct their efforts and improve.
Sales leadership should have a system that provides predictive performance guidance within a sales planning environment so that leadership and managers are able to assess where gaps and opportunities exist and thus guide consistent actions and enable more effective collaboration across the organization. However, doing this effectively requires predictive analytics, which more than two- thirds of sales organizations (69%) said is most important for business.
In the future, sales teams will have intelligent systems that provide notifications that guide and direct sales personnel to take the specific actions that have the highest probability to achieve best outcomes.
Exclusive Q&A
We hear all the time that we’re existing in an age of information. If that’s the case and we have more data at our fingertips than ever before, why isn’t every sales organization operating at historic levels of efficiency?
The broad industry conversation about information at your fingertips has been impressive, but reality has fallen short in that many organizations are still not able to access all information as and when needed. Our research into sales analytics finds that scattered sales information is the largest impediment to sales effectiveness, cited by more than half (52%) of organizations. This situation is motivating management to make investments to improve the availability of sales information.
For sales organizations, even simple tasks such as getting information about a territory, accounts, opportunities and progress-towards-quota can require significant work by sales operations. For most organizations, the reality is that data sets about quotas, territory, pipeline and compensation plans are most often stored in separate systems, which means that the information needed to support analytics to guide sales efforts is not unified, impeding efficiency.
What is your current thinking about using analytics to guide sales and improve sales performance? How often should a manager review pay and performance metrics? How should compensation be compared and benchmarked?
Organizations have long touted the use of sales analytics to help the sales organization better understand how to improve its performance. But this has yet to become a meaningful priority; for example, by utilizing pipeline analytics to forecast sales and project bookings, sales professionals can better understand their progress towards quotas and incentives. Our research finds that improving predictability in the sales pipeline is the top focus of sales organizations’ analytics efforts, identified by 64% of participants. It is critical that organizations also investigate analytics related to pipeline conversion and win rates as well as territory and account potential to understand how best to optimize sales performance.
Sales organizations should examine performance towards quarterly targets on a monthly basis to determine where improvements need to be made. Doing so will help organizations determine the effectiveness of individuals and where they need guidance to improve. Individuals should be able to look at their progress towards quota and compensation goals every day of the week.
Many sales organizations struggle to provide front-line sales professionals and managers with a unified view of quota and territory performance and progress to on-target earnings (OTE). How would you advise sales organizations to best address this challenge?
For many sales organizations, the disparate sets of data on quotas, territories with accounts, pipeline progress and forecast progress to OTE are not integrated. The lack of unified information makes it difficult for sales professionals to assess their performance and determine what they should do to improve.
The situation also makes it harder for managers to mentor front-line sales professionals to help them develop an appropriate sense of urgency regarding areas for improvement so they might better achieve their sales-compensation potential. Sales organizations need to ensure they have a unified view of these metrics, for both their current performance and their forecast, to better understand if they are on the right path to reach their quotas. To do that they need to ensure they have technology that can provide this unified view of metrics.
What are some key areas to increase potential in sales performance?
Sales management should scrutinize sales team performance at all levels to determine the progress-to-quota attainment and understand specifically where expected goals are not being and/or will not be met. Having this information summarized by level and available on a daily basis requires bringing quota, bookings-by-rep and territory data together.
The next step is to determine where the sales forecast — based on individual historical performance and pipeline conversion — is applied to understand the progress towards reaching quotas in future time periods. Examination of these types of sales performance metrics can identify gaps, enable better understanding of how individuals and teams are performing and help prioritize where improvement should be made.
Sales contests and sales performance incentive funds (SPIF) can motivate engagement and guide managers as they determine who is improving and contributing. Also, contests and incentives can provide insight on why salespeople are not engaged or reaching their full performance potential. However, it’s important to note that these methods are most effective when they’re executed in a centralized and transparent manner so everyone can see how well they are performing.
Does pay equity matter in sales organizations? How can companies make sure that their pay-for-performance opportunity is evenly spread?
Yes, pay equity matters. Ensuring that compensation is fair as well as effective is critical for the optimal performance of the sales organization. Unfortunately, most organizations do not know whether they are paying their sales staff equitably according to role and experience. If sales leadership does not know where gaps or imbalances exist then they are ill-equipped to assess and ensure pay equity. In such situations it is likely that employees will discover issues that can lead to larger challenges, especially if the wage gaps involve gender or ethnicity.
With the right level of modeling and analytics that assesses employees by role and experience, existing and new sales professionals can be paid at equitable compensation levels. Additionally, managers can use this compensation data to compare existing compensation to industry and market distributions, which also can provide a better understanding of which sales talent might be at risk. Utilizing the metrics and then comparing pay across the sales organization will help managers gain visibility into pay-equity challenges.
To determine if pay-for-performance strategies are working in sales, management must evaluate the set of compensation components with respect to OTE, with the base, variable and accelerators determining if the sales organization is reaping the level of performance desired.
How does a sales organization move from benchmarking to an optimized action plan?
Benchmarking compares individual compensation to that of peers in the organization and the market. But knowing where compensation needs to be adjusted to address pay-equity gaps is only the beginning. The next step is to establish a communication plan and steps to adjust compensation. The approach to doing this must be one that does not insult those who currently are not paid at the appropriate levels. Addressing adjustments is critical to retain the confidence and trust in the sales organization. Finally, sales organizations must ensure that all new hires are paid at the appropriate levels from the day they start work at the organization. Examine if your sales organization is benchmarking performance in a continuous manner and assess the value of these efforts.
How does sales leadership balance time hiring versus mentoring its salesforce?
Balancing the time spent hiring and managing employees and mentoring them is not easy to perform continuously and consistently. Mentoring and guiding its sales professionals should be the top priority for every organization and the time spent in this way investing in a team’s future is critical.
Effectively mentoring individuals requires having good, analytics-based assessments that indicate in which areas to focus efforts. Our research shows that almost half (44%) of organizations view providing coaching to sales professionals as an essential management capability. Continuous review and improvement of the sales organization and its compensation is essential to ensure it is delivering the maximum possible value in its sales performance.
What are the biggest limitations of the analytics and tools used by most sales (and business) leaders?
The first limitation of analytics tools is that they typically cannot operate on the complete set of sales metrics that organizations need to assess improvements. The second limitation is that these types of analytics are typically historical in nature, looking to past performance rather than helping guide future actions. Another limitation is that the analytics and data often are presented in the form of visualizations and charts that are difficult to understand and that do not easily guide actions. It is no wonder that today only a quarter (28%) of organizations are satisfied with sales analytics software. Organizations can overcome these limitations by using forward-looking planning tools designed to operate on analytics that are specific to sales and well-integrated with sales processes.
What is the future for maximizing the potential performance of sales teams?
The future of sales performance will involve providing all the metrics and indicators to the front- line sales professionals and their managers. When performance indicators are in the hands of those who execute on sales plans then they can self-direct their efforts and improve.
Sales leadership should have a system that provides predictive performance guidance within a sales planning environment so that leadership and managers are able to assess where gaps and opportunities exist and thus guide consistent actions and enable more effective collaboration across the organization. However, doing this effectively requires predictive analytics, which more than two- thirds of sales organizations (69%) said is most important for business.
In the future, sales teams will have intelligent systems that provide notifications that guide and direct sales personnel to take the specific actions that have the highest probability to achieve best outcomes.
Mark Smith
Partner, Head of Software Research
Mark Smith is the Partner, Head of Software Research at ISG, leading the global market agenda as a subject matter expert in digital business and enterprise software. Mark is a digital technology enthusiast using market research and insights to educate and inspire enterprises, software and service providers.