1. Basing SPM solely on an Incentive Compensation Management (ICM), Customer Relationship Management (CRM) or Sales Force Automation (SFA) system.
Traditional sales organizations drove behavior primarily through changes to sales force incentives – thus linking ICM and performance. SPM provides the “glue” between business objectives and sales performance – with ICM being just one component of that.
CRM/SFA systems are where Sales personnel spend a lot of time entering data regarding sales leads, opportunities, accounts, contacts, etc. This is, therefore, a goldmine of data to be used by the SPM system in linking realtime sales metrics (both activity and results-based) with the strategic and tactical objectives of the sales organization and the company as a whole. SPM systems must bridge between the “island” of sales systems and the other company performance management systems.
2. Attempting to measure too many metrics or metrics that are too complex.
Resist the urge to gather too many metrics as this will bog down your Sales Performance Management system and make for unhappy users. Too many metrics causes your dashboards to be cluttered and your sales reps to be unclear on what behavior they should be driving for. What ends up happening is that the Sales Reps will focus on the metrics that they perceive that they have more control over, leaving the intended, more important metrics unmet or unimproved.
Just because your SPM system can calculate and manage super complex algorithms doesn’t mean it is wise to do so. Sage old advice holds here: if you can’t explain it to your grandmother or 8-year old, it may be too complex. Rethink the objective of the metric.
3. Failing to set the correct balance of result vs. activity metrics.
Determining what balance to have depends upon your sales growth model, your management style, and the maturity (NOT tenure) of your sales reps. Focused too much on results and your Reps may be sacrificing short-term wins for long-term relationships that drive higher value customers. Too much on the activity side and you may find Reps missing targets for revenue and volume.
4. Underestimating the need for SM involvement.
SPM is not only a system, but also encompasses the processes, roles and responsibilities involved in measuring and reporting sales performance. Even though your SPM system can track many objective data points, there are still many metrics that will require the subjective observation, interpretation, analysis and entry of Sales Management staff. For example, an SM can record that he/she observed a Rep perform 10 introductory meetings in a very objective manner.
However, HOW the Rep performed against expectations during those meetings can only be answered in a subjective manner. So, when building your SPM framework, ensure that Sales Management understands their piece of the puzzle and how much effort is expected of them.
These are just a few of the top reasons why average Sales Performance Management implementations often take 3-4 attempts before they start to feel right.