Shifting SPM Perspective: Results vs. Activity Performance
Progression of Sales Performance Management Through Time
Currently, there is still a strong focus in SPM on financial results. In other words, many of these platforms have been aimed at tracking resulting financial metrics related to quota attainment, revenue generation, etc. And if we reference the historical legacy of the space for a moment, it's easy to see why this is the case. In the early 1990s, the onset of “Sales Compensation Management” was driven in part by finance departments that “looked to increase their focus, and control, over incentive spend relative to performance.”
In the past, there was a very high cost and a limited return associated with gaining visibility into sales activities and milestone attainment rather than just results. In practice, sales organizations would have had to require their sales teams to manually input the data or purchase a solution that automated the tasks. Either option left sales leaders with a pile of raw data with which they could do very little. In other words, sales leaders would then be forced to sift through and make sense of raw, line-item activities—something they simply don’t have the time to do.
In sum, two drivers have shaped the focus on results:
- Finance departments driving the purchasing decisions of SPM platforms
- A lack of cost-benefit justification to bring activity level visibility into purview
Transformation of SPM From Results-Based to Activity-Based
This availability of financial metrics (sales results) and this lack of availability of more granular sales activities, groomed the sales performance management culture over the years to focus on results and results only. And while these results matter (an “A” player is not an “A” player unless the results show), limiting the focus to only these metrics handcuffs leadership in their coaching efforts and their proactive course corrections. Results are retrospective. Financial outcomes result from the effort being put forth by the rep. These numbers cannot be coached. Only the activities that lead to these results can be coached, affected, and adjusted.
Now that the technology landscape has transformed, gaining this visibility has become more economically sensible. What should trail right behind this transformation is a shift in the coaching mindset of sales leadership. With this newfound consumable visibility into sales activities, leadership should begin focusing their coaching energy on the efforts of their sales reps, rather than just the results of those efforts.
Artificially intelligent solutions have reached a level of maturation where they can attribute sales activities to the right deals and reps, refine these raw data points into more consumable insights at the deal level, and then aggregate this data across sales teams to provide insight into both team and rep performance. In an instance where sales leadership is attempting to operationalize a new strategy, this level of visibility is imperative. Rather than waiting six months to a year, to understand, retrospectively, if the shift in strategy is being executed based on results, leadership can now drill into the activity and front line efforts of their sales teams. This enables leadership to identify risk areas and lower performing reps much earlier than the end of quarter or end of the year. Thus, they can make coaching corrections that are much cheaper than firing and trying to replace those that don’t meet their numbers.