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Sales Performance Management: Maximize Profits With Comprehensive Sales Processes
Sales Performance Management: Maximize Profits With Comprehensive Sales Processes
White Paper
SAP Customer Relationship Management
CONTENT
4 Executive Summary
After years of deploying systems and Developing a successful sales process System support is equally important
processes merely to control costs, or enhancing an existing one involves for your sales managers and represen-
companies are now deploying systems several challenges. You need to match tatives. They need the essential func-
that will help drive profitable growth. To the appropriate sales professionals tionality of an SFA system to help
maximize their profits, many companies with the right accounts so that your manage pipeline performance, align
seek to increase revenue and margins best salespeople work with your most territories, and analyze data. Inade-
and improve the productivity of their valuable customers. You need an effi- quate system support will hinder their
sales forces. Enhanced productivity cient way to measure your sales perfor- abilities to perform timely and accurate
that involves your sales organization mance and success. You must ensure value-rating activities, assign resourc-
concentrating on your most valuable that your sales professionals focus on es, evaluate opportunities, and plan
customers and prospects can reduce productive activities such as determin- productive sales activities. It is, there-
costs while boosting revenue and ing their most important accounts and fore, critical to deploy the appropriate
margins. planning appropriate activities for them. SFA system before you attempt to
You must also ensure that your sales- address your sales processes and
Your sales force must operate at the people apply the right strategies to anticipated objectives.
highest level of productivity to acquire, the right opportunities and continually
grow, and retain profitable customer make their quotas.
relationships. To meet this challenge,
many companies establish formal sales To efficiently address these challenges
processes and provide all required and become more process oriented,
customer information to their sales you need adequate system support.
professionals in usable and useful ways Because success requires the integra-
so they can turn insight into action. tion of huge amounts of data from
CRM and other enterprise application
Implementing an effective sales pro- systems, you must employ automation
cess is an enterprise-wide endeavor rather than manual efforts to measure
that requires comprehensive knowl- the performance of predefined KPIs.
edge of your business and sales Many companies without the neces-
cycles. An integral part of that knowl- sary system support eventually halt
edge is recognizing that sales process- their efforts to measure sales per-
es, which entail sales-cycle manage- formance after only a few months.
ment and execution, involve both early They do so because of the enormous
planning and ongoing performance amount of labor needed to gather
measurements. all the data required to achieve bene-
ficial results.
Sales analytics, which you can use to • Coverage rates, including visits Start with a Simple Report
assess KPIs, offer enormous oppor- and calls, of your most important
tunities to improve the ways you mea- customers Successful performance-management
sure your sales organization. Industry • Sales-force turnover rate efforts involve more than reporting;
analysts, for example, believe an aver- they support informed sales decisions
age organization loses a great deal of Measuring performance based on and improved win rates. The first ele-
sales if it has limited visibility into sales your top achievers also helps your ment, however, is a simple report from
activities. sales professionals learn what they which you attain information about
need to do to attain greater success. effective activities that salespeople
Deploying sales-analytical functionality The knowledge gained from such can undertake to close deals. Sales-
can help you dramatically reduce lost measurements can help reduce the people, for example, can use report
opportunities and improve the perfor- gap between your leading salespeople information to determine that their
mance of your sales organization. It and the rest of your sales force. pipelines are insufficient to reach future
can help you improve productivity from sales targets, identify new opportuni-
existing sales resources, realize faster Establish an Effective Sales ties, increase the value of deals, or
productivity gains from new salespeo- Process close deals earlier. They can combine
ple, increase penetration into existing such data with past experiences to
accounts, and expand your customer A proven way to establish a successful identify required actions.
base. sales process is to design a perfor-
mance-indication program to help your By including the right performance
These critical objectives form the basis salespeople recognize their objectives indicators, you can help salespeople
for implementing a sales-performance and the way they measure success use the reports to determine the rea-
measurement plan. KPIs and the right based on predefined KPIs. These sons for certain occurrences, such
performance-measurement tools are elements will help define the scope as whether pipeline shortfalls result
critical to the creation of a successful of the sales process and the key areas from a lack of prospecting quantity or
sales process, which includes mea- that need improvement. quality. Performance indicators can
surement, control, and correction help salespeople determine how many
efforts. It is important to ensure that some additional prospects to contact daily or
KPIs – such as quotes per order, per- what benefits they would achieve by
Continuous measurements of your centage of visits covering predefined spending a certain amount of additional
sales organization according to the KPIs, and coverage rate – are available time with each new prospect to build
following KPIs are critical to success: in real time. A lag in access to such greater rapport. Such KPIs include
• Percentage of sales reps achieving data can detract from the usefulness of raw metrics linked to benchmarks or
quotas the measurements and hinder the reac- simulation processes to answer what-
• Increase in success rates at each tion time to items that require attention. if scenarios.
major stage of the sales cycle With the rapid pace of today’s sales
• Pipeline required to make quota environment, any delay can have a neg-
(based on the difference between ative impact on the planning of required
actual sales and quota) activities. In addition, performance indi-
• Close rates of forecasted deals cators that help you understand pitfalls
• Percentage of visits covering and quickly capitalize on opportunities
predefined objectives or success are often of greatest importance at
factors critical stages of the sales and report-
• Quotes per order ing cycles.
The alignment of salespeople and The key to making the right sales-management decisions
accounts can have positive impacts on
sales organizations. Proper alignment and allocating the appropriate time and resources to
can help sales managers achieve each account begins with a thorough understanding of
enhanced productivity, lower employee
turnover, higher revenue per account your account base. Real-time visibility into the value of
and salesperson, and a more profitable accounts increases your ability to prioritize customer
sales operation.
opportunities and make the right business choices.
To optimize the alignment of sales-
people and customers, however, you
must do more than simply choose an Whatever your choice, it is critical to Executives at another technology firm
approach. The alignment process is do more than protect loyal salespeople realized that certain salespeople were
complex and requires management by offering them the easy accounts. highly successful in some accounts and
insight, the involvement of your sales- You need to balance the inclination to not profitable in others. As a result, the
people, and constant monitoring – all reward loyal and effective salespeople company would continually reassign
of which you can achieve only with the with the need to assign strong employ- salespeople to accounts for which they
support of a powerful SFA system. ees to the most challenging accounts were best suited. For example, the
that offer the greatest potential. company would avoid assigning sales-
Companies employ different methods people with strong business-value sell-
of assigning accounts to their sales- Examples of successful territory re- ing skills but weaker technology abili-
people. You may choose to designate alignment abound. A technology manu- ties to accounts that required technical
accounts based on geography and facturer achieved substantial revenue aptitude. While managers who
hope to turn the savings in travel time and productivity increases after hiring reviewed account alignments weekly
into extra sales. You may assign an external consulting firm to target recognized the costs associated with
accounts based on vertical-industry several geographically based territo- instability in account coverage, they did
segments, anticipating that salespeople ries. The consultancy helped the com- not hesitate to shift resources on
will make more sales by gaining greater pany recognize that it could attain the short notice. Though time-consuming,
understanding of specific industries same revenue by dividing many of its this process had a dramatic and
and customer needs. You may align top territories in half and sending sales- positive impact on the company’s
older, experienced salespeople with people to visit new as well as existing opportunity win-rate and customer-
valuable current customers and assign customers. In the fiscal year following satisfaction levels.
younger, more energetic salespeople the changes, the territories that the
to the higher risk-and-reward chal- manufacturer partitioned produced as
lenges of finding new customers. much business as the original territory,
You may also decide to use a combi- indicating that the company could
nation of options or select a completely set and achieve the same revenue
different approach. goals with their salespeople covering
smaller areas.
While it may seem unusual to attain Your sales organization maintains A global IT leader recently established
significant benefits from sales reviews, reporting relationships among sales a specialized review process that bene-
the knowledge transfer between man- professionals, managers, and execu- fited managers and salespeople alike.
agers and salespeople can be substan- tives. These relationships are designed
tial. Ensuring a healthy relationship to support accountability, guidance, Salespeople employed the pipeline per-
between sales managers and sales- and direction from top to bottom. formance-management functionality
people requires more than people Successful salespeople, who typically within the firm’s SFA system to help
skills; you need a solid understanding represent some 20% of a typical sales them quickly prepare for weekly update
of how to deliver value to a customer. force, tend to be self-sufficient, self- meetings. The system provided infor-
SFA-generated reports measuring motivated, and independent employ- mation about the number of their open
win rates can help you assess the ees. The other 80% of your sales and closed deals, as well as how such
increased success of your salespeople. force, however, requires coaching, deals compared with their quota goals.
advice, motivation, and supervision. The reviews included discussions about
expected timelines, milestones, and the
Thriving sales orga- The relationship that exists between resources required to reach their goals.
salesperson and sales manager is criti- The system also defined unique ways
nizations boost their cal. Many salespeople, for example, to flag stalled accounts and opportuni-
productivity, revenue, dislike micromanagement. Without ties so that managers could quickly
clear processes and tools, they may identify and resolve problems.
and profits by deploy- harbor resentment about their manag-
ing customer relation- ers, believing they waste their time
with unneeded questions and tasks, try
ship management to steal their successes, and diminish
systems to support their capacity to perform.
With global competition intensifying Your dynamic sales environment to evaluate the value of your custom-
today’s sales-performance challenges, requires you to react quickly to chang- ers. With SAP CRM, you know your
successful companies boost their pro- es in opportunities by reassigning sales professionals are engaged with
ductivity, revenue, and profits by salespeople to accounts. The territory your most valuable customers to
deploying CRM systems to support management component in SAP CRM increase your sales and profits.
sales processes that drive consistent makes such reassignments quick and
results and improved performance. easy. In addition, SAP CRM helps your To learn more about how SAP CRM
sales organization capture the most rel- can help you improve your organi-
Companies can streamline many of evant information in real time, so you zation’s sales performance, please
their SFA processes by implementing can make faster decisions. Your sales contact your local SAP sales repre-
the SAP® Customer Relationship Man- professionals can also create their own sentative or visit us on the Web at
agement (SAP CRM) application. The reports – functionality that helps www.sap.com/crm.
ability to rate and analyze customers reduce support costs and increase
according to their value helps you man- user acceptance.
age accounts so that you set and meet
the right objectives. You can use Another important aspect of SAP CRM
defined criteria tailored to business pro- is its seamless integration with other
cesses to assess opportunities and SAP software such as the SAP ERP
ensure you concentrate on the oppor- application. This synchronization elimi-
tunities that drive higher revenues and nates the need to maintain separate
profitability. You can save time and systems and ensures the rapid, accu-
resources by quickly determining which rate, and automatic transfer of order-
less-valuable opportunities to abandon. management, billing, financial, and oth-
er critical data between SAP CRM and
SAP CRM provides sales professionals SAP ERP. You can also easily and
and managers with pipeline perfor- quickly access and transfer product-
mance-management functionality they availability, credit-check, and other
can use to track performance and sim- order-related information between the
ulate expected results based on real- applications.
world metrics such as churn rates, quo-
tas, and expected year-over-year Sales-analytical functionality from the
growth. They can also work more SAP NetWeaver® Business Intelligence
closely together to evaluate opportuni- component lets you create reports and
ties and identify potential issues such assess KPIs with data from SAP CRM,
as stalled opportunities. Tighter collab- SAP ERP, and other SAP and third-
oration helps them make fast decisions party software. Such reports can help
and plan appropriate activities easily you determine customers’ buying hab-
and quickly. its so you can target the right custom-
ers with new products or discounted
discontinued products throughout their
buying cycles. SAP CRM also provides
preconfigured planning and reporting
content, such as customer-profitability
analyses, so you can immediately begin
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