Sales performance management: what, why, & how (with tips!)

What is sales performance management?

Sales performance management is the process of monitoring, analyzing, and improving the effectiveness of a sales team. 

It involves setting clear goals, tracking key performance metrics, and providing tools and training to continuously optimize results. Since it enables reps to sell more products and services more effectively, sales performance management can help businesses accomplish their overall objectives.

Despite what the name might suggest, sales performance management isn’t just conducting performance reviews with your team or individual sales reps.

‍It’s an entire framework you can use to view your sales team’s output and ensure incentives are aligned and everyone is on the same page. When it boils down to it, sales performance management is a set of analytical and operational functions that bring together all parts of the sales operation to unlock each member’s full potential.

As more and more organizations become data-driven and embrace the idea of continuous improvement, it comes as no surprise that the sales performance management market, which brought in $2.21 billion in 2023, is expected to grow to $8.16 billion by 2032.

Sales performance management frameworks (for startups and enterprises)

Whether you’re a fast-growing startup or a well-established enterprise, a solid sales performance management framework is essential for driving consistent results. 

It provides a structured approach to setting goals, tracking progress, and improving your team’s performance. While startups can use these frameworks to build scalable systems, enterprises benefit from ensuring their teams are aligned around strategic objectives.

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The sales performance management framework has five distinct steps:

1. Planning. Effective sales performance management starts with planning, which involves setting clear goals, defining strategies, and aligning them with broader business objectives. This step ensures that sales teams have a roadmap to follow and understand their role in helping the organization succeed.

2. Managing. Managing focuses on monitoring sales activities, providing support, and addressing challenges in real time — or at least close enough to it. It ensures that teams stay on track to meet their targets and maintain productivity through structured oversight.

3. Rewarding. Making the most out of sales performance management involves recognizing your teams’ achievements with incentives, bonuses, and recognition programs. This element motivates employees, encourages healthy competition, and reinforces desired behaviors.

4. Analyzing. Analyzing entails using data and key performance indicators (KPIs) to assess outcomes, measure success, and identify areas for improvement. Insights from this analysis help guide decision-making and enable you to identify strategic adjustments that optimize performance.

5. Forecasting. To improve performance, sales leaders need to use historical data and market trends to predict future sales outcomes and revenue. Forecasting helps businesses prepare for challenges, allocate resources effectively, and set realistic targets — ensuring goals are meaningful and attainable. 

To simplify these steps, many sales leaders think of this as a “predict, plan, and perform” sales performance management framework.

While most leaders are familiar with each individual piece of the sales performance management puzzle, thinking about all of them as an integrated whole can be a transition — whether that transition is for newer sales leaders at startups or enterprise organizations looking to expand or granularly fine-tune their sales processes.

If you’re in the first bucket and are leading a newer sales org, check out the next section for tips on how to get started implementing a holistic sales performance management framework at your organization. 

If you’re at a more mature organization that is looking to optimize an existing framework or are trying to discover the new strategies and tools that exist in today’s fast-paced, ever-evolving landscape, skip ahead to the next section. 

How to get started with sales performance management 

Whether you’re a brand-new sales leader (congratulations!) or a more experienced sales leader tasked with setting up the initial sales functions, understanding how to get started implementing a holistic sales performance management framework can be a bit daunting.

Good news: Whether you’ve done it before or this is your first time, we’re here to help.

We all know that sales leadership involves a ton of moving pieces — forecasting, pipeline generation, quota setting, account segmentation, sales team compensation with the proper incentives, territory planning, and pipeline optimization, amongst a never-ending list of other needs. 

Instead of thinking of these as individual problems to solve or standalone processes to implement, sales performance management takes a unified approach, throwing them all in the same bucket.

When we encounter sales leaders jumping into sales performance management for the first time, we like to ask them three key questions about the what, the where, and the how.

What are you selling?

B2B startups don’t typically have succinctly defined “products” with set-in-stone parameters of the offer, the price, and what’s included — and, maybe more importantly, what’s not included. 

While a lot of early stage sales at startups is selling whatever someone will buy, actually defining what you’re selling is a critical step for ensuring everyone across the entire organization is on the same page. We all know what happens when the sales team overpromises on a product’s capabilities. Ultimately, the new customer gets frustrated and the engineering team gets angry! 😠

So, first things first: Sit down with your leadership team and define as best as you can what exactly it is you’re selling, including:

• Products
• Different packages or subscriptions
• Customer service
• Add-ons/upsells 
• Pricing

At this early stage, sometimes it’s better to have guardrails instead of precise definitions. For example, you might know the absolute lowest you can go on pricing or that a certain feature is really expensive for your organization and must always carry an additional cost and adjust your approach from there.

Once you’ve created those guardrails, it’s time to think about your sales team’s goals over certain periods of time as you start to ramp up. This is less of the actual what and more of the goals the team should be aiming for, like:

• Sales forecasts: predicting future revenue and setting expectations based on historical data, trends, and team performance.
• Sales goals: establishing clear, actionable targets for your team to achieve within specific timeframes to drive focus and accountability.
• Sales performance measurement: tracking and evaluating team progress using key metrics to ensure alignment with goals and identify areas of improvement. 

Where are you selling?

Once you know what you’re selling, you can start to think about where you’re selling it. This part of the sales performance management process ensures that you understand the potential markets you’re targeting and align your sales team, tools, and processes to fit them.

At this stage in the game, some of the things you might try to pin down include:

• Market segmentation. Break down your target audience into specific groups based on factors like industry, geography, or demographics. This ensures your sales strategy is personalized to the unique needs of each segment.

• Territory allocation. Define sales territories, which could be physical locations, market sectors, deal sizes, or customer types. This helps distribute opportunities evenly and ensures efficient resource management.

• Team and individual sales quota setting. Assign realistic and measurable quotas to both teams and individuals, aligning them with overall business objectives. These goals drive accountability and keep sales efforts focused.

• Capacity planning. Assess your current team’s workload and determine when additional hires are needed to meet demand without compromising on performance. This ensures you scale effectively as sales grow.

• Technology needs. Identify the tools and software required to support your sales processes, evaluate options, and justify investments. The right sales tech stack enhances team efficiency and empowers reps to close more deals more effectively in less time. 

How are you selling?

You’ve got the what and the where. Now you need to know how. 

This is essentially your go-to-market strategy for sales. Are you mostly selling online? Are you going to try product-led sales or focus more on outbound? Are you using a pure automated SaaS model or will prospects need to hop on a call to demo the product? Will you use social selling or cold calling?

There are no right or wrong answers here; what works well for one organization might not work at all for another. It’s just important that you ask yourself these questions to figure out how you’re going to sell your offerings.

At this point in the process, start asking yourself some more questions:

• What sales channels will you use to sell your products? How will you generate a sales pipeline?
• Do you have the necessary tools in place?
• How will sales and marketing work together?
• How will you measure sales performance? (Nowadays, we know it’s about quality over quantity. So don’t you dare measure the amount of cold calls your SDRs are making and call it a day! 😉)
• What sales materials will you need?
• How will you define the sales process stages and what qualifications are needed to move a prospect down the sales funnel?
• What reporting will you do and how often will you do it?

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In addition to figuring out these answers, it’s important to remember that all of the how should also be centered around how you’re planning to motivate your sales team throughout the entire sales process. 

After all, proper sales incentives and compensation can have a profound impact on sales teams success — and ultimately your organization’s success or a lack thereof. In fact, one study found that 90% of top-performing companies use incentive programs to reward salespeople. What’s more, incentive programs have also proven to increase individual rep performance by 27%. If you want your reps to shine, you need to compensate them well. It’s that simple.

To make it easier for your reps to hit their numbers, make sure you aren’t bogging them down with manual tedious operational tasks either. By automating as many repetitive workflows off their plate, you can ensure they spend more of their time focusing on what they do best: actually selling!

We’ll talk a little bit more on whether you need specific sales performance management tools later on in this piece. But before you get too fancy, it’s important to make sure you have the basics covered.

4 ways to optimize sales performance management

If you’ve already got a sales performance management strategy in place, good for you! It can be a hurdle that many sales leaders can’t or don’t focus on because they’re too far in the weeds and aren’t taking enough time to see the forest for the trees.

But no process is perfect. In this section, we share some ways you can optimize an existing sales performance management process and get better and better results because of it.

1. Get teams’ input & buy-in

Notice where the apostrophe is on the word teams. We mean all teams across the entire organization! Historically, sales leaders have given directions in a top-down way; members of the sales team were not supposed to ask questions or provide any input. And marketing, customer support, and product and engineering teams weren’t even in the room!

Today’s most effective sales leaders have shifted to a more dynamic, bottom-up approach to increasing sales success. Instead of telling your team how it is, ask every team member about the sales process, tools, and opportunities to get a more holistic view of things you could improve and levers you could pull. 

For example, by speaking to marketing, you might discover that no one is following up with MQLs. Similarly, the support team might tell you that enterprise customers are feeling deceived by overpromising sales reps talking up features that aren’t yet available.

Whatever insights you surface, use them to further optimize your processes. 

2. Keep things transparent

Everyone across the organization should have visibility into the overall sales strategy, goals, and reasonings behind every decision. If you tell someone to do something, they’re less likely to oblige if they don’t understand why you’re asking them to do it and how it feeds into the bigger picture.

According to data provided by Slack, 87% of employees want to work for transparent organizations. By maintaining open lines of communication and encouraging a culture of transparency, you can meet these expectations — and boost retention because of it.

3. Get involved

Here at LeadIQ, we fully believe that sales leaders should be working on the business — not necessarily in the business. However, sometimes sales leaders get so detached from the day-to-day of sales teams and processes that things can slip through the cracks as teams stop bringing up the issues they’re spotting, ultimately causing revenue to drop.

A true sales leader rolls up their sleeves and works with their teams to understand problems and begin to solve them. If you’re seeing issues within your sales team or revenue is starting to fall, it may be a good time to get back into the weeds for a bit. It’s like when you hear a story about former Starbucks CEO Laxman Narasimhan earning a barista certification before taking the reins of the company. It’s not easy to see what life is like on the front lines unless you go there yourself.

4. Make sure you’re on the cutting edge

The world moves at lightning speed and gets faster every day. This whirlwind evolution includes sales enablement technology.

Due to the speed of change, you might not know that there’s a new way to automate a certain manual task or new types of data available to make prospecting easier as new software, tools, and ideas are being developed every day.

While the old adage if it ain’t broke, don’t fix it might be true in a lot of cases, there’s also a ton of truth in the early bird gets the worm. If you’re looking to unleash the full potential of your sales team, you should always be trying new things, seeing if they work, and failing fast when it comes to new sales tools, processes, or ideas.

Which is the perfect segue to our next section: sales performance management software.

Do you need sales performance management tools or software?

Since you have to spend money to make it, sales teams often have the most software and technology behind them. Think CRMs, contact data, lead tracking and management, analytics, AI sales tools, and forecasting platforms. 

Using all of these tools together in harmony can be overwhelming, which is why we’ve seen more tools try to become all-in-one solutions (or at least integrate nicely with other tools!).

All of this begs the question: Do you really need another tool just for sales performance management?

It depends who you ask. But more importantly, it depends on the stage of your company and whether you’ve nailed the foundation of sales performance management to begin with.

Sales performance management software or tools like Varicent and Xactly are generally focusing on helping orgs optimize territories, segmentation, sales quotas, and incentive programs. They’re likely best for organizations that have several product lines, global or distributed sales teams, and variable compensation plans for sales team members.

If that doesn’t sound like your organization, don’t sweat it. Chances are you don’t need a specific sales performance management solution just yet. 

That said, you might find that demoing certain solutions is valuable as there are often small pieces of software inside their larger suite of products that you may be able to explore with a different provider. For example, you may find that you’re using a fairly manual process for sales forecasting while having a tool that can automatically extract insights or predict sales could be helpful — and that another smaller provider makes that exact tool that you need in your stack today.

As you get started on your journey to sales performance management, it’s important to understand that you don’t have to make massive changes overnight; it’s okay to start small.

Sales performance starts with good data

Whether you’re a startup looking to incorporate sales performance management into your processes or you’re an established enterprise looking to continuously improve results, implementing a sales performance management framework can help you keep your team aligned and ensure everyone is working toward the same goals. By following best practices as you roll out your new framework, you can increase the chances your team gets consistently better results over time. 

But even with best practices, industry-leading tools, and a robust plan in place, your efforts are only as strong as your data. 

Without good data, your sales team might get stuck before they ever really get started.

To learn more about how LeadIQ is setting the standard of what high-quality actionable data looks like, check out this post from LeadIQ CEO and Founder Mei Siauw: The elephant in the room that most B2B data providers don’t want to talk about. 

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