4 Ways Sales Performance Management (SPM) Systems Keep Your Team Aligned and Focused in a Sea of Change
In 2017, over $3.5 trillion was posted in M&A deals, and it’s likely that 2018 will top that. According to a recent Deloitte report, more than two-thirds of executives at U.S.-headquartered companies and 76 percent of leaders at domestic-based private equity firms expect deal flow to increase in the next 12 months.
Business Insider recently noted that $60 billion in tech deals were made in Q1 of this year alone, with General Dynamics’ acquisition of CSRA coming in at $9.6 billion and Salesforce.com’s acquisition of MuleSoft reaching $6.8 billion.
While Wall Street and investors may take great glee at mergers and acquisitions, for the rank-and-file they can trigger uncertainty and worry. Even when a merger doesn’t mean a reduction in head count, there’s still plenty of trepidation over who will manage whom, where responsibilities will shift, and how corporate cultures will clash.
That trepidation is multiplied in the sales department. It takes time and experience to get a sales team aligned, trained, motivated and properly managed, and a merger can upend those achievements.
Effective integration ranks consistently as one of the top three most important factors for M&A success. When they integrate well, companies can deliver as much as 6 to 12 percent higher total return to shareholders (TRS), according to McKinsey & Company.
Unfortunately, integrating the sales organization is arguably one of the most difficult and important parts of the process. Distractions can kill sales momentum and sales teams can flounder, resulting in lost opportunities and revenue.
Worse yet, dissatisfaction or mistrust may cost you your best sales talent. A study by DePaul University found that the acquisition cost of a new sales employee was $29,159, and the training costs were $36,290. Excluding the opportunity loss of having an undermanned territory, that’s a total of $65,449. Lose five or six or 20 reps, and instead of gaining from the merger, you could end up with a sales organization that’s less effective and which is seen as a drag on the business’s ability to be profitable.
With a sales performance management (SPM) system in place, sales managers have the data and tools they need to incentivize the sales team according to the new direction of the organization, and reps have clear visibility into not only how they are performing but also how they are expected to perform in the new world order. As such, the entire sales organization can move quickly to align with the new objectives of the merged entities, as SPM can allow you to accomplish these four things:
1. Preserve the sales team’s trust.
When it comes to getting paid for their deals, salespeople are hyper-vigilant, as the widespread use of “shadow accounting” attests. In a merger that brings in new managers and unfamiliar plans, expect salespeople to be extra cautious about the accuracy of their first post-merger commission checks—and ready to dispute anything that doesn’t appear to be in order.
This is a major problem when you’re using a manual approach to compensation management—which often breeds mistakes and can get the merger off on the wrong foot in terms of trust with your sales team. Using a sales performance management (SPM) system eliminates most of those mistakes, and any errors that do creep in can be tracked, rectified, and eliminated in short order, keeping personal antipathy to a minimum. Automation actually leads to greater trust, which you’ll need as you bring sales organizations together.
2. Make it easier to merge sales comp plans and incentives.
When companies and sales teams merge, at some point, goals, objectives and incentives must be unified—and merging automated plans is far simpler than merging manually administrated plans. For starters, modern SPM systems can bring in data from multiple feeds, even before the newly merged company has fully unified separate systems such as CRM or ERP. Secondly, SPM demands managers use a common vernacular and organize data in ways mandated by the software; your comp plan is simply better prepared for a merger when it doesn’t reside in different formats and doesn’t require a mountain of data entry to reconcile. Most importantly, you will also have the agility to make needed changes and quickly communicate those to the sales team in the form of new objectives and incentives. With everyone in the loop and marching towards a new, common goal, the likelihood of success increases tenfold.
3. Help to evaluate sales performance effectively.
SPM enables you to analyze data faster and more effectively than is possible with manual approaches. Instead of having a hapless sales ops person spend hours with a calculator and a notepad, you can examine past performance with a few clicks.
While no one likes to think about the redundancies that happen with a merger or acquisition, unfortunately, it’s par for the course. If sales managers are asked to reduce the combined head count, it’s best for all involved if decisions are made on hard data—not a gut check or favoritism. Or, hopefully, it’s more a case of looking at the combined sales team to understand how resources should be deployed against new goals and assessing where investments should be made in increased training, etc., to get the team up to full optimization.
4. Establish new territories based on real data.
“Am I going to keep my territory?” When companies merge, that’s a natural question for salespeople. A merged sales team will invariably have overlapping territories. With SPM, you can apply the data and a territory design application to provide an answer: “No—you’ll get a better territory.”
Many companies still rely on maps and spreadsheets to do territory design and planning—a painful, labor-intensive, and time-consuming process. Automated territory mapping software makes it simpler and faster to design and optimize new territories and to leverage a data-driven approach to territory design and distribution.
Nothing upsets a sales team more than unfair territory distribution, or the perception of unfairness. With data insights, organizations can ensure an equal distribution of workload and sales potential for all salespeople.
SPM helps you better manage the day-to-day of incentive compensation – and it can prove an invaluable tool in a merger by organizing data and preserving stability even as seismic changes rock your sales team.
Erik W. Charles is vice president, product marketing, at Xactly Corporation, where he is responsible for driving the product strategy, defining the product vision, and developing a strong team of product owners and designers. An accomplished professional with over two decades of experience in marketing, consulting, and product evangelization, Charles focuses on helping companies drive expansion and team growth by better aligning positions, responsibilities, and incentives.