Planning for growth

A multitude of global events including the COVID-19 pandemic, inflation, economic headwinds, and geopolitical uncertainty have inspired sales leaders to recalibrate their approach to selling in an increasingly dynamic and demanding environment. Even organizations with a foundation of solid growth and established forecasting processes continue to face challenges such as:

Today, many employees still work remotely, and there is a greater reliance on, and normalization of, digital collaboration tools and technology. Sales teams continue to face challenges connecting with prospective customers in a selling environment that remains partially or predominantly virtual. While legacy sales culture centered around in-person, physical interactions, today it can be an uphill effort to get to the right person through emails or social media channels.¹

Economic uncertainty is causing many organizations to re-evaluate budgets and reallocate resources as recession fears loom, therefore placing a greater onus on maximizing sales teams’ performance and finding high-performing sales talent.² As a result, organizations are increasingly investing in automation technology as a tool to optimize for growth and maximize use of human capital.

Organizations are relying on sales teams to grow, scale, and manage performance in an environment that has fundamentally changed forever. To drive growth, sales leaders need accurate, real-time information and rich insights to be decisive and motivate their teams. An organizational foundation that is scalable, predictable, and transparent is the difference between a sales organization that is functional and one that is high performing.

The sales organization is now laser-focused on targeting a hybridized, multichannel buyer in a digital-first, buyer-centric market. This shift in focus is not only here to stay; it is also bound to evolve due to drivers such as technology, macroeconomics, and workplace culture. Below are 12 trends that demonstrate how the sales organization is evolving to be more adaptable and integrated. If these trends represent the direction in which the sales organization is headed, the vehicle that will get them from point A to point B is sales performance management.

Although the pandemic forced sales teams to engage more in hybrid selling – the new normal of catering to customers’ buying preferences through a mix of remote, e-commerce, and other channels – their most important goal remains building relationships with customers. Before the COVID-19 pandemic, sales teams traditionally met with prospective customers in person at their workplaces, allowing them to read body language, gauge level of interest, and connect with stakeholders. However, in a virtual meeting, sales teams may only meet with a single customer contact after spending more time, effort, and resources to get their attention, make a connection, and form a relationship. This new setting provides an upskilling opportunity for sales teams so they can perform in an environment they were largely unprepared for.

By 2025, it’s expected that 80% of B2B sales interactions between suppliers and buyers will take place digitally, according to Gartner’s Future of Sales 2025 report.³ At the same time, top sales innovators are embracing and reimagining how they can use data and technology across their organizations to reach newer heights.⁴ B2C selling, also known as direct selling, acclimated to a digital or omnichannel sales environment far before B2B selling, so the creativity in using new tools, technologies, and channels to engage and nurture customers are tactics that B2B teams can learn and emulate.

Organizations have a wealth of information at their fingertips, but making sense of it and using it to advance their sales activities and processes are still works in progress. That being said, more organizations are employing sophisticated analytics to make historical data more predictive and are therefore spotting both trends and risks, empowering teams to take meaningful action in a timely manner.

As customers become more educated about products and services, they are keen to understand the value those products and services can provide. Rather than differentiate by features, sales teams must pivot to focus more on the value their products and services provide, and how they help customers achieve what they didn’t know was possible. It’s important for salespeople to be in tune with their customers’ needs and provide valuable perspectives and information on how to solve their problems.

Sales and marketing teams in high-performing organizations tend to have a tight relationship, but it is often one-sided. Both capture insightful data on customers and their preferences; however, sales teams are the predominant beneficiaries of this data. When both teams work in tandem and share information equally, they can better identify impacts at the top of the sales funnel that translate into higher-value opportunities. This visibility and collaboration can shorten sales cycles and improve the quality of the funnel.

Trying to drive business decisions based on information siloes will lack depth and breadth, and unifying data manually from across the organization – supply, demand, product, and financials – is onerous and error-prone. Integrated business planning (IBP) is the next generation of decisive planning, with technology-driven, cross-functional collaboration at its core. IBP integrates information with the sales organization and streamlines the collaboration between people and technology.

Forty percent of traditional sales tasks within an organization can now be automated – and that could rise to 50% as technology, especially natural language processing, advances, according to joint research between Salesforce and the McKinsey Global Institute.⁵ Meanwhile, organizations are rapidly transforming themselves digitally, making record-breaking investments in 2022, up 65% from just two years ago, according to 2022 EY-Parthenon research.⁶ These investments, coupled with meeting the expectations and digital nascence of younger generations of talent, amount to an evolving sales organization that is increasingly predictable, scalable, and transparent.

Customers are increasingly conducting extensive research and entering sales funnels independently of supplier sales teams. Due to their process of self-guided discovery, customers come to the table with a more sophisticated understanding about the products and services in the market as well as the competitive landscape. Because of this trend in customer behavior, the awareness and consideration phases of the traditional sales funnel have become more difficult to measure and track: this is known as “the dark funnel.” The dark funnel is used to describe the touchpoints outside the traditional sales funnel (both online and offline) where buyers engage, research, and make decisions but aren’t immediately accounted for by attribution or tracking software.⁷

Most organizations are currently seeing inflationary pressure coming from multiple dimensions as suppliers are raising the cost of materials throughout supply and value chains. These price increases raise unsettling questions about passing along costs to customers and their tolerance for cost increases, as well as margin pressures and acceptable margins that organizations can bear. At the same time, buyers, who are also coping with inflation, are tightening their budgets and spending less on products and services. As a result, sales teams may see fewer opportunities, detrimentally impacting the pipeline. In this climate of enduring inflationary pressure, organizations must have visibility into these impacts in real time so they can identify pain points, adapt strategies, and manage operational impact sooner rather than later.

Sales organizations with leading diversity, equity, and inclusion (DEI) practices boast higher forecasts and conversion and customer satisfaction rates.⁸ As sales teams and their customers become more diverse, the days of shadow processes and institutionalized inequities wane. Organizations that aspire to be truly diverse and inclusive can only accomplish this by institutionalizing transparency and accountability as fundamental values of workplace culture. Transparency, for example, could reveal gender pay inequities in the sales organization or show favorability in allocating bigger opportunities. Sales leaders who understand the business value of DEI also understand that the ability to identify, replicate, and communicate successes is critical to growing and motivating a high-performing and increasingly diverse sales team.

Global organizations must consider geopolitics, especially as the war in Ukraine continues to rock the global economy. In this climate, countries are taking different approaches in how they’re responding and engaging on the world stage, which, in turn, is impacting organizations depending on where they’re based and where they conduct business activity.⁹ Sales leaders cannot overlook geopolitical tension in their risk assessment when considering new market expansion. They must evaluate the potential implications from government intervention, distinct economic blocs or alliances, trade barriers, supply chain constraints, and hiring regulations.

Resilient sales organizations need sales leaders who are confident in their forecasts and can make decisions with accuracy, precision, and speed. This confidence comes not simply from the presence of data, but from a meaningful understanding of the data and its implications. It also comes from using the same terminology and language across an organization and all its locations, resulting in a clear, consistent, and transparent interpretation of a forecast. No matter the size of data at hand, a forecast that is simplified is a forecast that will enable a culture of decisiveness and confidence in the sales organization.

As organizations mature and become more complex in their sales planning and processes, they seek a better way to integrate, view, and manage their sales operations to plan for the road ahead, and to attract and retain high-performing sales talent. Teams often operate in far-flung regions and markets, and run their own forecasts using regional variations and taxonomies, giving them little insight into their own objectives, progress, and compensation.
In this environment, SPM can help sales leaders:

According to Gartner, “Sales performance management is a suite of operational and analytical functions that automate and unite back-office sales operations and are implemented to improve operational efficiency and effectiveness.

“SPM core capabilities include incentive compensation management (ICM), territory management ™, and quota management (QM).”¹⁰

Sales Performance Management (SPM) provides a consistent, global, and automated structure with a common view of data on a shared platform – creating a foundation for greater confidence and trust in an organization’s data and decision-making.

SPM is extolled as a way for organizations to produce more insightful, accurate sales analyses and predictions, enabling them to become more proactive decision-makers.¹¹

A 2022 market study by Dresner Advisory Services found that SPM is viewed as a “core competitive enterprise component of high relevance, especially in very large organizations.”

Eighty-five percent of respondents said that SPM is, at minimum, “important” – including 66% who said it was either “critical” or “very important,” a figure that is 10 percentage points higher than that recorded in 2021. Only 14% said SPM was “somewhat important” or “not important.” (See Figure 1).

Figure 1: Importance of Sales Performance Management

The perceived importance of SPM is highest among organizations with more than 10,000 employees. Figure 2 shows that about 80% of large organizations believe SPM is “critical” or “very important,” compared with 63%–65% among all other organizations. “This latter finding reminds us that sales performance management is well above the level of important at all organizations regardless of size,” according to the study. Similarly, SPM is also “very important” or near to that level among organizations in different regions across the globe, according to Dresner.

Figure 2: Importance of Sales Performance Management by Organization Size

In an increasingly competitive global market, both publicly traded and privately held organizations confront greater resource constraints, seek more productivity from their employees, and expect new hires to add more value more quickly. SPM is viewed as a better way to manage sales operations and drive employee retention and engagement because it can reveal new opportunities to scale, provide consistency and predictability, and imbue a practice and culture of transparency.
Dresner found that 46% of organizations use SPM in 2022, while nearly 14% “are evaluating SPM software, which indicates both an active market and considerable headroom for adoption” (see Figure 3). In fact, current use of SPM is up 28% compared with 2021.

Figure 3: Sales Performance Management Use

SPM continues to gain traction across organizations of all shapes and sizes all over the world. As they become larger, more complex, more diverse, and increasingly global, sales organizations must aspire to scalability, predictability, and transparency to achieve transformational growth amid strengthening economic headwinds.

An organization that is scalable is one that can maintain or improve its profit margins, retain a consistent view of performance, and plan appropriately for demand and opportunity through increases in sales volume, headcount, and market expansion. The ability to scale is critically dependent on having systems in place that are established yet adaptable – and can withstand the pressure of rapidly increasing workloads while remaining efficient, resilient, and profitable.

To achieve scalability, an organization’s operational planning and budgeting – including costs, revenues, sales figures, and other measurable values – must be aligned to its overarching strategy. SPM can help sales leaders identify which areas to grow or expand, understand potential returns on investment, estimate expected costs, expose resource shortages, and guide their investments or reallocations. Through modeling simulations using different variables – also known as “what if” scenarios – teams can quickly envision that, for example, investing in a market or a particular region could generate a level of sales and revenue that, in turn, could spur the hiring of more sales professionals. In short, SPM can point sales leaders to areas in which they have a consistent and compelling right to win.

A scenario modeling exercise can also expose risks to the sales plan. For example, it can expose the downstream impact of inadequate communication and collaboration with human resources, legal, finance, and other relevant departments. In addition, modeling through SPM can alert sales leaders to risk stemming from territory or personnel underperformance, empowering them to pivot activities and investments before the plan is jeopardized.

Planning for growth requires organizations to have a degree of predictability that is critical to have yet difficult to achieve. Stakeholders and shareholders must have a high degree of confidence in an organization’s ability to produce predictable results in today’s uncertain business environment. A predictable organization is one that’s able to leverage rich insights into allocating resources, consistently managing risks, and regularly achieving plan goals. This process must be repeatable, consistent, and performed on an ongoing basis quarter over quarter, year after year. For sales leaders, gaining richer insight into their business over time empowers them to act with decisiveness and confidence.

Predictability is enabled by SPM. With SPM, a sales team can import data into one framework and source of truth, enabling a sales operations leader, COO, or CFO to assess the information, drill down into details, and appropriately change course.

Additionally, SPM can offer an artificial intelligence (AI) capability in which the platform can provide a potentially unbiased assessment that can be compared with a human assessment. AI is not necessarily a flawless analysis or perfect answer; however, it does provide sales leaders with an alternate perspective, one that may diverge from the human viewpoint. This scenario presents stakeholders with an opportunity to dig deeper and develop a basis of comparison against which they can determine whether a business model needs to be refined or why sales teams are viewing information through a particular “lens.”

Through repeatable and consistent processes, sales teams in a predictable organization can make consistent, informed decisions and adjust activities as needed to align with the business strategy and revenue goals.

Underpinning scalability and predictability throughout the SPM process is transparency. A transparent sales organization can build confidence and trust by providing accurate, predictable, and consistent information to its teams, topline management, and other stakeholders such as the finance department. Sales leaders must convey what’s happening in the business, if the forecasts are accurate, if they’re getting proper and accurate insights, or what course corrections should be made.

For example, imagine a software organization is planning to increase sales of its cloudbased product. As a result, its platform team needs sufficient capacity at its data centers to accommodate the planned increase of customers for the quarter and, therefore, needs more resources to onboard those customers. The human resources department may need to expand and accelerate hiring. A decision made in sales can create such downstream effects to which other parts of the organization will need to react.

Transparency is also vital for individual sales professionals. Visibility into their targets, incentives, sales data, and parity in their territories and quotas provides an opportunity to reduce and correct any errors in compensation. This visibility engenders greater confidence within the system and organization, and helps them to plan effectively, define their sales territories, target specific industries, and disclose the potential opportunities they’re aiming for. In addition, they can provide feedback regarding what’s working and what isn’t, and whether successes can be replicated elsewhere.

Humans are notorious for unconsciously introducing cognitive biases that can sway an analysis or decision. This is where AI comes into play: AI can provide sales leaders with an alternate perspective that is free of human bias and therefore may diverge from the human viewpoint. Consistency (or lack thereof) between a human and AI assessment is a valuable data point for sales leaders.

Here are three types of cognitive bias that can hinder sales performance:

Past performance doesn’t predict future performance; however, some sales teams may believe they can guarantee a particular win because they think they can predict certain customers and their behaviors, approval processes, and operations based on historical interactions. As a result, they may not factor in, or could even possibly ignore, tangential external factors (i.e., the current geopolitical and/or economic environment) that could potentially block such deals or affect what their customers are going through or dealing with.

It’s natural for a sales team to tout a winning deal and analyze the aspects, elements, and features that led to the win. The key is to bring that same energy and motivation to deals they lose: why did they lose it? Is it indicative of a larger trend? What competitors were they up against? Does the incentive management approach need to be reviewed and changed? Should alternative incentives be considered? Without comprehensive and equal focus on win/loss analyses, sales teams could repeat the same mistakes and lose out on future opportunities.

Sales teams may heed their emotions or gut feelings when pursuing opportunities or may act by looking at a narrow slice of information that serves to validate their gut feeling. However, an analysis of a larger amount of data may reveal larger trends, patterns, and facts that contradict their emotional assumptions about certain opportunities. In such cases, an AI assessment can be used to compare against a human assessment of the same data to objectively triangulate what succeeded or what went wrong.

The business environment that sales teams are currently navigating demands a playbook that is not only being written in real time but also crowdsourced from the most expansive and inclusive data set in history.

Sales performance management is the connective tissue both within and beyond the sales organization. Designed to provide a single source of truth for every dimension of sales performance, it provides a foundation for developing and engendering decisiveness, confidence, and trust across an organization and, ultimately, helps stakeholders uncover what they didn’t know was possible.

To grow and scale a business in this environment, the sales organization must be adaptable: to the needs of their customers, to the dynamics of the market, to the competitive landscape, to the growing presence of automation, and to the power of data-driven decisiveness. Sales leaders who aren’t continually measuring and evaluating their performance, operations, teams, and customers may not be able to spot the trends, opportunities, and risks that could make or break their year. Having visibility isn’t a novel concept; however, the recognition that there is always more to see and understand is what differentiates a sales organization that is high performing from one that is merely functional.