In the past, the measurement of sales performance was tied primarily to the revenues generated by sales orders. It was simple to calculate total sales from the internal financial systems and compensation was often based upon commissions. Over the last several years, the sales environment and markets have changed dramatically. There has been increased complexity in the sales channels, customer requirements and the sales roles. Salespeople are being asked to sell multiple products and services to customers who have grown larger either through acquisition or consolidation of divisions and represent a bigger proportion of the total sales for them and the company.

As the complexity grew, the inability to manually manage and measure sales performance required the use of spreadsheets to handle the administration. Currently more than 90% of sales organizations use spreadsheets to measure their sales performance and of that group over 80% said they were unhappy with the spreadsheet tools they were using as they were not meeting their needs (Gartner 2005).

The rise of proprietary software for sales performance management is relatively new. In the past 5 - 10 years there have been tools developed to calculate commissions or to track customer activities. These systems have addressed big expectations but have largely failed to meet them. Why? For the most part, the systems have been developed primarily by software companies more intent upon selling software than meeting or exceeding the needs of the customer. Many of these companies do not even install their own applications, but outsource it to consultants or systems integrators with limited knowledge or content expertise in the sales performance area.

To successfully address the needs of the sales organization, it is critical to understand the unique information needs of all of the stakeholder groups. These include:

1. Senior Management: They need high level information regarding organization sales performance versus targets with the ability to drill down into the data to evaluate underlying causes. They also need to see trends, product and customer performance versus budget as well as potential areas if risk.
2. Field Management: Sales Managers need to see the overall performance of their group as well as the ability to quickly drill down into each salesperson's performance to identify and address any improvements needed. Understanding sales performance versus expectation gives the manager the fundamentals for coaching and mentoring their people to improve sales outcomes.
3. Field Salespeople: It is critical for salespeople to have real-time access to their personal performance information. Sales by customer, product, margin and comparison to targets tell the salespeople where to focus their time and energy as well as how well they are doing against the expectation of the company.
4. Administration: In order to process sales data and format it into valuable information for management and salespeople to make good business decisions requires a clear understanding of the data inputs and output requirements and format. Access to clean, accurate and complete data for processing is essential to effective measurement of sales performance.

With all of these different information needs, and the increasing complexity of the environment, what then is necessary for effective sales performance management?

1. Flexibility - The ability to make changes to the configuration and functioning of the software to enable it to continue to align with changing economics, strategy, and organization structure and plan designs is paramount. This weighs against most server-based applications as these kinds of changes require you to make changes that can only be done by either the integrator or the software company. Software-as-a-Service (SaaS) applications include the costs of such changes. They also allow the user to do many of the changes without the support of their I.T. department.
2. Immediate Access - Salespeople and their management are typically not known for their aggressive use of technology (although that is changing). As a result, whatever tools are available need to be simple and easy-to-use, with quick access to performance information. Forcing them to click through an application to find and launch reports will result in sub-optimal use of the application. Home page dashboards, plan documents, communications material to keep them updated will increase use of the tool and their appreciation of it as a value added resource.
3. Customization - Every organization is different and their needs and desires in terms of what they measure and how they want to measure it is different. Forcing them to view the information in the format or process that is dictated by the software usually means they will export the data and analyze it in .... You guessed it....a spreadsheet. This defeats the purpose of the tool. Whatever application is utilized, it needs to be customized to the unique needs of the user so that they can align it with their measurement bias.
4. Knowledge & Support - Even the best software ever written is not a solution. The dictionary defines a solution as "to solve a business or consumer problem". The software is only enabling technology which must be combined with expertise and experience to provide the required resolution. Most organizations rush out to buy software only to find that they have a tool which does not give them the answers to their problems. Ensure that when you are purchasing the software what support will you get after implementation and what if anything that support will cost. It should be made clear as well, that the support requirement is not application support (i.e.: keeping the software running) but rather content support on sales performance management and incentive management to ensure that you can manage going forward without having to pay for additional consulting or configuration.

A technology component is a requirement for sales performance management when you have more that 25 - 30 salespeople. The transaction volumes, number of sales roles, different sales compensation plan designs and performance reporting requirements make technology as critical partner in effective sales management. It is important however that you create the vision for what you expect from the technology solution and how you will work with it in the future.