Coffee, Commissions, & CPQ: What is Sales Performance Management (SPM)?

Coffee, Commissions, & CPQ: What is Sales Performance Management (SPM)?

Coffee, Commissions, & CPQ: What is Sales Performance Management (SPM)?

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Author: Canidium Podcast

Coffee, Commissions, and CPQ is a podcast that will cover topics about all things sales, sales operations, sales enablement, and SPM! In the first episode of our series, Tim Bensman, Canidium's Xactly practice Lead, talks about the importance of SPM and measurment in sales. Tune into our podcast by clicking the link below, or read the transcripts on this blog! 

 
Questions?

 

Rick: Hello and welcome the Coffee, Commissions, and CPQ, a podcast where we talk about all things related to increasing the effectiveness of your sales organization. My name is Rick Roberts. I'm the host today’s episode. Today, Tim Bensman and I will be answering the age old question of, “What is sales performance management?” - Better known as SPM. Before we get into that, let's learn a little bit about our guest. Tim why don't you tell us a little bit about yourself?

Tim: Sure. Hello. Thank you for having me on. Yeah, I live in Lincoln Park in Chicago. I'm getting married this summer. I have a degree in economics and communications. I got at the University of Illinois. I also have an MBA from DePaul University. And yeah, really excited to talk with you today. And ready to dive into all things SPM.

Rick: Thanks for coming on today. We certainly appreciate it. And congrats on getting married this summer! How long have you guys been together?

Tim: Oh, geez, I think six years. Yeah, that sounds about right. But it's in doubt, you know, with everything going on with the COVID 19, they're canceling venues right and left.So I hope we can get married and make it happen this summer. But who knows in this current environment?

Rick: You know, hopefully this comes to a close within the next month or so. We'll see. Depends on a lot of things. Right? But obviously, people need to social distance. I keep looking out the window and I see a lot of traffic going by. It was a little lower for a few days and then it started increasing again. So I guess maybe people felt like after three days of isolating themselves, they had done their part. But let's hope we can all get out there this summer and get really sunburned from being super pale, isolating ourselves for weeks... So what do you do for fun? 

Tim: Yeah. So I really enjoy PC Gaming. I do that quite a bit. I actually built my own computer a couple of summers ago. And just the feeling when you first boot up Windows for the first time, that feeling is incredible. That's like a top ten feeling of all time for me. So that's always a fun time. And yeah, I peruse the streaming services I'm watching. Better Call Saul right now and really enjoying that and checking out the new Star Trek series and yeah, really enjoying both of those so far.

Questions?

Rick: Got it. Did you watch Breaking Bad?

Tim: Oh, yeah, of course. That's like my favorite show of all time. So yeah, I was really excited when Better Call Saul came out.

Rick: Yes. I actually never watched all of Breaking Bad. I watched a season. I think a while back, I go back a few years. I watched episode one and two and then I dropped off. And then I started watching Better Call Saul. And I thought, wow, the show's incredible. And I loved it. I really do love it. And I'm wondering if I should just continue like riding that train because that comes before. That's like a prequel right?

Tim: That's right. Yeah. Well, you got to watch them all. I can't recommend them any higher.

Rick: Well, no better time than now. Right?

Tim: That's right.

Rick: So if you have and if you have time, Tiger King on Netflix, that goes not just to you, but everybody. Tiger King is an incredible documentary, which I promise you, it's full of...You will experience a lot of emotions while you watch that show, but it's great.

Tim: Yep. That's on the list. Absolutely.

Rick: So, you know, obviously, you work with Canidium. You work with us. But why don’t you tell everybody a little bit more about your role at Canidium? What do you do? Maybe a little bit more about, you know, your day-to-day. And we can kind of go into how long you've been in the industry and so on and so on.

Tim: Perfect. Yeah, of course. Yes. So like you said, I work for Canidium. And just for those who don't know; Canidium is a sales performance, incentive compensation and sales operation optimization company. So that's a lot of words to say that we provide strategic, technical and managed services. So me specifically, I'm the Xactly practice lead, which means I manage and oversee the Xactly practice. My team is 100 percent dedicated to Xactly. I scope out work. I handle resourcing. And really I just help the team be the best that they can be.

Questions?

Rick: So, Tim, when you say that it's a 100 percent dedicated Xactly practice, what exactly do you mean by that?

Tim: Well, it just means that all of our consultants are 100 percent focused on Xactly. That's what we do. That's our bread and butter. And when we get a project where 100 percent focused on making it an Xactly project. So, yeah, our our entire focus is on Xactly.

Rick: Gotcha. So real experts, 100 percent certified, no solution. Fun back not floating in between other other vendors or types of projects.

Tim: You got it.

Rick: And so you've been in the industry for a little while now, right? You were actually on the customer side of things as an admin. So why don't you tell us a little bit more about that? The start of your career and really how you've been involved in this industry the last few years?

Tim: Sure. Yeah. And it's something I kind of fell into. I started out as an admin, just the sales compensation analyst. And I can really empathize with my clients now. You know, I know what they're going through. They're grinding it out. They're accruing expenses. They're pushing payroll out the door. And it can be really stressful. And that's why I'm excited to talk about SPM, because I know how impactful it can be. I know how helpful it can be. And so after I was a sales compensation analyst, I moved out into the consulting world. And I've been here for about four years and I've seen a variety of companies and industries along the way. All sorts of different companies and industries, small, medium, big. So I really get the benefit of seeing the best of breed and best practices across a wide variety of organizations here.

Rick: And I'm imagining that that allows you and your team to really think outside the box for the sense that, you know, you might see parallels between a bunch of different industries and you've seen this issue before or something like that. You can come at it from a different angle. Right? So there is there maybe an example of a time where you were working with one industry, but you were able to borrow some learnings from another? That might be a little hard to answer or unfair to ask. I mean, The Xactly Practice alone has done over 350 projects. But if there's anything off the top of your mind that you could share that.

Tim: Yeah. You know, I guess the the whole world is moving to the subscription based model where there is a concept known as MRR or monthly recurring revenue. And that has been a big trend in the way in which sales reps are measured. And so are you increasing your MRR or are you decreasing your MRR? And obviously, if you're increasing, that's a benefit to the company and you should be compensated that way. So we've really seen that be used as a metric across quite a few companies. And that's kind of an exciting new way in which people are getting paid.

Rick: Got it. Thanks. And let's go back to how we started here. So Sales Performance Management. OK. SPM, what exactly is SPM? Because when I had first discovered this industry - because any time that I was payed any sort of commission, I had no idea what was going on in the background or anything like that. It was, probably, for them, the best thing because they didn’t have to worry about me disputing anything. But what is SPM?

Tim: It's a tough question. I'll try my best. But let me ask you a question first. Do you know who Peter Drucker is?

Rick: Peter Drucker? No, but I do know Peter Dinklage. It sounds a lot like that.

Tim: So, yes. Peter Drucker, he was Austrian born American management consultant. He did a lot of writings and philosophical ideas that really contribute, contributed, to the idea of a modern business. He was a leader in the development of management education, and he invented the concept known as management by objectives or MBOs. So this guy is really big deal. He's known as the founder of modern management. And there's a quote that gets attributed to him. It goes, “What gets measured gets managed.” And let me say that again. “What gets measured gets managed.” And I really love this quote. And what it means to me is that when you take responsibility and properly track your specific metric, whatever it is, you can improve that metric. But you first need to measure it and keep track of it and see where it's going. And only then can you improve it. So, for example, do you want to bring more new logos into your business? Start tracking new logos. You want to improve invoicing? Start tracking territory optimization, sales, lifecycle retention of employees, start tracking those metrics and getting that data. And then only then will you be able to improve it. So sales, performance management or SPM is the process of tracking or measuring your relevant sales data and improving the associated processes. And most people find that they need some sort of specialty software to help them track and measure and report the relevant data. And that's when companies call on Canidium to help them through that process - We’ll help them select the appropriate software, we’ll help them implement that software, we’ll help them manage that software, we’ll help you in that journey of sales performance management.

Rick: Got it. Got it. So who is the end user? How does SPM play into the sales organization?

Tim: Yeah, that's a good call out, right. Because it doesn't just affect the back office or the accounting folks or the finance folks. It really does impact the sales end users. And I've spoken to quite a few sales reps. And I'll ask them about their commission checks. You know, some of my buddies are sales reps. And I say, you know, “Do you get any insight into the final amount that appears in your paycheck? And do you have any idea how that is calculated?” And oftentimes, I would say probably eight out of 10 would just shrug their shoulders and say, “I just trust the amount in the paycheck. And that it’s maybe right.” And that's terrible. Right? You know, if sales commission checks are supposed to be motivating sales reps and they have no idea on how anything is calculated, that's a major problem. Comp plan designers spend hours and hours pouring into details to ensure accelerator rates make sense. And if an employee doesn't know when an accelerator kicks in, then the compensation plan isn't doing its job. It's not motivating that sales rep. So a real benefit. You mentioned the end user benefit of SPM is that it adds a display layer to the data. It provides a graphical interface where a sales rep would be able to quickly see how much and why they are getting paid a certain way. And because of that, they're going to see that they're at ninety nine percent of their quota. And once they hit one hundred percent of their quota. That's when their accelerator kicks in. So that information is going to get that sales rep more motivated, more fired up, ready to pick up the phone and make that extra call to secure additional business because they are so close to hitting their accelerator rate. So that's one way in which SPM can play into the sales organization from end user to share.

Questions?

Rick: I feel so naive right now after hearing all that and just trusting people. The younger version of Rick was... It was a naive version. Hopefully I'm less now. So other than what you had mentioned then, optimizing some of your processes - what are some other benefits of SPM? Going back to the whole “What gets measured gets managed.” What are some of the things that this helps measure and manage? And kind of going through that. A short list of those. 

Tim: Sure, yeah. So, it all depends on what you're measuring. But some examples might be your pipeline or your forecasting. How is that being measured and can you manage that sales rep motivation, quota setting or goal setting? Territory management, employee satisfaction, compensation plan effectiveness. Are you paying the right amount to the right people? All of that are different ways in which you can measure things and therefore manage things. But let me give you a little personal story. Back when I was an Admin, before we had any sort of SPM software, we were doing everything in spreadsheets, and ranking reports were something that our team produced monthly. It would probably take a week or so to put these together due to any sort of last minute adjustments, pulling a bunch of different sources of data altogether, checking the results against monthly statements to make sure that we're pulling in the right amount of data. You know, lots of activity just to produce this report. Then we would send out these reports. This ranking report and then the sales VP's might have a problem with it. You know, someone was too low or someone was too high or something looked off. And so they would kick it back down to us and our team would just get dejected and embarrassed. You know, we were all depressed. Here's something that we worked on for a while and there's still problems with it. So we had to take a look at the data. We had to correct the error, whatever it was, and send it back out. But by the time we did all of this and made all those corrections, the data was already stale. You know, it was three weeks ago when this data was relevant. So when people lose faith in the data, it's a bad situation. You know, whenever we've proven that we've been wrong in the past, nobody is going to believe this report. So that's an issue. And when we got SPM, when we got our software, it changed all of that. Now, this ranking report that we would work on for forever was automated and updated every day. Everyone had constant, on-demand access to the report. So there was no week long effort to produce the report. No more static data. Everything was on demand and there was one source of truth. So that's kind of a story of, you know, a bunch of manual effort. Then incomes, SPM, we automate it and there's no more manual creation anymore. It's just something that people can pull on demand. So that was one way in which SPM really impacted our business.

Rick: Honestly, it really sounds like you need an SPM solution to win. It sounds like you really need to have the best version of your admin to show up every day. Right. Because even then, somebody on their best day is still liable to make a mistake, even if it's just a simple, you know, wrong keystroke or something like that. And next thing you know, you're having this big argument with a whole team. And obviously you're saying if you've been wrong in the past and how it affects everything moving forward. So with that story alone, you can make a case study for a need for something like an SPM solution. What does a typical SPM journey look like if you could break it up into three stages?

Tim: Yeah, that's a good call out. You know, it's not a binary thing. It's not. You have SPM or you don't have SPM. It's more of a journey. That's how we look at it here at Canidium and we kind of put it into three different stages almost. So stage one is really just making sure that you have everything in place and you're measuring the data appropriately. You have your data that's been cleansed. That's a big issue - dirty data. So the first stage of SPM is really just data management, making sure that you're administrating your campaigns effectively and maybe you have some self service reporting. That's kind of stage one. But then you can move in stage two and it becomes a little more advanced. You have stage 1 in place. You have the base layer. Now you're kind of getting into some some of the cooler aspects of SPM, maybe, maybe like sales coaching, maybe quota and territory management, maybe dispute resolution, plan document analysis. Those are kind of some of the next level stuff that you could maybe think about doing once you've already set the stage for stage one. And then there's like a stage 3. We don't see too many people get into this stage 3, but stuff like predictive analytics or modeling or forecasting or maybe even some really cool dashboard thing that you can do that would be kind of stage 3. So it's a journey. You know, it's not, like I said, a binary thing, yes or no? It's something where it gets better and better every year. And the more data that you have, the more analysis you can run. So, yeah, just a note to everyone out there that's thinking about getting some sort of an SPM tool. It definitely is something that takes time and it's a absolute journey.

Rick: Got it. And so going back for more of the business perspective, let’s go back to that. How does SPM impact the bottom line in revenue? Right, because I think obviously you've made the case for why an admin would need an SPM solution. But at the end of the day, in order for them to go to a decision maker, Director, C-level or really, just talking to if we have any director issue level listeners today, how does this impact the bottom line revenue? Why should people in sales ops really care about SPM?

Tim: Sure. Yeah. And you know, I would encourage everyone to take a look at a financial statement of a large sales focused company. You know, these financial statements are available to the public. All you need to do is go to a search engine and type a company name and 10-K, and that will bring up a financial statement. And once you open that up, look under operating expenses and there should be a gigantic number allocated to sales expenses. And this number represents a huge investment on behalf of the company. Sales expense would be all of the commission related to paying your sales reps. And the question is, are you investing wisely? Is that gigantic number being put to use correctly? Are you paying the right people for the right performance? And that would be a reason why you should care about SPM so you can measure that sales expense and you can measure if it's being used correctly. And so, you know, we mentioned that's kind of the bottom line, why you should care about it from an expense point of view. But you mean you mentioned sales operations and why should they care about SPM? My favorite part of the job is when I can tell a client I've just turned a 40 hour process into a five minute process. The idea of automation and the relief that I can see from them. And I know the pain and I can see it there. They're hunched over their keyboard. They're, you know, they have non-ergonomic setups. These reports that they're cranking out are all causing them to have tense shoulders. It's just a real pleasure to make that all go away. To automate some painful process is just a pure joy. So, you know, getting rid of that is why I would encourage sales ops folks to care about SPM -  is automating away those broken processes that are causing you to hunch over a laptop and to crank out whatever report it is each month. You know, that is something that should be automated away using SPM short term.

Questions?
Rick: You know, at the end of the day, with what we do, we’re really responsible for customer success. When the business is doing well and things are working well enough, sometimes people will just say, well, it's working well. Right? But now when the time is obviously of the essence, the people doing this scramble and try to make some plan changes, and draw changes, guarantees, and all that kind of stuff, you know, having to do that on top of realigning your compensation plans so that the strategy is better aligned to your book, your sales org and your corporate goals. You know, it's like you need 40 hours in a day, let alone in a week. Right? So having a solution that's able to provide that so that they can get back to some of the more, I don't want say important, but more like high level, more strategic things versus just little changes. Obviously, that right there alone justifies the cost of selecting a vendor and implementing that. So thanks for sharing that, because I think that the last two things that you've covered, if there's ever any kind of ammo somebody needs to go to a board or decision maker and say, hey, I need this. I think that that covers it all. So. Where do you see the world of SPM moving in the future? Why is it important to have these foundations set up today? It's kind of sounds a lot like one of those scenarios where if you don't get on the ship now, then, you know, the next few years aren't going to look as bright as they could without something like this.

Tim: Yeah, I would just say that the world is moving towards automation. I think everybody can feel that manual processes in the back office of an organization are being moved to automation and it's just the natural flow of things. So from my perspective, it's kind of sink or swim. You want to setup that base layer of data that we talked about that stage one of SPM so you can do the more advanced things that will benefit your organization in that Stage 3 that we talked about. So getting started now will allow you to create that base layer that you can improve from. So yeah, I would just encourage any sort of automation and SPM will definitely allow for that type of automation in your sales performance area in your organization.

Rick: Great. Well, thank you so much for joining us today Tim. Really appreciate it. And for all the listeners I hope you were able to take away the answer of “Why SPM? What is it, and why does an organization need that?” So thanks again. We really appreciate that and value that.

Tim: Sure. Absolutely. Thanks for having me on.

Rick: Anytime. Thank you, everybody, again - I'm Rick Roberts. This is Coffee, Commissions, and CPQ. Definitely keep a lookout for some upcoming episodes. We're going to discuss things like CRM, SAAS, CPQ. What is it? All those kinds of things, why you need to know about it, and then even go more into the nitty gritty. But for all things commissions, CPQ, or sales performance and process management related, certainly subscribe. Thank you!

 

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