How To Improve An Underperforming Sales Team | Forma.ai

How To Improve An Underperforming Sales Team

A comprehensive guide breaking down the factors that drive sales performance and how to get your team aligned on KPIs that result in attained quotas.

Introduction

It’s rarely our first instinct to re-examine our compensation plan when a sales team or individual reps fail to meet performance expectations. And while your comp plan won’t be the only contributing factor to performance gaps, every step you take to improve performance will be futile without a well-oiled plan.

The only problem? Compensation models in most sales organizations today are outdated at best and broken at worst. Charlie Munger once said, “Show me the incentive, and I’ll show you the outcome.” Yet most sales orgs default to the same old copy and paste comp plans without considering how it will inform rep behavior.

In today’s rapidly evolving B2B buying landscape, rigid, one-size-fits-all structures that don’t acknowledge the varying motivations of salespeople won’t cut it. Getting your compensation model right is one of the most underrated strategies for changing behavior, boosting performance, and even transforming your buyer’s experience.

In this guide, we’ll break down the factors that actually drive sales performance and how to get your team aligned on KPIs that result in attained quotas. Then, we’ll discuss how you escape the maze of broken comp models that give companies the same disappointing results quarter after quarter. We’ll share tangible ways you can unify all incentives (commission structures, SPIFs, etc.) so you can drive desired behavior consistently and create an incredible sales culture while you’re at it.

Section 1

What Really Drives Sales Performance?

Success leaves clues. What top performers have in common is self-motivation and the ability to remain focused on goals and quotas. However, while sales teams are responsible for closing deals, revenue results come from varying factors like the company’s reputation and how their comp plan is structured.

To improve B2B sales performance, we need to learn which metrics matter most and how to effectively measure them. Having a clear understanding of your goals allows you to plan how you’ll motivate your team to attain them.

Sales Performance Lives and Dies by KPIs

Sales success lives and dies by numbers. And if your team isn’t unified by executing data-driven activities, you won’t hit your targets. KPIs ensure that the activities each individual and department perform daily are aligned with the organization’s objectives. Sales reps will always focus on activities that maximize their earnings. Sales managers will ensure their team hits targets and that their top performers are happy. The senior leadership team’s responsibility is to ensure all those activities are profitable.

Aligning Your Team on KPIs

To help both roles get what they want while also prioritizing the overall company goal, you must align your entire organization on which KPIs matter most. Only then can those metrics become the guiding force behind all decisions.

Sales leadership is:

Five Critical Sales Performance KPIs Your Sales Team Should Be Focusing On

  1. Sales Productivity
    Shockingly, two-thirds (64.8%) of reps’ time is spent on non-revenue-generating activities, and only 35.2% is spent actually selling. (Forbes) Growing companies have many different priorities, so measuring sales productivity ensures that reps are “keeping the first thing first” and focusing on activities that close deals.

    • Meetings held / demos booked
    • Sales cycle duration
    • Time to productivity

  2. Lead Quality and Response Time
    How quickly your team responds to leads determines the likelihood of that lead converting into a paying customer. According to Chili Piper, it takes the average B2B sales team 42 hours to respond to a new lead, and 38% of those leads never respond. Quicker response times are critical. Analyze how long your leads are waiting for a response, and then figure out how to shorten it.

  3. Average Deal Size
    Number of deals closed isn’t enough—you need to know how much revenue came from each deal and ideally, how much work it took to close it. That will help identify your average deal size needed to be profitable.

    • Average deal size reveals where you need to adjust your sales goals and compensation plan.

  4. Win Rate
    Win rate, also known as opportunity-to-win ratio, shows you how many deals close versus how many entered your pipeline. Measuring win rate reveals how effectively your reps are moving deals from negotiation to close and where they can improve.

  5. Quota Attainment
    Quota attainment is critical when you look at the team’s success as a whole. If only 40% of your team attained quota, it could indicate issues beyond individual sales rep performance.

How to Stay Consistent in Volatile Times with Sales Tracking

Monitoring your sales performance metrics once per quarter or year isn’t enough to guarantee success anymore. Business is dynamic and your sales team, processes, and incentives will need to adapt as market conditions change over the year.

In particular, your comp program must be able to adapt to situation-based payouts or changes, like commission-splits, one-off discounts, and SPIFs. In an unstable economy and shifting buying landscape, agility is key.

Sales Performance Measurement Tools

Now that you’ve established which metrics to track, it’s time to choose your measurement tools. Equip your team with tools that help them do their jobs more efficiently and automatically track their results so you can improve upon them.

Section 2

Helping or Hindering? Your Sales Compensation Plan Could Be the Problem

Think of your sales compensation program as the spine of your sales organization. Your comp plan incentivizes and guides your rep’s behavior.

Common Compensation Plan Pitfalls

Problem: Unattainable Quotas

You designed your comp plan based on general benchmarks instead of your company's unique context.

Solution: Emphasize your unique corporate context when compensation planning

Ensure your unique company context guides your incentive program design by basing it on your own historical transactional data.

Problem: Unbalanced territories

Be careful with individual product incentives which leads to salespeople dropping product.

Solution: Make sure your comp plan is incentivizing the right behavior

Problem: Lack of rep engagement

Communication is one of the three pillars of sales compensation excellence.

Solution: Communication

Communicating your comp plan to sales reps is an ongoing process.

How to Coach Underperforming Sales Reps

  1. Clarify expectations early and often.
  2. Take a hard look at your compensation plan.
  3. Be open to constructive feedback about your management style.

Creating Data-Backed Sales Goals Is the Key to a High-Performing Team

Here are the two ingredients for creating a high-performance sales team:

When Should You Let a Sales Rep Go?

Every sales team (even the highest-achieving) will have underperformers.

Section 3

The Art of Using Incentives to Boost Sales Results

While financial gain is the most prevalent motivator for sales success, it’s not the end all be all.

  1. Operationalize public acknowledgment.
  2. Paint a Clear Career Advancement Path.
  3. Encourage Healthy Competition.

Driving Revenue with a Unified Sales Compensation Program

Even the best perks and prizes won’t motivate your team if your compensation plan isn’t unified.

Avoid These Compensation Mistakes to Incentivize Your Sales Team

  1. Setting the bar too high too soon.
  2. Overly complex design.
  3. Capping commissions.

How to Incentivize Reps Beyond the Core Compensation Plan

Continual goal attainment keeps reps motivated and engaged throughout the year.

The Bottom Line on Improving Underperforming Sales Teams

To create a top-performing sales team that increases top-line revenue, you must start with the numbers. Measure sales performance with the right KPIs like sales productivity, quota attainment, and win rate.