Do you remember when a scanner, printer, copier, and fax machine used to all be separate devices? While that wouldn’t make much sense these days, think about revenue planning, data, and processes. Does it make sense to have a complete separation between your company goals, sales reps targets, and compensation models? In this blog post, we’ll look at how you connect the dots between Sales Performance Management and xP&A.
What is Sales Performance Management?
Sales Performance Management (SPM) is a unified approach to analyze, plan, and optimize sales processes within an organization. It is not uncommon to find other, more narrow, definitions for SPM: Improvement of sales personnel performance; streamline sales and sales-operations data; monitoring and measuring the effectiveness and efficiency of sales processes. Those are all good approaches, but SPM must be holistic and combine those approaches and offer better planning, forecasting, and control of different stages of sales processes. Therefore, an SPM solution should follow the different activities of sales operations:
- Budget & Target Setting is the starting point where the organization aligns between the revenue goals and go-to-market plans.
- Territory and Quota Setting: With the approval of sales targets, Individual salespersons (quota carriers) are getting their specific goals within their sales territories.
- Incentive and Compensation Management (ICM) is closing this loop. Effective sales incentive models should signal the desired results in light of the overall strategy, such as higher compensation for strategic products.
Without a unified approach, SPM systems may not be able to provide full insights, and the monitoring and on-going forecasting will be more challenging. Moreover, misalignment of sales ops and sales strategy creates different strategic risks when executing processes.
Modern FP&A departments work closely with other departments across the organization as a business partner. Creating cross-functional planning and analytical skills, extending the traditional scope of financial planning is known as xP&A. This term, set by Gartner, overlooks financial and non-financial business processes, data, and technology tools. In this eBook about 360° Planning you can learn more about the shift to xP&A.
Connecting the dots
Some organizations keep their budget and revenue planning separate from the detailed sales planning processes (which include territory & quota and compensation plans). Keeping those processes separate can create several challenges:
- Misalignment between strategic decisions (like go-to-market, preferred channels, and products) and compensation plans. Misaligned compensation plans are a major risk to the strategic execution of those goals.
- Center of Excellence (CoE) – Any sort of business planning require unique skills and tools. Having a separation between financial planning and sales planning limits the ability to accelerate those skills.
- Data Silos – Sales data and financial data are separated, making reconciliation between those sources difficult.
Adopting the concepts of Extended Planning & Analysis allow organizations to unify processes – unifying the go-to-market (strategic) planning and the individual sales rep. Unified tools and processes reduce data silos, decrease a risk of potential misalignment, and support better long-term business performance.
Discover how a full xP&A solution can support a variety of planning methods and needs, forecasting, and allowing different types of data analysis. Connect the dots between your FP&A and SPM with a best-in-class performance management solution.