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When is it time to buy sales performance management software?

These days, businesses need all the help they can get. Sales performance management (SPM) applications provide insight into sales activities, streamline operations, and open the door to new opportunities.

When sales and finance executives at Comcast-Spectacor realized they were missing potential sales because managers...

were unable to spot key cross-market opportunities, they knew it was time to move to a sales performance management software application, said Mark DiMaurizio, the company's vice president of technology solutions.

It's not always an easy decision. Sales performance management (SPM) software, typically a complementary application to a company's sales force automation, offers advanced insight and analytics into how sales is performing, activities usually tracked on Excel spreadsheets. Determining when to move from incentive compensation based on spreadsheets and ad hoc analysis of the sales pipeline to investing in additional software can turn on a number of factors.

Six signs it's time to buy an SPM software application
Denis Pombriant, principal analyst at Beagle Research, notes that there are many factors that motivate business to acquire a sales performance management (SPM) application. Here's his list of the top six signs:
  1. The finance department spends too many weekends collating sales information to build compensation reports and cut checks.
  2. Salespeople stop trusting the accounting department and begin spending too much time in "shadow accounting" with their own spreadsheets, tallying their commissions rather than selling.
  3. The error rate in commission checks goes up. "This is especially tough," Pombriant said, "since there is a chance that a sales rep might only report an error if the error goes against him or her but not if it is in the rep's favor.
  4. It takes too long to deliver checks. "One important part of incentive compensation is in providing a reward close to the time of the actual behavior," Pombriant said. "Not being able to do this or making it difficult to collect the reward makes the whole idea of incentive less motivating."
  5. Sales managers realize that they can't direct sales reps' behavior. "That is, it is difficult to get people to sell new or high-margin products," he said, "and management does not have the tools to accurately incent specific activity."
  6. Sales managers want another way to improve performance. "They can do this with SPM by using the tool to discover which deals offer the best margins and the best commissions," Pombriant said. "Near the end of a quarter, this gives everyone more flexibility and incentive to work on the deals that can make the biggest difference."

Comcast-Spectacor, a Philadelphia-based sports and entertainment firm, owns the Philadelphia Flyers of the National Hockey League and the Philadelphia 76ers of the National Basketball Association. It also manages two major Philadelphia arenas. What Comcast-Spectacor didn't have was full insight into its diverse sales activities.

"We have [separate] sales forces for concerts and events, basketball and hockey," DiMaurizio said.

To help unify its sales activities, Comcast-Spectacor turned to Acumen Solutions, a Vienna, Va.-based systems integrator, which recommended a customized version of Salesforce.com tuned to the company's sales performance management needs.

"Prior to Salesforce.com, every line of business was working almost in a silo," DiMaurizio said. "The software allowed us to get that holistic, 360-degree view that everyone talks about with CRM while also giving us transparency into every account across all lines of business, including sales, service, ad sales and premium group sales."

Besides giving management oversight into critical sales activities, SPM software also alerts individual sales reps to potentially lucrative sales opportunities, DiMaurizio said. "Let's say a customer spends $60,000 a year with the Sixers and they call up the Flyers [for tickets]," he said. "Before the SPM, the Flyers [rep] wouldn't know that they've already spent $60,000 a year -- they just know that John Smith is calling, looking for seats to a Flyers game."

Denis Pombriant, principal analyst at Beagle Research, a CRM research firm located in Stoughton, Mass., said companies decide to turn to SPM software tools for various reasons. Some, like Comcast-Spectacor, need the software to optimize their sales operations. Others decide to migrate to the technology for reasons ranging from building sales rep confidence and loyalty to streamlining paperwork, such as the creation of sales reports and commission checks (see sidebar).

SPM apps aren't absolutely necessary, but they can provide an important tactical advantage for businesses, particularly in tough times.

"Many companies have gone for years without SPM [software], relying on in-house-developed systems and spreadsheets," Pombriant said. "But companies searching for an edge will look at the benefits that SPM can provide and be very interested in having them."

Michael Dunne, a CRM analyst at Gartner, a technology research firm headquartered in Stamford, Conn., notes that "necessity is the mother of invention" in today's challenging business environment, creating a tipping point for organizations looking to move to an SPM app.

For more on sales performance management software
Hear Steve Cakebread discuss SaaS and sales compensation management in this podcast 

See how Ventana Research ranks the sales performance management software market

"Right now, organizations are retrenching, reorganizing their sales forces -- they're looking at how to do things better," Dunne said.

For such enterprises, he added, acquiring an SPM application is a logical choice.

Businesses in the market for an SPM app need to look inward to decide whether the technology will really generate measureable benefits, according to Pombriant.

"Once you have a clear idea of your business need, ask vendors how they will help you solve it," he said.

For his part, DiMaurizio says he doesn't regret embracing SPM software. "It makes us more efficient and smarter because we have this transparency into the accounts now that we didn't have before."

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