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Sales Performance Management, SPM

Sales performance management systems, SPM-systems allow you to plan sales for the entire company and divisions, align sales plans, draw up motivation schemes for employees of sales departments and analyze the effectiveness of salespeople.

As defined by Gartner, "SPM solutions are a set of operational and analytical functions that automate and integrate the back office of operational sales processes." These features include compensation management, goal and quota management, planning, territory management, advanced analytics, and even gamification.

In 1995, the term CRM (Customer Relationship Management) appeared. The CRM model of interaction with customers is based on the assumption that the center of the entire business philosophy is the customer, and the main directions of the company's activities are measures to ensure effective marketing, sales and customer service. Supporting these business goals includes collecting, storing, and analyzing information about customers, suppliers, partners, as well as about the internal processes of the company. CRM systems have proven to be such an effective tool in the hands of sellers that they have become an integral part of most ERPII systems, but at the same time are successfully marketed as standalone solutions. However, the sales departments of large companies are very numerous units that also need to be effectively managed. This is precisely the role that SPM systems have begun to play.

According to Gartner, the Sales Performance Management (SPM) software market stood at $ 850 million as of early 2018 and continued to grow 12-13% annually. It is expected to reach $ 1.4 billion by 2022. Leading trading companies that purchase SPM solutions are introducing bonus and compensation systems and advanced analytics to improve sales efficiency and optimize planning.

SPM systems usually implement the following functions:

  • Management of compensation payments (incentive compensation management, ICM). Automation of the incentive system for commercial personnel using commissions, bonuses, and other means of material incentives. Calculation of payments, analysis of the correspondence of paid remuneration to real profitability, etc.
  • Territories and quotas management. Management should be carried out in such a way as to obtain the highest possible income at the lowest cost of sales. To do this, the SPM system must take into account the cycle time of each trade, the profitability on trades and products of different types, profitability compared to the paid remuneration for a certain period of time, etc. This allows for a balanced distribution of commercial territories and quotas among staff.
  • Sales planning and monitoring. A set of tools that help executives explore what-if scenarios and plan changes to optimize sales. May also provide feedback to individual sales representatives or perform performance reviews.
  • Sales forecasting. Can be done manually or using a predictive sales analytics toolkit. Powered by statistical algorithms, big data technologies, and machine learning, this toolkit allows you to build highly accurate sales forecasts and identify potential problems at an early stage of their occurrence.
  • Adaptation and coaching. Interactive development tools for employee-specific business skills, onboarding plans, etc.
  • Gamification, badges, rolling pennants, honorary titles, and other ways of moral reward for employees who have achieved high results.
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