SALES PERFORMANCE IMPROVEMENT METHODOLOGY: CONTINUOUS IMPROVEMENT OF SALES PERFORMANCE TO ACHIEVE ORGANIZATIONAL GOALS AND GAIN SUSTAINABLE COMPETITIVE ADVANTAGES

Step 1: Assess Performance FACTs

The first step of the SPI approach is to assess performance in these areas: finance, activity, customer, and talent as well as strategy and sales goals (FACTs; Phillips et al., 2020). This step focuses on performance assessment and forms the basis for subsequent analyses and performance improvement steps. As the first step of SPI, the performance assessment serves as the starting point of the whole process. It is also helpful for understanding different aspects of sales performance and their relationships. Many managers believe that what gets measured gets improved. It is, therefore, critical to define the sales performance clearly. It is important to establish concrete measures for different aspects of the sales performance.

The FACTs in this step refers to a framework proposed by Phillips et al. (2020) for analyzing four dimensions of marketing and sales performance from the perspective of strategies and goals. In order to systematically improve sales performance, sales managers need to first clearly define and adequately assess the current performance levels. The current performance levels also need to be compared with strategic goals for better interpretation. As demonstrated in Figure 2, the FACTs framework consists of five components. The implications of performance assessment become meaningful only when all four dimensions of the sales performance are compared with the strategy that sales managers are implementing and the sales goals that managers are attempting to achieve. A brief discussion of the five components follows.

View Figure

• Download as Powerpoint
• Download Figure

Step 2: Set SPI Objectives

After assessing the four dimensions of sales performance, comparing them with goals and strategies, and identifying key performance gaps in Step 1, sales managers and performance consultants should proceed to set up appropriate SPI objectives, which are specifically designed for closing the key performance gap identified in Step 1. Managers need to consider both the results of performance assessment in Step 1 and intended sales goals set by their organizations or themselves in order to set appropriate targets for subsequent analyses and guide performance improvement efforts. As discussed in Phillips et al. (2020), the SPI objective can focus on financial, customer, activity, or talent performance, although financial SPI objectives are more common due to their importance and high visibility. Certainly, the SPI objectives need to satisfy the five criteria of good goal setting and thus should be specific, measurable, ambitious, realistic and time-bound (e.g., Johnston and Marshall, 2013).

Step 3: Identify Pain Points

After assessing sales performance FACTs, identifying focal performance gaps, and setting up SPI objectives, the next step is to identify pain points, which refer to both “discrepancies and ignored opportunities that are directly causing or relating to the performance gaps identified in Step 2” (Phillips et al., 2020, p. 265). In the context of sales performance improvement, this step focuses on exploring sales activities. It plays a critical role in the SPI process, but its importance is often underestimated. After recognizing a performance gap, many sales managers rush to investigate the causes (some managers go even further, given they may rush to take action, a situation discussed in later paragraphs). However, conducting the cause analysis before adequately defining and analyzing the focal weakness may create multiple problems.

The focal performance gaps are likely to be either a financial performance (e.g., declined sales revenues) or customer performance (e.g., increased number of customer complaints). As learned previously, most financial and customer performance measures are beyond the direct control of sales managers. If managers conduct cause analysis prematurely, they are likely to be distracted by the factors in their circle of concern, but outside of their circle of control. Consider the example of the MEC sales performance issues discussed at the beginning of this article. As the district sales manager, you realize that you are lagging behind the YTD sales goal and are determined to close the financial performance gaps. You set up the SPI objective “to improve sales performance to 100% YTD sales quota in 5 months.” You then ask your salespeople what they think the causes of poor sales performance are. Here are some of their responses.

• Salesperson A: Because the economy is bad, and customers are unwilling to buy when their budgets are tight

• Salesperson B: It's because our products are too expensive

• Salesperson C: I think the reason is that we do not have a strong social media presence, as our major competitors do

• Salesperson D: We need to have some new and better products developed

• Salesperson E: The competitors' advertising and promotion are too aggressive

Many of the reasons cited by your salespeople are probably relevant and significant, but in general they are useless and even distracting to you as a district sales manager. The reason is quite simple: You do not have control over these factors and cannot do much about them. You do not control the economy or the competitors. As a sales manager, you generally do not have authority to develop new products or set prices. Similarly, you do not decide what and how frequently TV commercials and social media marketing campaigns are launched.

Focusing on factors beyond one's control is a quick and certain way to becoming frustrated and even depressed, but not a way to address performance improvement. Instead, you should focus on factors within your circle of control for the purposes of analysis and action taking. As stated in Step 1, the only factors that are under direct control of sales professionals are activities: the things salespeople do regularly on a daily basis in order to serve customers and generate revenues. This can include making sales calls, sending out product proposals, making sales presentations, and attending trade shows. The activities and their outcomes are activity performance in the FACTs framework and should be the focus of the analysis in Step 3.

Multiple quantitative and qualitative tools can be used to explore sales activities and identify pain points and weaknesses; for example, sales value chain analysis, top performer benching marking, subjective assessment and observations, and survey approach. [Details of these tools are available upon request.] When used properly, these tools can help sales managers identify discrepancies and ignore opportunities associated with the sales activities. These pain points can then be used as the basis of Step 4, conduct cause analysis.

Examples of potential pain points:

• Unlike top performers, 86% salespeople spent too much time and energy on nontarget customers

• Less than 5% of salespeople recommended the new products, which were more profitable for the company

• More than 90% salespeople were overworked and lacked proper tools and job aids to be productive

Step 4. Conduct Cause Analysis

Identifying pain points of sales activities, like those in Step 3, enables sales managers to analyze causes of pain points more effectively. In Step 4, instead of considering all external and internal factors influencing sales performance, sales managers focus on specific causes related to the pain points. Compared with a general analysis, the focused analysis is more manageable, more productive, and, therefore, more likely to reveal the root causes. The focused analysis also enables sales managers to dedicate their efforts to addressing causes within their circle of control without being distracted by factors beyond their control.

A particularly useful framework for cause analysis at this stage is Thomas Gilbert's behavioral engineering model (BEM; Gilbert, 1987). This seminal work has greatly influenced the field of performance improvement and has been empirically tested and supported across industries globally (e.g., Cox et al., 2006; Hartt et al., 2006; Stull & Freer, 2019). Binder (1998) and Chevalier (2003) simplified Gilbert's original framework and made it more management friendly. Phillips et al. (2020) introduced this model into the field of marketing and summarized the main factors associated with marketing and sales performance issues in the “cause analysis for marketing implementation” table (Phillips et al., 2020, Table 4.1, pp. 98–99). We adapted it into Table 1.

TABLE 1 Cause Analysis

View Fullscreen

Table 1 highlights six categories of potential causes of a pain point. According to the BEM, the top three of the six factors (expectation, resource, and incentives) are at the system level. The other three factors (salespeople's knowledge, capacity, and motivation) are at the individual level. The theory posits that system-level factors are far more important than individual-level factors in determining job performance (Gilbert, 1987). Empirical studies conducted worldwide support this notion and show that system factors determine 55%–85% of job performance (e.g., Dean, 1997; Fu et al., 2022; Stolovitch & Keeps, 2004). Therefore, when conducting cause analysis, sales managers should consider the three system factors before exploring the three factors at the individual level.

Tools have been developed to help sales managers conduct cause analysis (these are available upon request). A thorough analysis of causes at Step 4 enables sales managers to better understand the challenges needing to be addressed and the resources available. As shown in Figure 1, they have the option to revise the SPI objective set in Step 2 by incorporating the additional information and in-depth understanding gained as a result of the cause analysis.

Step 5. Design and Develop Solutions

After identifying pain points and analyzing causes, sales managers are ready to design and develop solutions to address the activity discrepancies and take advantage of neglected opportunities in order to achieve their SPI objectives. On the basis of accumulated research and managerial experience, sales managers have a variety of solutions available in their tool kits. As demonstrated in Table 2, each of the six categories of causes comes with multiple solutions.

TABLE 2 Potential Solutions for Each Cause

View Fullscreen

For example, if the cause identified is that most salespeople were unclear about managers' expectations (i.e., role ambiguity), then sales managers should better articulate their expectations. Tools for this purpose include goal setting, quota setting, or even sales contests. On the other hand, if the causes identified are associated with a salesperson's capacity and aptitude, then sales managers may rely on hiring and recruitment to select individuals with the proper capacity to join their sales force. But, more realistically, managers also have the option to modify organizational structure or redesign work processes to accommodate individual salespeople with different aptitudes. No matter what solutions are chosen, for sales management the key to success in this step is to properly define desired salesperson behaviors. No solutions, whether changing a sales quota or providing sales training, will be effective until salespeople implement desirable behaviors.

But what behaviors are desirable? We use the following criteria to define desirable salesperson behaviors that ensure successful solutions for sales performance issues.

Step 6. Implement the Solutions

After the right solutions are chosen and desirable behaviors are identified, the next step is to implement those solutions. In the context of sales management, managers in Step 6 should take proper actions to facilitate the desirable behavioral changes defined in Step 5. The process of solution implementation is also the process of change management because all solutions involve changes. Fu et al. (2018) introduced a framework to measure changes occurring at different levels. This framework, known as the ROI marketing chain of impact, measures and calculates data at the reaction level (Level 1), learning level (Level 2), action (Level 3), business impact (Level 4), and the ROI (Level 5).

At this point, sales managers should focus on action (Level 3) because it is where the desirable behaviors occur. Sales managers also need to pay attention to the lower levels of measurement, such as salespeople's reactions (Level 1) to the solutions and learning (Level 2), given that both are important antecedents of salespeople's actions. Learning, in this context, refers to the extent to which salespeople acquire and process information related to the solutions.

It is no secret that human beings have the tendency to refuse change. In order to overcome salespeople's inertia and reluctance, managers should focus on the following attributes identified by research to induce desirable behaviors (Azjen, 1985; Davis, 1989; Fishbein and Azjen, 1975; Phillips et al., 2020).

Perceived usefulness measures the extent to which salespeople perceive the solutions to be useful and beneficial and that can potentially make their job more productive and life easier.

Perceived ease of use refers to the extent to which salespeople believe that adopting the solutions and taking the expected actions will be effortless, with less difficulty and fewer barriers.

Self confidence, also known as self-efficacy, is another important predictor of salespeople's behavior. When salespeople have more confidence in their abilities to successfully adopt the solutions, they are more likely to assume desirable behaviors and accept the solutions.