The present and future of Sales Performance Management in Italy

To face new problems and rapidly evolving, unpredictable economic scenarios, faster, more robust decision making, is needed in the business world, mixing qualitative and quantitative data. In this context, in the sales sector too what is coming to the fore is a fact-based mindset (both inside and outside, in relation to customers. In recent research by the Commercial Excellence Lab (CEL) at SDA Bocconi School of Management, the data-driven approach to decision making emerged as one of the pillars of future sales strategies. Yet using available data in a truly effective way is still represents a challenge.

CEL, partnering with Akeron, conducted a survey to discover where Italian companies currently stand in terms of Sales Performance Management (SPM) systems, the set of data-based applications that run integrated analytics. This input can make decisions more effective and efficient with regard to various operating procedures and back-office processes. Examples here include setting goals, planning activities, appraising the sales network, optimizing compensation and incentive schemes and mapping sales territories.

The aim of our study was to ascertain the current status of tools and processes for planning, control, reporting, and incentivization in the sales sphere, which are the most critical managerial levers for guiding sales force behaviors and driving business performance.

We surveyed 330 executives from companies operating in a range of sectors who serve in various organizational roles (general managers, sales managers, sales (operations/support/analysis), controllers/finance, HR managers)

One standout finding is the level of satisfaction with today’s SPM systems, which is not particularly high. (On a scale of one to ten, the sample average was 5.94.) But there were sizeable differences from sector to sector, with the highest satisfaction in ICT and services, and the lowest in mass market goods and industrial products.

Only 23% of the companies in our survey have developed predictive or prescriptive SPM; in other words, these organizations have systems with the capacity to provide precise indications on what they need to do to hit their sales targets. Instead, 44% have descriptive SPM systems, which at most can accurately describe the phenomena of interest to the sales team, while 29% have a basic SPM system in place, which can only produce a modicum of analytics to give a general overview of relevant phenomena. The more evolved systems (i.e. predictive and prescriptive) are mainly found in big companies and among top market performers.

As far as effectively managing commercial initiatives, we also found wide divergence in terms of the availability of solutions, tools and processes. In examining these, we explored how they enable companies to carry out 13 governance functions relating to sales actions. By crossing this availability with the importance attributed to each function, we were able to identify an area of excellence linked to managing daily activities. These in turn enable organizations to make targeted decisions to focus and fine-tune the actions of every single salesperson, in particular in the short term, to boost immediate performance. Some specific examples are the ability to set precise individual targets, to carefully monitor how each salesperson works, and to analyze the underlying performance drivers for each sales team member in the company.

As far as imperative, urgent intervention, priority goes to addressing the limited capacity of SPM systems to reliably simulate the economic impact of alternative courses of action, and having a sales reporting system that integrates data from various sources. These functionalities represent the strategic side of process management, which identifies actions characterized by greater managerialism, which in turn involve analyses, evaluations, and decisions that can impact medium- to long-term performance, and encompass various corporate functions.

Organizational responsibility for day-to-day management (commercial planning, mapping sales zone/territory to assign to salespeople, controlling and evaluating salespeople/stores) clearly falls under the umbrella of a single function – sales – at most with the support of other functions (marketing and controlling).

In contrast, ownership of more strategic actions does not belong to a single function alone. Specific examples here are reporting, and handling salary packages and incentive schemes. As for the latter, our sample shows that myriad functions intervene in this case, with no single one holding more sway over the others. This responsibility for management, shared and dispersed across functions, translates into a low management capacity, generally speaking.

A final observation that emerges from our survey is a widespread propensity to invest in SPM systems (28% of our sample say they will make large or very large investments), in particular among top performers.

Our research underscores the fact that widespread adoption of SPM systems is contingent above all on a cultural change that leads to greater information transparency, standardization and sharing. In particular, an organizational change must primarily involve rethinking responsibilities, organizational processes and decision-making relating to SPM.