McKinsey & Company notice how too often staff and sales reps struggle to see how their own goals match those of the organisation. Companies introduce all manner of performance management systems, but they can become complex, cumbersome tools that leave employees less motivated than before.
The challenge for companies is to develop a performance-management system that benefits both the sales reps and the company. That requires both a system that works and a way to track performance. In our experience, companies that outperform their peers do the following three things well:
- Uncover data on performance
Measuring performance requires transparency into data that matters, such as profitability. Without that data, managers can’t tell whether sales rep pricing activities are helping or hurting. A European steel producer had data, for example, on how overall profitability but sales managers lacked the tools to drill down to the individual customer or product level. That meant they could never measure the profitability of any given transaction or take actions to improve it. The people who win here are those who can get the field team, the inside team - everybody - using the system to input more data.
- Design the system with the sales rep in mind
Putting a pricing dashboard system in place can be useful, but it’s meaningless if the salesforce does not use it. A system should be both easy to use and relevant to the sales rep. Data visualization, simple outputs, and an ability for a rep to easily run queries against the data is a prerequisite for the success of any technology.
- Set the right targets and track actions
The final piece in the puzzle is active management and tracking. That starts with defining clear targets for sales reps based on a systematic analysis of all the facts and factors relevant to price. When those are established, the best pricing leaders put in place specific metrics that help track progress against those. It’s important to balance metrics between revenue targets and pragmatic measures of margin that are relevant to the business but also practical for the rep.
See how Stratinis can endeavour to optimize and manage your prices through our pricing software