How To Improve An Underperforming Sales Team

Introduction

It’s rarely our first instinct to re-examine our compensation plan when a sales team or individual reps fail to meet performance expectations. And while your comp plan won’t be the only contributing factor to performance gaps, every step you take to improve performance will be futile without a well-oiled plan.

The only problem? Compensation models in most sales organizations today are outdated at best and broken at worst. Charlie Munger once said, “Show me the incentive, and I’ll show you the outcome.” Yet most sales orgs default to the same old copy and paste comp plans without considering how it will inform rep behavior.

In today’s rapidly evolving B2B buying landscape, rigid, one-size-fits-all structures that don’t acknowledge the varying motivations of salespeople won’t cut it. Getting your compensation model right is one of the most underrated strategies for changing behavior, boosting performance, and even transforming your buyer’s experience.

In this guide, we’ll break down the factors that actually drive sales performance and how to get your team aligned on KPIs that result in attained quotas. Then, we’ll discuss how you escape the maze of broken comp models that give companies the same disappointing results quarter after quarter. We’ll share tangible ways you can unify all incentives (commission structures, SPIFs, etc.) so you can drive desired behavior consistently and create an incredible sales culture while you’re at it.

Section 1

What Really Drives Sales Performance?

Success leaves clues. What top performers have in common is self-motivation and the ability to remain focused on goals and quotas. However, while sales teams are responsible for closing deals, revenue results come from varying factors like the company’s reputation and how their comp plan is structured.

To improve B2B sales performance, we need to learn which metrics matter most and how to effectively measure them. Having a clear understanding of your goals allows you to plan how you’ll motivate your team to attain them.

Sales Performance Lives and Dies by KPIs

Sales success lives and dies by numbers. And if your team isn’t unified by executing data-driven activities, you won’t hit your targets. KPIs ensure that the activities each individual and department perform daily are aligned with the organization’s objectives. Sales reps will always focus on activities that maximize their earnings. Sales managers will ensure their team hits targets and that their top performers are happy. The senior leadership team’s responsibility is to ensure all those activities are profitable.

Aligning Your Team on KPIs

To help both roles get what they want while also prioritizing the overall company goal, you must align your entire organization on which KPIs matter most. Only then can those metrics become the guiding force behind all decisions. With ballooning B2B tech stacks, it seems like there are more stats than ever to measure. While the list below is not exhaustive, it’s a good place to start if your goal is to improve the performance of an underperforming sales team.

Sales leadership is:

• 10% managing up

• 20% having tough conversations

• 30% really understanding your numbers

• 40% uncovering what motivates your team

• Sometimes, it’s 100%being a therapist.

Five critical sales performance KPIs your sales team should be focusing on

1. SALES PRODUCTIVITY

Shockingly, two-thirds (64.8%) of reps’ time is spent on non-revenue-generating activities, and only 35.2% is spent actually selling. (Forbes)

Growing companies have many different priorities, so measuring sales productivity ensures that reps are “keeping the first thing first” and focusing on activities that close deals.

Some of the most critical sales productivity metrics:

• Meetings held / demos booked

• Sales cycle duration

• Time to productivity

Every software vendor out there claims to make your sales team more productive, but do you even have a baseline understanding of what your reps are doing right now? When you can grasp how much time your reps currently spend selling (versus admin work and meetings), then you can implement tools and tech that increase their efficiency.

2. LEAD QUALITY AND RESPONSE TIME

How quickly your team responds to leads determines the likelihood of that lead converting into a paying customer.

According to Chili Piper, it takes the average B2B sales team 42 hours to respond to a new lead, and 38% of those leads never respond.

Quicker response times are critical. Analyze how long your leads are waiting for a response, and then figure out how to shorten it.

3. AVERAGE DEAL SIZE

Number of deals closed isn’t enough—you need to know how much revenue came from each deal and ideally, how much work it took to close it. That will help identify your average deal size needed to be profitable.

If you realize that too many deals are coming in below your average deal size, it could point to reps opting for the smaller, quicker wins, or discounting just to close the deal.

One less obvious — but just as detrimental — problem we see is unprofitable workload ratios. Some customers will require a lot more effort to close. Some customers require so much work that even if the deal is bigger than average, the profit your company realizes is less than smaller deals that require less work.

Average deal size reveals where you need to adjust your sales goals and compensation plan. It will also show you when it’s time to double down on lead generation efforts, help you balance territories, and avoid unprofitable deals.

4. WIN RATE

Winrate, also known as opportunity-to-win ratio, shows you how many deals close versus how many entered your pipeline. Measuring winrate reveals how effectively your reps are moving deals from negotiation to close and where they can improve.

Some of the contributing factors that affect win-rate are:

• Pricing

• Competition

• Lead volume

• Seasonality (Timing)

5. QUOTA ATTAINMENT

Quota attainment is critical when you look at the team’s success as a whole. If only 40% of your team attained quota, it could indicate issues beyond individual sales rep performance.

Where coaching an individual rep to meet their quota is self-explanatory, quota attainment forces you to evaluate the quality of the plan you created. Using historical data to develop your quotas is critical because even the best reps won’t fill an unrealistic or poorly-planned quota.

How to Stay Consistent in Volatile Times with Sales Tracking

Monitoring your sales performance metrics once per quarter or year isn’t enough to guarantee success anymore. Business is dynamic and your sales team, processes, and incentives will need to adapt as market conditions change over the year.

In particular, your comp program must be able to adapt to situation-based payouts or changes, like commission-splits, one-off discounts, and SPIFs. In an unstable economy and shifting buying landscape, agility is key. The ability to analyze and respond to incoming sales performance and market data in days not weeks or months is one of the few significant competitive advantages in the modern era.

Start-ups have used their decisioning agility to great advantage when taking on industry incumbents. Startups can move information around and make decisions much faster than larger and more mature organizations with traditional, rigid functions and processes. That allows them to take advantage of new opportunities and mitigate risks before their behemoth competitors have had time to analyze them.

So how do you stay adaptable? Start by centralizing your data, ensuring version control and accuracy. Automate the calculation and reporting of KPIs as much as possible, so you’re free to focus on coaching your team and creating incentives like SPIFs. The key to dynamic compensation planning is using a platform that allows you to view performance in real-time so that you can make decisions and course-correct in real-time.

Data-tracking action items that your compensation plan platform will automate:

• Gather updates daily

• Clean data for accuracy

• Analyze the data

• Inform the team on how to act on that data

Sales Performance Measurement Tools

Now that you’ve established which metrics to track, it’s time to choose your measurement tools. Equip your team with tools that help them do their jobs more efficiently and automatically track their results so you can improve upon them.

Tool #1:

Customer Relationship Management software (CRMs) to automate and measure sales activities

Most B2B sales organizations have the motto, “If it’s not in the CRM, it didn’t happen.” A CRM is usually the first tool a sales team will implement, serving as your system of record for sales activity, individual performance, and sales revenue. Two of the most popular CRMs are Salesforce and HubSpot.

Tool #2:

Sales Engagement Platforms (SEPs) to measure sales productivity

Sales Engagement Platforms integrate with CRMs, helping sales reps advance opportunities faster by automating workflows and data analysis. With sales engagement software, you can determine if your cold email subject line led to opens and responses. You can see how many touches it took to get a prospect to respond. With features like conversation intelligence, you can spot the competitors or objections brought up most on sales calls. One of the most popular sales engagement tools is Outreach. For in-depth call analytics, Gong is the leader.

Tool #3:

Sales intelligence software to score leads and accounts

In our noisier-than-ever digital landscape and the increasing cost of ads, revenue teams are becoming more strategic about identifying in-market accounts. Sales intelligence tools help sales and marketing get on the same page about when an account is ready to convert to an opportunity. Sales intelligence use shard data to score leads and accounts, eliminating human subjectivity that often skews forecast data. 6Sense is one of the industry leaders.

Tool #4:

Sales Compensation software to stress test your comp plan and accurately budget

Sales Incentives Compensation Management (ICM) software automates commission calculation, analysis, and forecasting. While small businesses can getaway with using a spreadsheet, larger orgs need more sophisticated solutions to ensure accuracy, efficacy, and sanity. Legacy ICMs provide the tools for Sales Ops to program their own automations. Forma.ai is the first ICM solution that automates the programming, analysis, and forecasting in a single platform.

Top 12 New Tech Sales Intelligence Tools

1. HubSpot
2. ActiveCampaign
3. Apollo
4. Salesloft
5. Revenue.io
6. ZoomInfo
7. Seamless.ai
8. LinkedIn Sales Nav
9. Adapt
10. Lusha
11. Reply
12. Groove

Section 2

Helping or Hindering? Your Sales Compensation Plan Could be the Problem

Think of your sales compensation program as the spine of your sales organization. Your comp plan incentivizes and guides your rep’s behavior. It also connects individual goals to corporate goals and communicates explicitly (or implicitly) where reps should focus their efforts. Unfortunately, most organizations rarely have the internal expertise or know-how to develop and maintain an effective program.

Common Compensation Plan Pitfalls

Problem: Unattainable Quotas

You designed your comp plan based on general benchmarks instead of your company's unique context.

Using your competitors' compensation programs or infusing elements of past programs leads to the dreaded "Frankenplan".

Solution: Emphasize your unique corporate context when compensation planning

Ensure your unique company context guides your incentive program design by basing it on your own historical transactional data, not benchmarks and guesswork. Context ensures that compensation plans are kept simple and focused on what truly matters to your success.

Problem: Unbalanced territories

New sales leaders come in with comp plans that worked in the past. The problem is, they lack the context of the new company. Here's where it gets messy: the new leader wants to impose their playbook on the current comp program, and existing leaders in Finance, HR, and Sales want to preserve elements of the existing comp program. The result is that they wind up meeting somewhere in between, resulting in a Frankenplan with disjointed elements that don't ultimately lead to revenue growth.

Solution: Make sure your comp plan is incentivizing the right behavior

Be careful with individual product incentives, which leads to salespeople dropping product and shifting their focus away from maximizing total sales for the business.

Instead, use SPIFs to promote individual lines and use data to create an uncapped commission plan that doesn't "overpay" reps.

Problem: Lack of rep engagement

You've checked all the boxes of a winning compensation plan but there's one problem: your reps didn't engage in time. Other than design and administration, communication is one of the three pillars of sales compensation excellence. Without it, your reps won't understand the plan or how to make money from it and therefore won't engage with it.

Solution: Communication

Communicating your comp plan to sales reps is an ongoing process. Monthly spreadsheets or PDF summaries aren't enough.

They need to understand how their commission was calculated quickly and easily so they can tie it to deal elements and identify opportunities in the pipeline that can bring similar value.

Your reps AND your bottom line will thank you.

How to Coach Underperforming Sales Reps

Sales leaders tend to fall into two traps when it comes to dealing with poor performance. A) managers immediately jump into helper mode and invest too much time and resources into reps that just aren’t a great fit. Or B) They default to PIPping the rep too early.

While Performance Improvement Plans sound great in theory, understand that most reps will take your PIP as step one in an eventual termination process. Knee-jerk reactions to missed quotas can have costly mistakes.

Instead, take a step back and strategically assess the next best move when dealing with underperforming reps:

1. Clarify expectations early and often

Humans like to know where we stand within the larger group. We also need to understand the why behind what we do. Bring the necessary KPIs and metrics up in every group and 1:1 meeting. You may start to feel like a broken record, but when reps always know how they’re measuring up, you create a culture of “no surprises.” Most importantly, explain how these KPIs relate to your compensation plan.

2. Take a hard look at your compensation plan

If your reps hate their commission plan, they will miss their targets. If reps are walking out the door, it could be because of your compensation plan. Even the best sales compensation plan will fail if you don’t properly communicate it to reps or they don’t trust you to calculate it correctly.

Common reasons sales reps hate their commission plan:

• They think the plan is designed to limit their earnings

• They think the quotas are unfair

• They don’t understand how to make money from the plan

• They don’t trust you to calculate commissions correctly

3. Be open to constructive feedback about your management style

There is no one-size-fits-all management style, and your reps may be reacting negatively to yours. Low performance is a symptom and not a root cause. CloserIQ recommends questions like, “Is there anything I could be doing to better support you?” or “Ideally, how would you like to be managed?”.

You might not be able to implement the changes they ask for, but the goal is for your rep to feel heard, which can go a long way for morale.
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“Development of a winning culture starts with understanding your people’s why, earning their trust and being transparent about your path and need for change. People will get in the boat with you when they feel included and their feedback and input are heard. When they are part of the change, the likelihood they are bought in increases exponentially.”
- Carson V. Heady, Author of Salesman on Fire.

Creating Data-Backed Sales Goals Is the Key to a High-Performing Team

Here are the two ingredients for creating a high-performance sales team:

• Make them feel involved in the creation of their goals

• Help them understand how their day-to-day activities are getting them closer to that goal

Making these two activities central to your sales management technique is known as Management by Objectives (MBO). MBO was popularized by management guru Peter Drucker’s 1954 book, The Practice of Management.

Here’s how to execute MBO management techniques within your team:

Step 1: Get buy-in from other departments on your goals

Too many sales leaders set targets in a silo. Lack of company-wide collaboration leads to organizational misalignment. Include stakeholders from every function involved when creating goals — particularly for revenue-generating programs, like sales compensation.

Step 2: Present those goals to your team and fine-tune them

Have a one-on-one with reps to establish their personal goals. Again, avoid one way conversations. Be open to their feedback about what’s realistic and what isn’t, so you can fine-tune your strategy.

Step 3: Build a system for continual performance and progress monitoring

Once you’ve created a plan, it’s critical that you monitor progress daily, weekly, and monthly. Your team will go into heads-down mode, which is why stopping to assess progress often gets overlooked, causing reps to go off-track. Make sure your tech stack has easy-to-read reporting and dashboard features that allow reps to see their progress towards goals easily and gives managers complete visibility over their team’s performance.

When Should You Let a Sales Rep Go?

Letting reps go due to performance issues is never easy, but you have to handle it correctly to prevent it from eroding company culture. It’s the people behind a company that determines its success. Every day, the right players will improve your culture, while the wrong ones slowly eat away at it.

Every sales team (even the highest-achieving) will have underperformers. Ironically, sales leaders spend the most time on reps who consistently fail to hit quota. As leaders, we must be able to discern when it just isn’t working out.

Sales Hacker recommends measuring your team members on these 4 elements:

Performance and Cooperation

Do they consistently miss their sales quota? Do they buck admin tasks like updating SalesForce?

Cultural Fit

Are their values aligned with the company? How well do they interact with team members?

Commitment

Are they willing and enthusiastic about performing the activities needed to hit their goals? What’s their attitude toward going the extra mile to succeed?

Competence

Have they proven they’re capable of doing the job at hand? Are they knowledgeable and focused enough to complete their responsibilities?

Section 3

The Art of Using Incentives to Boost Sales Results

While financial gain is the most prevalent motivator for sales success, it’s not the end all be all, or else a dollar amount would fix all sales performance issues. That’s why we believe strongly in a well-oiled comp plan that mixes in nonmonetary motivators.

Salespeople do care about other aspects of job satisfaction like the quality of leadership, company culture, and work/life balance. Here are some ways to motivate your team (that actually work) without financial incentives:

1. Operationalize public acknowledgment

It sounds basic but acknowledging and praising your reps in front of their team members is powerful. Build periodic public acknowledgment into your routine with these strategies:

• Top-performer of the month awards

• Catered team lunch that centers around acknowledging star sellers

• Recognition award posted in a public space, like a “wall of fame”

• Handwritten thank-you cards

2. Paint a Clear Career Advancement Path

Lack of clarity around a rep’s career trajectory leads to churn and poor performance. To motivate salespeople, define a clear plan that includes regular reviews, so they gauge their own progress. You can also consider a mentorship or coaching program that pairs newer reps with tenured sellers.

3. Encourage Healthy Competition

The best salespeople have a competitive nature—no matter how team-oriented they are. Encouraging a competitive spirit is sometimes as simple as investing in leaderboard technology like Hoopla, or workplace gamification platforms like Cooleaf.

Driving Revenue with a Unified Sales Compensation Program

Even the best perks and prizes won’t motivate your team if your compensation plan isn’t unified. With a Unified Compensation Program, you’ll make decisions based on insights, analysis, and objective truth rather than “the way it’s always been done”.

Unbalanced territories and unattainable quotas are tell-tale signs of disjointed compensation plans that don’t work for rapidly evolving businesses. Unification helps create an analytical environment and “source of truth” for managing and optimizing your sales team’s performance.

When organizations commit to a unified approach, their operations teams can quickly fine tune territories and quotas while calculating the most realistic attainment payout scenarios. At the same time, management can make data driven decisions regarding investments in their sales organization.

Compensation Strategy > Compensation Execution

1. Territory Design > Manage Territories

2. Set Quotas > Manage Quotas

3. Manage Quotas > Administer Incentive Programs

Avoid These Compensation Mistakes to Incentivize Your Sales Team

Sales organizations live or die by the quality of their sales comp plans. A poorly designed comp plan will quickly stifle engagement and slow down goal attainment. By optimizing the design and execution of your comp plans, you can focus on what matters: driving revenue, growing market share, and maximizing shareholder value.

Here are the most common mistakes companies make when creating their comp plans and incentives:

1. Setting the bar too high too soon

Having high standards isn’t always a net positive. Reps that fall behind on their objectives early in the year will view their target as unattainable and give up more quickly. The first weeks of rolling out a comp plan are critical. If your sales force doesn’t engage with your comp plan in that short window, they’ll likely struggle to hit targets over the rest of the year. Your comp plan should contain realistic objectives based on data and reasoning that your sales reps understand.

2. Overly complex design

People commonly misunderstand this tip to mean, “make your comp plans as simple as possible,” which is incorrect. Incentive programs can be as complex as your ability to execute and communicate them. That is where most organizations struggle.

Routinely optimize and rationalize comp plans to prevent your program becoming bloated with unnecessary and ineffective incentives. Short-term additions or adjustments that worked should be integrated into the core plan, and those that didn’t produce results should be dropped.

3. Capping commissions

Reps thrive on the freedom to earn. In other words? Stop capping commissions. Uncapped comp plans signal that you’re willing to pay for performance and that you have faith in your reps, goals, and plan design. Instead of capping, set commissions carefully, plan for windfall scenarios, and ensure you tie payouts to a defensible ROI. If those windfalls do occur, take the hit now and correct for the future.
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Companies cap commissions thinking that it only penalizes a small number of sales reps while mitigating organizational risk. But the top 20% of sales reps typically drive around 80% of revenue.
Some companies attempt to use soft or ‘windfall’ caps several times higher than the average earnings. These are justified on the grounds that “nobody will reach them anyway", but the psychological effect is as strong as when the cap is much lower.
Better to avoid them completely, and mitigate risk through more comprehensive forecasting and scenario modelling.

How to Incentivize Reps Beyond the Core Compensation Plan

After the initial release of your compensation plan, you must continue to create goals that reps can strive for. Continual goal attainment keeps reps motivated and engaged throughout the year.

One study found that while an annual quota highly incentivized high performers, more frequently creating goals helped keep lower performers on track. Quarterly bonuses were most effective for lower performers. Top-up incentives like SPIFs help motivate lower performers to go a bit further as motivation wanes over the year.

Use the following incentives to boost overall sales performance, close sales gaps, and create a great sales culture.

President's Club

President’s Club is the most traditional way to recognize and reward exceeding quota. While President’s Club perks vary from company to company, the peer recognition, unique prizes, and luxury experiences are highly motivating, adding healthy competition and another reason to push on throughout the year. These are often most appealing to your existing or upcoming top performers.

When designed and deployed effectively, President’s Clubs can:

• Increase sales performance

• Improve employee morale

• Increase top performer retention

• Attract other top-performing salespeople.
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PRO TIP
It might be tempting to open the President’s Club to any rep that achieves quota, but it’s a mistake. Depending on how exclusive you want your Club to be, around 5-20% of the sales team should make it into the President’s Club.

Kickers

A kicker (aka contract quality incentive) increases your reps’ commission rate beyond what they would have earned on their regular base commission rate. While core incentives reward reps for closing deals, kickers can be used to ensure reps focus on the right things during contract negotiations. Here are some of our most effective kickers to implement:

UP-FRONT CASH KICKERS

If your business has a cash-flow problem, consider offering reps a bonus for getting customers to pay upfront. The value of cash-in-hand will vary from business to business, but a good starting point of 1-3% usually works well.

INFLATION KICKERS

With inflation skyrocketing, inflation kickers can safeguard you from eroding margins, To account for inflation, insert periodic price increases into your contracts. Motivate your reps to get these contracts signed by paying them more depending on how much of a "pricing escalator" they can negotiate into the agreement.

CONTRACT LENGTH KICKERS

If you're experiencing customer churn issues or your team is overwhelmed by the annual renewal process, incentivize your reps to get long-term contracts. First, determine your current average contract length before customer leave and incentivize reps to negotiate contracts thatsurpass that time period.

Example: If customers tend to churn at the two-year mark, create a kicker than pays out a 5% bonus for any 3+ year contracts.

SPIFs

Sales Performance Incentive Funds (SPIFs) are a classic revenue acceleration strategy. Use SPIFs to mitigate seasonality, push new offers, or course-correct throughout the year. Successful SPIFs always have these two things in common:

1. They pay for themselves

2. They’re time-limited (aka they don’t last forever)

SPIF IDEAS

Status Symbols

SPIFs aren’t just about cash. Give winners something they can wear or show off that symbolizes their high performance.

A pin, a VIP seat at a conference, or even a parking spot at the front of the building (if you work in an office) are simple ways to give performers that status they crave.

We’re calling this one the SPAF: Something Precious and Flashy.

Extra Vacation Days

In the summer months, vacation days are worth their weight in gold.

Instead of cash, offer the winners of the SPIF additional vacation days for their hard work.

Annual Trip

Everybody wants to go on the annual trip. You know, the one in a tropical location, at a luxurious resort with an open tab.

Although trips are usually reserved for the 10% of performers, you could create a SPIF that opens that opportunity to the rest of the team.

Annual trips play into FOMO. When a rep goes once, they’ll do everything in their power to not miss out on the next one.

We’re calling this one SPIF: Sunny Paradise Incentive Fun.

Sports Tickets

Salespeople are competitive — they care about winning and want to be the best at what they do. A competitive spirit and sports tend to go hand in hand.

Sports help them relax after a stressful day and give them something to bond with their prospects over.

We’re calling this one SPIF: Sports Performance Incentive Fun.

The Bottom Line on Improving Underperforming Sales Teams

To create a top-performing sales team that increases top-line revenue, you must start with the numbers. Measure sales performance with the right KPIs like sales productivity, quota attainment, and win rate. Use tools like CRM, sales intelligence, and sales compensation software to accurately measure where you’re at so you can improve.

To deal with poor sales performance, identify the top factors that tend to hinder sales organizations like unbalanced territories and unattainable quotas. Then, create a dynamic plan that incentivizes the right behavior. Don’t forget to thoroughly communicate that plan to reps, then continually optimize that plan based on data using a sales compensation platform.

Once you’ve established the KPIs you’ll track and strategies to improve sales performance, roll out incentive plans that keep reps motivated to crush their targets. The right combination of SPIFs and kickers as well as non-monetary incentives will boost revenue, create an unparalleled sales culture, and attract top talent.

A unified sales plan built on data so that you can make decisions based on facts instead of opinions. Most importantly, making a commitment to ongoing performance monitoring will be a key ingredient in sales success.