When you mention Sales Performance Management, it's not unusual for everyone in the room to cringe. Why? Often, no one really owns it--it belongs to Sales, no it belongs to Finance, no it belongs to...

Even though this is one of the most critical areas for an organization, it is one of the least agreed upon. Sales drives revenue and impacts the financial bottom line of the company. While Sales executives focus mainly on the production of revenue, the Finance executives monitor how the revenue affects the financial statements of the organization. Often, the decision making process for these two constituencies are not in sync and that can negatively impact the health of the business. The truth is that key executives in both areas need to collaborate and determine how the decision making process should work for the organization.

Sales Performance Management and its components--incentive compensation, territory and quota management, and product management--are important in ensuring Sales and Finance are on the same page. The ability to make informed decisions not only impacts a company's viability, it helps guide Sales and Finance on where to focus their attention. If executives are monitoring by specific metrics, then they will know where the organization is strongest and where they can refocus resources. For example, if a company discovers that a particular mix of products sold as a package is more appealing to the client base, then they can refocus on selling the package versus the individual items to increase revenues.

Defining and agreeing upon metrics is critical in the decision making process. Metrics could include regions, territories, product groups or lines, sales force personnel, reporting lines, transactional liability and time periods. If you are wondering how to define these metrics, look to one-off or special request reports. Sit down with key decision makers in Finance and Sales individually and create a wish list from these two groups. Then combine that list. Then sit down with the entire group, and sort through and prioritize the list. These key metrics can aid in decision making and in defining your Sales Performance Management goals.

Sales Performance Management is the process by which you manage your sales, incentive compensation, territories, product and or services to drive revenue, and how you manage each of these components affects your bottom line. By aligning Sales and Finance and defining key metrics, you will aid executives in making decisions that will positively impact the financial bottom line of the company.