These days, B2B sales organizations face more challenges than ever. For many companies, the selling dynamic is changing as their sales focus shifts from perpetual software or equipment licenses to as-a-service models or the data it generates. Meanwhile, evolving expectations, digital transformation, and societal shifts are changing how B2B customers buy. Customers demand more than products and services, they expect memorable omnichannel buying experiences.
Many companies are launching new customer-centric offerings and transforming existing business models to stay competitive. In this environment, the sales organization can't be left behind. Simply stated, when people buy differently, companies must sell differently. This means reimagining the sales function and its go-to-market capabilities to better connect with potential customers, communicate the product or service's value, and close the sale. The stakes are high—when companies get it right, the sales organization can help drive profitable growth, improve the seller experience, and enhance customer outcomes.
A Pay for Performance (P4P) program helps drive a successful transformation by motivating sellers and encouraging the right sales behavior. Yet too often, companies equate P4P with compensation and attempt to motivate sellers by changing their pay structure—by taking a “carrot and stick approach.” However, a holistic program considers the entire organization and the transformation that's necessary to make sellers successful while achieving the organization’s goals and improving the customer’s experience.
Our Pay for Performance framework, based on our observations of sales transformation success stories, lays out the building blocks for an effective program: vision and governance, program design, technology, and analytics.
- Lay the foundation with vision and governance. Start with a clear vision that ties your organization's growth goals to sales outcomes, then align the P4P objectives to these goals. What do you want to accomplish this year and in the next five years? What unique levers can you pull? Once they are defined, determine the strategy and guiding principles to guide downstream activities. Most importantly, don't overlook the importance of gaining stakeholder buy-in and communicating your strategy to the broader organization.
For example, a global energy company took the time to gain stakeholder buy-in to its vision for positioning its field services as an additive to its traditional business. By communicating the vision, its pitch for the offering, and how to engage with the potential buyer, the sales organization was well-equipped to promote the new offerings.
- Design the program to achieve your growth ambitions. Next, design sales roles and assign territories to help the sales team achieve the growth goals. Is the market adequately covered to capture all opportunities? Does your sales team have adequate technical knowledge? New support or sales roles may be required when introducing a new product or changing a business model. Good role design considers the end-to-end customer journey and requires continuous evaluation and updates, especially as buying behaviors shift to digital or virtual environments.
Good territory design is also critical. Consider territory design for a company with a new, highly complex offering that plans to introduce a product specialist as an overlay role to consult with customers and business development reps. Sales leaders should define the specialist's territory within the context of the business strategy and its coverage model. Multiple factors determine the need and definition of overlay roles and how they support the various growth objectives of an organization. For example, how many product specialists are required, which customers or reps do they work with, and when should they get involved? A thoughtful approach to territory design, informed through analytics, helps lead to optimized coverage and ROI.
- Put the right supporting technology in place. Once the P4P program is designed, leaders need to consider how to integrate the program into the sales organization. The technology landscape includes solutions specifically designed to support sales territories, quotas, compensation crediting and reporting, analytics, and data integration tools. By operationalizing P4P with purpose-built technology, organizations gain access to the latest features, reducing tech capability needs and increasing focus on core competencies.
The right solution must also support the efforts of your sales organization. A platform that puts information at your seller's fingertips can significantly impact the sales organization and supercharge business outcomes. Can the seller check product availability and the customer’s buying history, as well as his monthly quota? With the right tools, sales reps are better equipped to focus on customer interactions and work to build trust in the organization.
- Invest in analytics and reporting. To make any P4P program successful, sales organizations need to move from simply gathering data to learning from insights to make better decisions. Making appropriate investments in analytics and reporting holds the key. All stakeholders need to be identified early in the process, along with the insights they need, and how and which tools can support their tasks and provide the best user experience.
A robust P4P program—one that's designed with a complete view of the organization and its growth objectives—is one of the key levers available to sales organizations to drive a successful transformation of their business model or offerings. Companies should consider moving from making reactive changes to traditional Pay for Performance components to developing a sales optimization program holistically—by laying the foundations to align with the organization's vision, designing the program to meet its goals, and supporting it with technology and analytics capabilities.
The pieces must be knit together so that salespeople feel empowered and energized to sell. Elevating the seller’s experience makes it easier to deliver better customer experiences and outcomes—and in turn, helps both the seller and the sales organization achieve their performance goals.
Paul Vinogradov, a principal at Deloitte Digital in Sales Transformation, leads Deloitte’s Future of B2B Sales Research.
Ashish Tiwari, senior manager in the Strategy practice at Deloitte Consulting, advises B2B technology clients on strategy-led transformations.
Priya Agnihotri, senior manager in Customer and Marketing at Deloitte Consulting, is a life sciences and health care cross-SGO sales specialist.
Mario Arnold, sales excellence manager at Deloitte Consulting, focuses on sales process improvements as a part of sales technology transformations.