Sales success is measurable and also fails. So it is usually very clear which employees are doing well and who is not achieving the goals. If sales people underperform over a longer period of time, dismissal and replacement seem the best solution. But it is important to first set up a Sales Performance Improvement Plan (SPV) together with underperformers, so that they get a real chance to get their results to the desired level.
In an SPV there are steps to get the performance up to standard within a set period. If that fails, the SPV can be used to place or dismiss the employee elsewhere. However, these options are often more expensive and far-reaching for the organization in advance. Training and development of existing employees are usually cheaper than the recruitment and selection of new people.
In an SPV, managers name the lagging results - poor quality of work or missed targets - but an SPV is not suitable for inappropriate behavior or a wrong attitude.
How do you make an SPV?
To prepare an SPV, the manager and employee go through the following steps in the process:
- Beforehand: determine the situation and the role of the manager
- Determine content: SMART
- During: Team effort and control
- Afterwards: clear closure
For effectiveness, it is crucial that a manager believes in the employee's opportunities. Without this conviction, there is a risk that the seller will see the process as the way to the exit. That is why the manager must make it clear from the start that the approach is to help the employee with his performance. Moreover, it is not a one-way street, but is about interaction between both parties.
A good starting point is to determine the reasons for the underperformance.
- Does the seller have the right knowledge and experience?
- Are the goals clear and achievable?
- Are there matters in private life?
- Is the remuneration appropriate and consistent with the strategy?
Every SVP must be SMART:
- Specific. What are the exact quotas and results achieved (in terms of turnover, customer retention, margins, etc.)? What are the consequences (relocation, relegation, dismissal) if the goals are not achieved?
- Measurable. Objective goals prevent surprises at the end of the process. Sub-goals (number of phone calls, completion of an education / training, regular consultation or customer visits, for example) can help to achieve the main goals.
- Achievable. The goals are achievable. Is extra support or training required?
- Relevant. The goals match the job description.
- Time-bound. The SPV runs for a fixed time, for example 1 month or quarter, with intermediate measurement points. This way the employee can gradually improve; the process is central to the SVP.
Sales Performance Improvement Plan (SPV) Templates
An SPV is not a one-off action, but a process to which all involved must contribute.
- Achieving objectives
- Make appointments with managers to discuss progress
- Giving insight into the causes of lagging performance and possibly asking for specific support
- Understand and address the cause of the poor results. Lack of training? Unclear reward? Managers who investigate this must take into account possible consequences for the rest of the team.
- Motivate. An SPV is no fun for the employee. Confidentiality and encouragement are important to keep employees motivated.
Closure or extension
- At the end of the SPV period, the manager and employee determine whether the goals have been achieved. If that is not the case, the manager has two options:
- The consequences are implemented in accordance with the agreements (dismissal, demotion, transfer, other employment conditions). The outcome is no surprise for the employee
- Progress has been made, but not yet up to the agreed level. Then the SPV can be extended.
SPVs are very suitable for sales teams, because the goals are measurable and clear. The results are clear and good agreements are possible to gradually get behind performance to the desired level. This is a task for both the employee and his supervisor.
Dismissal can be a last resort, but sometimes it is the best solution: poor performance and undermining behavior can drag an entire team down.
Managers can evaluate their own hiring process to find out why they have made the wrong choice. Training an employee is cheaper than replacing it, but the most cost-effective measure is of course to hire the right employee immediately.