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Optimizing Sales Performance Management in Manufacturing – Strategies to Navigate Challenges and Drive Growth

Manufacturing companies are constantly grappling with evolving market trends and customer demands. From digital transformation to supply chain disruptions, they face myriad challenges in optimizing their sales performance. Sales Performance Management (SPM) emerges as a crucial tool in this scenario, offering strategies to overcome hurdles and drive growth. In this article we highlight key trends in the manufacturing industry and explore how SPM helps companies tackle these challenges effectively.

1. Digital Transformation

The manufacturing sector is undergoing a significant digital transformation, with Industry 4.0 technologies such as IoT, AI, and big data analytics revolutionizing operations. According to a report by McKinsey, companies that fully embrace digital transformation can boost their operational efficiency by up to 40%.

SPM enables manufacturers to harness the power of data-driven insights for better sales forecasting, customer segmentation, and incentive optimization. By integrating digital tools into their sales processes, companies can streamline operations and enhance productivity.

2. Tools and Processes

Many manufacturers still rely on outdated tools and manual processes for sales performance management, such as spreadsheets or legacy systems. These tools are often inefficient, error-prone, and lack scalability. According to Ventana Research, companies using manual processes for sales compensation experience a 48% higher error rate. By transitioning to modern, automated SPM solutions, manufacturers can eliminate errors, improve efficiency, support their digital transformation, and drive growth.

3. Global Competition

In an increasingly globalized market, manufacturers face stiff competition from both domestic and international players. According to the World Economic Forum, global manufacturing output is expected to reach $16 trillion by 2025, intensifying competition further.

SPM provides manufacturers with advanced analytics and performance tracking capabilities to identify and respond to market opportunities. By aligning sales strategies with market dynamics, companies can stay ahead of the competition and drive revenue growth.

4. Channel Sales

In some form or another, the vast majority of manufacturers rely on indirect sales channels to get their products into the hands of the end consumer. Did you know that 75% of world trade flows indirectly (WTO)? Because of this reality, effectively motivating (and managing the conflicting demands) of both in-house sellers and distribution partners is a critical and complex business challenge that manufacturers must content with to maximize profitability.

SPM offers tools for effective channel management, allowing manufacturers to incentivize desired behaviors, monitor channel performance, and optimize partner relationships. By fostering collaboration and transparency, companies can maximize channel effectiveness and drive sales growth.

5. Diverse Sales Teams

Manufacturing companies often have diverse sales teams with varying roles and responsibilities. Managing different compensation plans for these teams can be challenging and time-consuming. According to WorldatWork, organizations with personalized incentive plans experience a 44% increase in sales performance.

SPM solutions equipped with flexible compensation management capabilities allow manufacturers to tailor incentive plans to individual sales teams, driving motivation and alignment.

6. Supply Chain Disruptions

The COVID-19 pandemic exposed vulnerabilities in global supply chains, disrupting manufacturing operations worldwide. According to a survey by the Institute for Supply Management, 75% of companies reported supply chain disruptions due to the pandemic.

SPM helps manufacturers adapt to supply chain disruptions by providing real-time visibility into demand fluctuations and aligning sales efforts with supply chain realities.

7. Cloud Adoption

The adoption of cloud-based solutions in manufacturing allows for greater flexibility and scalability. Cloud-based SPM platforms enable manufacturers to access sales data from anywhere, at any time, facilitating collaboration and decision-making. In fact, Gartner predicts that by 2028 cloud computing will shift from merely being a technology disruptor to becoming a necessary component for maintaining business competitiveness.

By leveraging cloud-based SPM solutions, manufacturers can streamline sales processes and adapt quickly to changing market conditions, driving growth and competitiveness.

8. Changing Customer Expectations

Today’s customers expect personalized experiences and seamless interactions across all touchpoints. According to Salesforce’s latest State of the Connected Customer report, 91% of business buyers said the experience a company provides is as important as its products and services.

SPM equips manufacturers with tools for customer segmentation, targeted marketing, and personalized sales strategies. By understanding customer preferences and behavior, companies can deliver tailored solutions that meet individual needs, driving customer satisfaction and loyalty.

9. Cost Pressures

Manufacturers face increasing pressure to reduce costs while maintaining quality and profitability. Rising raw material prices, labor costs, and overhead expenses further exacerbate this challenge. According to recent research by Visual Components, cost pressures are weighing heavily on all U.S. manufacturers, forcing all to offer higher salaries to attract in-demand talent.

SPM enables manufacturers to optimize cost of sales and streamline sales operations for maximum efficiency. By analyzing sales performance metrics and identifying areas for improvement, companies can achieve cost savings without compromising quality or customer satisfaction.

10. Talent Management

Recruiting, training, and retaining top sales talent is essential for driving growth and maintaining competitiveness in the manufacturing industry. However, talent shortages, skills gaps, and high turnover rates present significant obstacles for companies. Constantly onboarding new hires and realigning territories can disrupt sales operations and impact performance. Research by CSO Insights indicates that companies with effective sales onboarding programs achieve 60% greater sales quota attainment.

SPM helps manufacturers optimize sales team performance through data-driven insights and performance incentives. By identifying top performers and aligning incentives with business objectives, companies can attract and retain the best talent to fuel sales growth. Also, by leveraging SPM solutions with robust territory management functionalities, manufacturers can streamline processes and ensure continuity amid team changes.

Sales Performance Management serves as a strategic imperative for manufacturers, enabling them to overcome challenges, seize opportunities, and achieve sustainable growth in today’s competitive landscape. By leveraging advanced analytics, optimizing sales processes, and empowering sales teams, companies can drive superior performance and deliver value to customers while maintaining profitability and compliance.

Are you ready to drive growth by aligning and motivating your sales teams? If so, we are here to support your SPM journey and help you identify the best SPM solution for your needs. Contact us today to learn more.