Finance plays a large role within an organization, from setting guidance on revenue targets, establishing budgets for head count, to setting goals and quotas for sales.  In many organizations this is where the role of finance ends, but in forward thinking companies, it’s only the beginning.  Just as sales and marketing alignment brought about better sales performance, so will sales and finance alignment.  Finance should be playing an integral part in the optimization of territories, the protection of margins, and in sales performance management.

Sales Performance Management
Leveraging Finance to Optimize Territories

In order to truly optimize territories finance needs to be involved, after all, they are the ones that have the historical data on territory performance and, therefore, are in a better position to predict the potential each territory will have moving forward.  By leveraging finance, sales will be able to better allocate territories because they will have a better understanding of how many current customers are in each area, how many different product lines have been sold to those customers, and how much market potential is still untapped.

Armed with this knowledge, sales leadership will be able to ensure that their sales capacity meets their needs in order to reach their revenue targets.  Better territory alignment will result in better sales attainment, as territories become more fairly assigned, ridding the organization of over or under assignments.   Sales leaders will also be able to make better use of sales performance management tools as they can more easily compare reps apples to apples.

Protecting Margin Health – Finance within CPQ

Finance has always plaid a role in quotes and proposals.  They help determine what prices should be, how much is an appropriate amount to discount an item, and in the approval of the final proposal.  While these functions are extremely important in keeping your pricing integrity and in the protection of margins, they can also be a drag on sales productivity.  While there should be an approval process in place to ensure that overzealous sales reps are not giving away the farm, the process should happen as quickly as possible to keep deals moving forward.

This is where sales and finance alignment, within CPQ in particular, comes into play.  Getting sales and finance to agree on the level of discounting that is appropriate for each product or service that a company has to offer, prior to generating the quote, will ensure that margins are protected while also enabling sale reps to stay productive.  Building this approval process into a CPQ solution is the key.  Sales reps need to be able to respond to sales inquiries with accurate quotes ASAP.  They also need to be able to offer discounts when needed to beat out competitors and get deals closed faster.  When a CPQ system uses built-in approval processes, reps will be able to see the margin health of each item, better understand where they can give discounts, and if/when they are getting carried away with discounts.  When reps stay within a pre-specified price they should be able to send that quote directly to their customers, without further approval.  Having this process in place will allow finance to have a role in approving quotes and protecting margins, while not taking away from sales productivity.

Sales Performance Management with Finance

Sales leaders and sales managers are the ones that are mostly responsible for sales performance management.  That being said, finance plays a large role here as well.  Finance has the responsibility of creating and implementing sales compensation plans.  If finance is just going through and assigning everyone a quota and setting percentages for commission payouts, then they are missing a huge opportunity to impact sales performance.

By using an automated compensation management solution, sales and finance can work together to ensure that the incentives are driving, not only sales attainment, but proper selling behaviors as well.  Commissions and incentives should be aligned to overall company objectives and revenue targets, should be able to be changed rapidly to respond to changes in the market, and should be motivating sales to sell according to the best interests of the company as a whole.

Download the free whitepaper  on sales and finance alignment to get more information on the role finance plays in sales attainment.

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