Is there light at the end of the tunnel? Photograph by HeavyWeightGeek.

Don’t over-measure your salespeople. Of course, you want to know if your sales team’s activities are putting it—and by extension, your organization—on the right track for success.

But companies tend to go too far. Because at extremes, measuring can kill your CRM program by driving salespeople crazy. “All you’re doing is measuring me,” they’ll say, and CRM adoption—and by extension, the hard data required to measure sales force effectiveness—will decline.

Everyone wants hard data. Executives, in particular, want to generate accurate sales forecasts, and as much as possible, predict the future. But these aren’t just numbers; they’re jobs, and without some ground rules the situation can spiral out of control. For example, executives at one of Innoveer’s energy clients used to literally get into fistfights at meetings, as they all tried to prove that their version of the sales data was true. Bonuses and promotions were at risk. Tempers, naturally, flared.

So how can organizations consistently measure their sales program, without measuring too much?

Forecasting Is Not Your Problem

Don’t start with forecasting. There are four best practices for excelling at sales force program measurement:

• Metrics: Track your progress toward a goal
• Feedback: Highlight the difference between what’s been achieved and what’s required
• Reporting: Analyze sales data and provide insight into trends and measurements
• Forecasting: Project sales revenue or volume

Roughly 50% of organizations implement sales force automation (SFA) to get forecasting; it’s that important. But as a result, forecasting tends to be the most overdeveloped SFA capability.

How do we know? Organizations often ask us to rank their relative process maturity, from 1 to 5, in a number of different areas, using our CRM effectiveness framework for sales. The underlying thinking: know where you excel, and know what needs improvement, because that’s what will make your program less effective.

So instead of devoting more time and energy to forecasting, focus on the other three aspects of measurement, and you’ll see your overall measurement capabilities, including forecasting, improve even further.

For organizations that excel in all aspects of measurement, by all means do bolster your forecasting capabilities, if required. One of our customers, for example, had relatively advanced overall measurement capabilities. We helped the company, which manufacturers chips for cable television controllers, implement more advanced forecasting processes, enabling it to reduce—from nine months’ worth to four months—the excess inventory it carried. This reduced its carrying costs, resulting in substantial savings.

Think In Metrics

To avoid over-measuring, articulate your business goals to know exactly which sales metrics to measure. In industries that rely on indirect sales, for example, meetings are paramount, because they allow salespeople to influence deals. One of the pharmaceutical companies we work with, like most, divides the doctors it wants to influence into groups of As, Bs and Cs, based on importance. Executives want salespeople to visit the As three times as much as the Cs, because it leads to more doctors writing more prescriptions. Each week, managers meet with sales reps to review their activities, and make sure they’re following the sales plan. In short, meeting these targets delivers results.

Direct sales must often measure in the opposite direction. For example, one of our high-technology clients wanted to determine how many telephone calls the inside sales team had to make to line up a meeting—about 400. Then, how many meetings resulted in a proposal? About 25%. Then, how many of those proposals did the company win?

Innoveer helped the company design those metrics, to help sales understand how to achieve certain results. This also enabled the company to know what to measure, so that it didn’t over-measure.

No Salesperson Left Behind

If top-notch sales programs know which measurement data to collect, they also know what to share, and how. We helped ABN AMRO bank, for example, tightly integrate its sales reports with the CRM system. Reports that managers deemed ultra-important displayed, front and center, whenever a salesperson logged into the CRM system. Perhaps the most important report showed how that salesperson was performing against his or her peers.

Sales is the contrapositive of Garrison Keillor’s famous Lake Wobegon quip: “All the children are above average.” This might seem obvious, but 90% of your salespeople won’t be in the top 10%. By showing the nine out of 10 salespeople where they stand, the firm thinks it can make them perform better.

In short, for sales programs to excel, know what to measure, measure it, share relevant insights and then get back to the job at hand: selling more. Otherwise, what will you have to measure?

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Based on Innoveer’s numerous CRM projects, we’ve created a Sales Effectiveness Framework based on this observation: Maximizing the effectiveness of your sales program requires excelling not just at measurement, but also managing pipelines, territories, customer relationships, as well as salespeople.

Now fill it. Photograph by wili_hybrid.

Pipeline management is critical for making your sales force more effective. Briefly, pipeline management uses predefined sales stages—each of which describes the status of a deal or account within the “opportunity pipeline”—to help sales teams focus on the best actions for moving a deal to closure or an account to maximum adoption. No wonder that for about 90 percent of Innoveer’s sales force automation (SFA) projects, it’s the client’s number-one requirement.

The Problem With Pipelines

Too often, however, organizations over-focus on pipelines. For example, Innoveer worked with a European telecommunications provider that couldn’t reach its sales targets. The organization had invested significant time and money to combine previously separate groups—landlines, broadband, mobile phones—to offer bundled services to consumers.

But salespeople weren’t closing deals. Many withered on the vine, and signing new customers remained especially challenging.

What was the problem? Not pipeline management—the firm had already invested heavily in that—but rather, not having a holistic enough approach to sales force effectiveness. For example, the firm wasn’t using segmentation to create optimal sales territories. And from a relationship management standpoint, salespeople skilled at selling point products hadn’t received any training for selling converged products, which is quite a different proficiency. But the company did have its pipelines.

Think Holistic

Why the predilection for pipeline management, often at the expense of other sales force capabilities? When we think about SFA projects, we often focus on what we can do technically, rather than what’s most required holistically. And pipelines are relatively tangible, integral for planning sales calls (likewise, tangible), essential for creating sales forecasts (ditto) and relatively easy to automate. Indeed, opportunity management—one component of pipeline management—is literally a screen and series of reports in most CRM systems.

While pipelines are important, however, they’re just one piece of the SFA puzzle. Maximum sales force effectiveness requires addressing all of the required capabilities—pipeline management, relationship management, sales force leadership, sales force measurement, and territory management—and ensuring that they work well together. Because a problem in any one area often saps the effectiveness of the other areas, and thus the overall sales program.

Best Practices for Pipeline Management

That “need to be holistic” disclaimer aside, exactly how can organizations maximize their pipeline management proficiency? Focus on these four best practices:

• Prospecting: Identify new business opportunities—in new or existing accounts, preferably backed by lead management support from marketing, collaboration between all customer-facing functions and a multi-channel strategy.
• Opportunity Management: Manage and advance sales stages, from lead acceptance to closing deals. Monitoring the status of opportunities also helps organizations forecast their financials and design better territories.
• Pricing: Use consistent criteria or guidelines to price every product or service. Having a well-defined pricing structure—used across business lines and functions—is crucial for increasing the accuracy of pipeline forecasts.
• Contract Management: Create, file, access and update customer contracts—including relevant attached content and a calendar of contract milestones—and store these contracts in a central location. Make it searchable, and automatically link relevant contract details to create a better opportunity pipeline, track warranty entitlements and generate more high-quality leads.

Pipeline Management: How Advanced Are You?

Innoveer benchmarks organizations’ sales strategies to determine any given organization’s relative process maturity in that area—namely, whether it’s advanced, lagging, or somewhere in between. Here’s how that spectrum looks for prospecting:

• Initiating: Salespeople pursue new business opportunities as they appear, and have no formal expectations for developing new business.
• Competitive: Account teams share information—storing data in a central location—to identify new business opportunities, backed by lists and cold calls to identify opportunities.
• World class: Prospecting is planned and executed collaboratively across all customer-facing functions, in alignment with a multi-channel strategy and marketing campaigns.

Fix Problems First

Benchmark your organization’s capabilities to understand which parts of your field sales program to improve first. Based on Innoveer’s experience, the best plans focus first on making weak capabilities stronger, because what you’re not good at holds you back the most. Another benefit is that investing in making your weak capabilities stronger—rather than strong ones even stronger—will maximize the return on your sales force effectiveness investment.

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What’s the next improvement an organization can make to its field sales program, to take it to the next level? To build the best plan for improving sales force effectiveness, first you need to know what you’re good at, as well as what needs work.

In addition, Innoveer offers a brief workshop—over one, two or three days—to help companies identify the cost, time and business benefits associated with achieving new and more mature—which is to say, more effective—CRM capabilities. During the workshop, Innoveer examines the five core elements of an organization’s field sales program, identifies the optimal enhancements, and produces specific, technology-agnostic recommendations for building next year’s plans and budgets, with detailed estimates of the required project time and costs to improve specific elements of your sales program.

CRM: A History of Failure?

Are customer relationship management (CRM) projects prone to failure? ZDNet reviewed analyst firms’ reports to chart general CRM failure rates for 2001-2009:

• 2001 Gartner Group: 50%
• 2002 Butler Group: 70%
• 2002 Selling Power, CSO Forum: 69.3%
• 2005 AMR Research: 18%
• 2006 AMR Research: 31%
• 2007 AMR Research: 29%
• 2007 Economist Intelligence Unit: 56%
• 2009 Forrester Research: 47%

Failure is defined broadly, covering projects that didn’t meet expectations (at best) or failed outright (at worst). Because these statistics come from different research firms using dissimilar research methodologies, you can’t accurately compare year-on-year trends. But to pick just about any given year, my immediate reaction is: There’s no need for CRM failure rates to be this high.

Will project success rates improve? In fact, I predict that sales force automation (SFA) project failure rates are going to increase even more. (The majority of CRM implementations today are for SFA.) Why is that? Simple: Companies are shooting without aiming, just like it was 1999 all over again. The only difference is that instead of implementing on-premises CRM software, they’re using SaaS.

SFA Success Starts With a Plan

What can companies do to ensure that their SFA—or broader CRM (encompassing not just sales, but also service and marketing)—projects meet expectations?

For answers, let’s flash back to 1999, when Lee Iacocca, then CEO of Chrysler, was still a well-known business figure. In those days, he talked a lot about planning as a way of saving money.

Here’s the great thing about planning: you don’t need to spend much money to get a great return. For example, say you spend less than 1% of your expected return on a one-week—or, if you like, two-week—exercise to identify the objectives of your SFA system, as well as what your two-year plan will be to achieve those goals.

As a result of having that plan, you’re probably five times as likely to achieve your objectives, versus just implementing this or that software. And really, what did the planning cost? If your returns are over 100 times that initial planning exercise investment, wasn’t the planning more than justified? In fact, why would you neglect such a foundational step, given the potential returns?

Is SaaS Short-Circuiting Our Brains?

If you follow the Freakonomics camp, you know that psychologically speaking, we humans approach financial matters not from a rational perspective—though we think we’re being objective—but rather with our emotions. And perhaps that’s the answer: SaaS offers the opportunity to have something up and running in days or weeks. It’s the latest and greatest. You want it now. Why bother pausing for even a week or two, to plan?

Just as we’re not naturally adept at rationally analyzing financial patterns, when it comes to CRM projects, we also need to check our innate tendencies at the door. Meaning, sit down and figure out what you really want to do, and how you’re going to do it. Unless you want to fail?

Planning Is Cheap

Based on our experience, and—organizationally speaking—having lived through the dot-com bust as well as the boom that preceded it, we’ve continued to emphasize this theme: Want to succeed? Then don’t just implement software. First, plan.

The good news is that over the past 12 years, we at Innoveer have codified what people should be doing in terms of their CRM planning, and have developed best practices to very quickly help people determine what their plan should be. So whereas a decade ago, planning may have been relatively expensive, today, it’s much easier and less expensive, because we already know the best practices for sales effectiveness, marketing, or customer service.

As a result, creating a plan doesn’t require starting from scratch. Rather, to create an SFA plan, one excellent starting point is to benchmark your company’s sales capabilities—in such areas as relationship management, territory management and pipeline management—against other companies to see understand where your organization excels or needs work.

We’ve found that companies often continue to invest in what they’re already good at. In fact, we recommend investing in what you’re not doing well, because that weakest part of your SFA—or wider CRM—program is what holds you back. Of course, you won’t learn that from just having SaaS CRM software. To find out, you need to build a plan.

Learn More

Innoveer offers a brief workshop to help organizations identify the cost, time and business benefits associated with achieving new and more advanced—meaning, more effective—SFA capabilities. During the workshop, Innoveer examines the five core elements of an organization’s field sales program, identifies the optimal enhancements, and produces specific, technology-agnostic recommendations for building plans and budgets, with detailed estimates of the required project time and costs to improve specific elements of your sales program.

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How does your CRM program rate? Photograph by ToastyKen.

I remember when the motion picture industry first came out with its movie rating system. At the time I was just a kid and it was the first time I encountered the word “mature.” So, one night while at the cinema I required my mother to explain to me the meaning. Rather than just tell me that some movies were for kids and some were for grownups, she attempted to explain to me the more elaborate definition (she was a career-long school teacher and every long car ride involved a lesson of one kind or another). What was strange about it all to me was that one would be required to reach a certain level of maturity in order to watch a movie. It did not help my full comprehension that my parents often let me accompany them to more adult-oriented movies, even as a pre-teen.

Thanks to my mother this lesson really stuck and, believe it or not, I think this whole maturity thing plays a critical role in managing CRM strategy and program planning. For example, a very common request that I typically field from a new client will be to help answer the question, “what should be next for our CRM program?” Naturally, as a consultant my answer is always the same – “it depends!” But I am not acting flippant with this response; it truly does depend on the maturity of the different elements within their program. The best things to focus on are commonly those that are less mature and most likely holding back the effectiveness of the whole program.

So, you are probably wondering, does this mean some CRM programs are PG13 while some are rated R, and then are there serious programs out there, which get the infamous X rating? Well, no, that is not exactly the right way to think about it. I prefer to think about maturity on a five point scale. At the low end of the continuum (I prefer not to use the term “immature”) are program elements that we might view as just getting initiated such as a first attempt at creating a customer segmentation model. On the other end of the continuum would be what we might view as world class capability – you do it as well as the best companies on the planet.

The next thing you are probably asking is what exactly is it that we are rating on this 5 point scale? Naturally, that gets another, “it depends.” Some of our clients want us to look at their whole CRM program to determine what is needed. Then, there are those companies that have a very focused need, they may want us to focus just on campaign management – where are they on that five-point scale and what do they need to do to advance just that one CRM element to the next stage of maturity? We can work at either end of that range, and everything in between.

When we focus on the whole CRM program we take a look at the full spectrum of CRM domains:

• Technical CRM,
• Functional CRM and
• Enterprise CRM.

Technical CRM is what many people think of when they consider CRM. It is the software that defines the industry. But there is more to it than just configuring your CRM package. You also need to consider the data, which may be in many places. Then you also need to include the integration and middleware that brings those disparate data elements together into something useful. And then supporting all of this is the infrastructure in place to make it wall work – servers, networks, portals, handhelds, all kinds of stuff that make up the backbone of our CRM technology.

Functional CRM is all about the customer touchpoints. How do you make your company known to prospective customers? How do you convince them to become customers? How do you keep them happy customers once they are through the door? These are the business functions that touch the customer. CRM is all about how those customer interaction processes work and how to make them as effective as possible. For example, are your pipeline management processes well developed? Do they need to become more mature? And don’t forget about your partners who sell and service for you? The channels you have established to reach and support your customers are also one of these functional components. Don’t leave them out of the maturity assessment.

Enterprise CRM includes all the other parts that can be overlooked. What is your customer strategy and how well is it aligned and executed across the customer facing functions? What measurements do you have in place to know how well you are doing relative to customer-facing objectives? And then there is your company culture – is it customer friendly? Finally, achieving higher levels of CRM maturity requires the ability to define and implement initiatives. How well do you manage programs – process improvement initiatives, technology deployments and the management of these organizational changes? Yes, this is all a part of the CRM capability.

If you are really focused on CRM software as the center of our program, there is a good chance some of the other elements are not as well developed. Often customers will ask us about what tools they should add as the next step in their CRM program. If all of the focus has been on the technology, our answer will probably be to focus on something other than a tool as the next step. Here is the reason. The least mature element of your CRM program may be the least common denominator to your success. If you have good software but weak processes or poor alignment with your strategy, adding more software is not going to make you more successful. You have to address the less mature items first. If you want to run faster, but you have a strong leg and a weak leg, don’t exercise the strong leg more – the weak leg is what is holding you back.

Improving your CRM capability can be managed at multiple levels. You can assess your maturity with the big picture as the focus or you can get up close and personal with targeted capabilities that you know need attention. If you are not sure where to begin, start at the broad level. If you are confident that you know your weak links in the chain, examine them in more detail. Improving those links then will make the entire CRM chain stronger.

Good luck with your maturity rating analysis, and don’t forget the popcorn.

Do you have what it takes to cut costs and close the deal? Photograph by kevindooley.

How many salespeople does it take to close the maximum number of deals at any given customer?

Many of our clients—especially in the high-technology, pharmaceutical and medical device industries—have multiple sales teams calling on the same customers, oftentimes supported by multiple CRM systems. It’s not unusual, for example, for a large software provider or hardware manufacturer to have a different salesperson for every product, any half-dozen of which may be in use at their typical client. In other words, that client sees a lot of the company’s salespeople.

At least, this was the case during the most recent economic boom—to my mind, a five-year stretch that ended in September 2008—as many companies focused, above all else, on growth. Namely, to improve the bottom line, they fielded different sales teams for each product line, to wring every last dollar, euro or pound out of a customer.

With the downturn, however, about 50 percent of our customers have decided to focus on efficiency, rather than growth. So instead of having dedicated salespeople for different product lines, they’re consolidating, and perhaps having just one salesperson lead the charge at any given client. The goal is simple: Cut salespeople, save money.

This approach can work. For example, IBM has long used one account manager to bring in all required specialists, and it has been incredibly successful. But companies have to be careful that they don’t replace five specialists with a single generalist who doesn’t know much about any product in particular. If I was a client, I’d certainly prefer the former approach.

Either Growth or Cost Savings?

But let’s step back: What makes companies pursue growth, versus efficiency? Of course, it’s the economy. During boom times, most companies focus on growth. During a recession, most focus on efficiency. Here’s the underlying thinking:

• Prioritize growth: If there is a high degree of likelihood that you can get every last dollar of sales, you focus on growth
• Seek cost savings: If the security of cost savings outweighs the probability of getting that last dollar of sales, then you focus on cost savings

Beware Binary Thinking

Companies, however, must beware such binary thinking. Because don’t these economy-driven actions have the opposite effect than intended? For example, if everyone obsesses about efficiency during the downturn, where’s the spending required to get the economy growing again? Or if everyone pursues rapid growth during a boom, where are the efficiency and customer-facing improvements required to sustain long-term customer satisfaction and operational success?

Successfully navigating the downturn, while being prepared to capitalize on the upturn, requires more subtle thinking. For example, we’re working with a large company that’s recently merged with many other companies, and we’re helping it decide which of the many in-house CRM systems and sales processes it should standardize on. As a result of these efforts, the company expects to achieve significant savings both by reducing the number of systems, as well as headcount. But these improvements are aimed at reducing duplicate efforts and consolidating similar product lines. It’s activity you’d ideally see in a downturn or an upturn.

Support New Ways of Selling

Next to consolidating multiple CRM systems, integrating CRM systems also offers numerous cost-saving opportunities, but likewise not at the expense of growth potential. For example, we’re helping a leading credit monitoring company consolidate multiple CRM systems onto a single CRM platform, so sales managers can correlate data, to know which companies are buying which products, and find new opportunities to increase “wallet share” with each customer.

This strategy isn’t aimed at creating a single, über-salesperson for each account—the organization, which has numerous operating divisions, isn’t scrapping its specialist sales teams. Furthermore, sales managers don’t necessarily even want sales representatives to cross-sell products. Rather, from a marketing perspective, they want to better understand correlations across the many different operating groups and products. For example, if the customer has bought products A and B, are they a good prospect for product C? Such information is incredibly valuable for making sales and marketing efforts more efficient as well as effective, which by the way also improves the bottom line.

Many companies source the data they need to make these decisions externally. And for certain types of companies, such as pharmaceutical firms and medical device manufacturers, personal data regulations require doing the best you can with external data. But many other organizations already have the data they need to generate these insights in-house. They just need to piece it together. First, however, you need a CRM system that isn’t disjointed.

Guard that Goose

The takeaway for companies weighing how cost savings balance with growth is this: Find ways to economize and become more efficient, especially through CRM integration and standardization. But beware of going overboard, because selling isn’t a one-way street. In fact, clients may regard your salespeople as a core competency. Don’t kill the golden goose.

Learn More

Maximizing the effectiveness of your sales team requires finding a healthy middle ground between the data collection needs of executives, and the “just let us sell” attitude of frontline salespeople. Our white paper, “Striking a Balance,” discusses the best way to apply sales force automation to meet both requirements.

Of course, difficult times call for caution, and ensuring that every CRM investment, however minimal, produces maximum returns. To that end, our white paper on CRM and the economy argues that the biggest payoff will come not from making point improvements, but by focusing on the links between sales, service and marketing.

Finally, for organizations dealing with mergers, acquisitions, or divestitures during the downturn, we argue that business rationale must drive CRM assimilation.

Tool talk. Photograph by geishaboy500

Lately, Innoveer has been helping more companies use customer data segmentation and visualization tools to provide marketing teams with better insight into customers.

These tools are available from such organizations as Alterian, Apteco, Oracle, SAS, smartFOCUS, SPSS, and Unica. That list includes both niche tools and more “enterprise-class” options, and it goes without saying that each tool has its own strengths and weaknesses. In general, these tools are very graphically based and simple to use—perfect for anyone who’s not a natural quant. (But also quite handy if you are.)

Rules for making data visualization tools work

Yet, as with all data-related endeavors, the old adage about “garbage in, garbage out” applies in full force. Accordingly, there are three recommendations I always make to any company rolling out data visualization tools:

• Obtain good data. Data visualization tools won’t create something out of nothing. First, you need thorough data. If you only know someone’s name and email address, you really know nothing about them. No matter how fancy the tool is, you must feed it good, quality data.
• Or know where to get the data you need. If you don’t have the data now, you can get it, through special offers and partner channels, for example, as well as through third-party companies such as Axiom and Experian, that sell data based on postal codes or actual addresses. This provides at least a starting point for your marketing team to then make sensible guesses about any given person’s profile.
• Then don’t flood people. One common mistake companies make when they first use a new marketing solution or data visualization toolset is bombarding their clients with offers, at which point of course people just turn off or tune out of further communications. So for many of our clients, we put technological safeguards in place—for example, in Siebel—to limit the amount of contact any one person receives.

By keeping the above principles in mind, companies can ensure that they get the most from their data visualization tools, and enable their marketing departments to obtain deeper insights into customers, build better segments, and run more effective marketing campaigns.