There is a disconnect between sales goals and the actual benefits companies are receiving from their CRM systems. That’s one of the most important findings that came out of CSO Insights’ 12th annual Sales Effectiveness Study. Addressing that disconnect can have dramatic effects on sales organizations and make 2006 a year to remember.
The study, which was compiled from what more than 1,250 companies worldwide told us about how well (or poorly) their sales organizations were performing, looked at more than 120 metrics.
The first of these was identifying what were the top three goals sales executives have for their teams for 2006, and the second was reviewing what benefits organizations were deriving from their investments in CRM technology.
In Figure 1, we see the four goals most commonly cited by managers who took part in the study. Here are the bread and butter of sales: more revenues, improved sales effectiveness, greater market share and increased customer loyalty.
Figure 2 shows the top four benefits these companies are achieving as a result of implementing CRM applications. They are able to improve communications between sales reps and management, improve forecasting accuracy, reducing the admin burden placed on sales reps and increasing revenue.
It is clear that, while CRM is generating some important benefits, those benefits, at first glance, do not appear to be tied directly to the issues that are top of mind for sales executives.
Beyond the surface
In a more detailed analysis of the data, however, we found that may not be a valid assumption. One needs to understand that CRM is not a single thing, but rather many things. The most commonly used functions are features such as contact management, opportunity management, territory analysis, customer correspondence and forecasting. If you just consider those capabilities, then it is easy to see why the benefits involve improved communications and forecasting, reduced administrative tasks and increased revenue.
But when you consider that there are many other aspects of CRM, including lead management and incubation, proposal generation, needs analysis and qualification, product configuration, sales process management, best practices sharing, compensation management and order processing, you recognize that a more well-rounded use of a CRM system can close the gap between the "wants" and the "haves."
When you look at companies using these capabilities of CRM, you see a higher percentage of firms reporting improvements in such avenues as revenue, margins and win rates. And these are more directly aligned with the top challenges sales executives are struggling with.
What should this mean for CRM in 2006? As firms move beyond just leverage the basic capabilities of CRM applications and start to train their people to leverage some of the more advanced functions of these systems, we would expect to see more firms optimize the performance of their sales teams and thereby improve their top line, bottom line and market share numbers.
In looking at the increase in the number of firms who reported achieving significant improvements in performance through the use of CRM applications this year (33.4 percent) compared with last year (29.0 percent), we can see that the wave has already started. So our recommendation to CRM project teams for 2006 is this. Analyze what parts of CRM your people are using, and get them comfortable using more of the capabilities within the system.
Make that move now, and by the beginning of 2007, the results you are generating from CRM should be directly aligned with helping your company solve your most pressing sales problems.