Don’t Believe in Metrics? Have You Heard of StorageTek?

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CSO Insights is often brought in to CRM initiatives when the evaluation team is preparing the recommendation to management for how team members think should be spent on hardware, software, customization, training and support for their project. Looking at all these expenses, we are asked to give an assessment of what the ROI might be on this investment.

Our response is a question in return: "What metrics regarding how you are currently performing can I review, so we can give you a perspective of what type of improvement you can expect to make?"



In all too many cases, the next few minutes are filled will a very uncomfortable silence. It is as if we have just asked a question in a foreign language. Then finally someone will break the ice and say, "Metrics? What kind of metrics?"

Obviously, education is needed, so I often share what is still one of the most compelling cases studies we have ever collected, regarding how John Williams took StorageTek from $700 million in revenue to $2.2 billion in four years without adding any new salespeople—all via performance improvement.

My partner, Barry Trailer, and I profiled that achievement in our last book, The Sales And Marketing Excellence Challenge, so let me share John’s own words on what transpired from an interview we did with him after he retired:



When I took over the position of executive vice president of worldwide field operations, I was actually coming back to StorageTek. I had worked as a sales executive for the company before leaving to start a PC hardware company.

While I had some previous knowledge on how things worked, and in fact had kept in touch with people in the company over the years, upon my return it occurred to me that it would be a mistake to let any of that influence my decision process on where to take things from here.

I decided that I needed to do my own due diligence analysis of the company as it existed today. I needed to get a current perspective on how operations were currently managed. So I personally visited every major sales offices, analyzed how we did business, and I was shocked at what I found.

The company’s processes were very antiquated and overly complex. The sales process was full of inefficiencies. It took on average 50 calls to close an order. I am talking 50 “real” calls: face-to-face meetings with a customer over an average sell cycle of nine months. We computed the expense and determined that each of these calls was costing us about $1,200.

Once we got an order, things didn’t get any better. To fully understand quote-to-cash cycle, we produced a workflow chart that documented everything that needed to be done to produce an order. I am not joking. The final document ended up being 8 feet long, even after using miniature print. We calculated that it was costing us $700 to process the paperwork using these procedures. I actually put that chart up in my office, hanging from the ceiling, and I would look at it and shake my head.

With these metrics in hand, my first task was to create the vision for how we needed to sell going forward. The vision document reviewed the metrics of how we were presently performing; detailed the holes in the way we did business; laid out the new sales process; pointed out where efficiency, effectiveness, and communications improvements needed to be made to implement that process; and finally, defined the technology tools the team would need to support their work efforts.

I presented this vision to the board to get their approval. The initial plan called for spending $3.5 million—nearly $18,000 per sales user—for hardware, software, application customization, training and support to equip the sales people in North America. Based on the success we achieved in the States, we would then roll the systems out worldwide.

We were in a period of very austere budgeting at that time. Because of this, I had to develop a detailed project plan showing how we could generate an ROI for the project within 12 months. I had to personally commit to achieve that number. I made sure I had a firm commitment for the funds before I said anything to the sales force. In addition, I had to sell other departments on why they should support me in this endeavor, so I gave a lot of thought into what was in it for them if my plans were put into action. Ultimately, I gained complete support for this initiative.

We developed a system to address the key performance challenges our metrics gathering had uncovered. Within two weeks of the launch of that CRM application, we had a 55 percent adoption rate. By that, I mean salespeople were using the tools on a daily basis. After six months we were up near 90 percent. All along the way we gathered new metrics on our performance, so we could see if we really were improving or not.

After six months of active usage, I was able to go back to the board and show in hard dollars, to the CFO’s satisfaction, that we had achieved the full ROI that we had set for the project. By focusing on new ways to do things, and giving salespeople the information and tools they needed to do their jobs, we collapsed the sell cycle down from 50 calls to 35. We reduced the sell cycle length from nine months down to seven. We reduced the cost of a sales call by 60 percent. We dramatically increased our service revenues. Prior to starting the project, I would have been happy if we had achieved any of these numbers, and here we did them all in six months.

From that point on, I never had any problem getting money from the board. They saw the real returns their investments were generating. Over the next several years, we rolled out a new release of the system every six months. Each phase of the project had the same objective: find three or four new problems still impacting the effectiveness of sales teams, design solutions for those challenges, train the people how to use the new tools and start all over again.

Over time, we added tools to help the sales force do financial analysis, lay out the floor space of a computer room, handle expense analysis and even streamline a new sales order entry system. Yet with all of that, when I retired, we still had plenty of areas for improvement. The vision kept expanding over time, based on new business needs, new technology, new competitors, sales force reorganization and so on.

When I asked John to share the lessons learned from this project, he shared the following: "You need metrics before you do anything else. These are not always easy to get, they can be very time consuming to collect, but I don’t know how you can build your vision for improvement without them."



I couldn’t agree more.

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