If CRM were a baseball game, what inning would we be in? We were asked that question way back in 1999. Our answer then: maybe the first or second inning. Today we’d probably put CRM somewhere in the sixth inning. And it seems to us that, despite years of work, the discipline of sales effectiveness is in the first or second inning.
The thing that has most surprised us as we look back at sales effectiveness in 2006 is how much work sales organizations recognize there is to do to improve performance but how little activity they’re actually undertaking. This inactivity is pervasive across industries, company size and channel systems.
We recently completed a study in partnership with CRMGuru that underscored what we’ve been seeing anecdotally for the past few years: There is a meaningful disconnect between under-performing sales organizations and the implementation of readily available solutions.
The study, which examined trends in sales effectiveness, surveyed people whose sales teams were made up of at least 10 reps primarily focused on business-to-business sales. Large and small companies from 38 different countries participated, with representation from among 20 different industries.
Of the sales teams surveyed, 75 percent produced under $250 million (in U.S. dollars) in revenue, with 8 percent producing more than $1 billion, and were heavily weighted toward direct sales models (greater than 60 percent on average). The respondents themselves were vice presidents or C-level executives (29 percent) and middle management (42 percent) and worked across functional areas largely weighted toward sales. But 12 percent scattered across various functional areas including customer service, field service and information technology.
‘Sales executives have given up trying to proactively solve identified problems.’
Our take is that sales executives have given up trying to proactively solve identified problems and are instead choosing to maximize attainment within their identified performance constraints. This not only impedes sales optimization, making continuous improvement all but impossible, but also completely obviates what the true goal should be: non-linear scalability. Consider these findings:
- Organizations don’t know how to set targets. The best practice suggests that sales targets be set such that if 60 percent to 65 percent of individual sales reps hit their targets, then the sales team as a whole will hit its target. If more reps than that hit their targets, sales targets are set too low (resulting in a lackadaisical sales team). If fewer reps than that hit their targets, either targets are set too high or there is some other systemic problem within sales.
- Lack of time in the field is significantly impacting sales performance. The fact that sales managers on the whole believe sales reps do not spend enough time in the field goes without saying. What’s fascinating is the extent to which it affects the overall performance of the sales team. When asked what impact it had on their organization that sales reps spent too little time interacting with clients and prospects, 80 percent of survey respondents said “to some extent” or greater, and of those, 33 percent said “to a great extent.” Just how bad is it? Seventy percent of respondents quantified their answers, saying that sales reps spend fewer than one and a half days a week speaking with clients or prospects, not including preparation time, travel time, or voice-mail/email. And of those, 30 percent said their sales reps spend less than a day per week on it.
- While respondents equate sales automation technology with performance improvements, very few have useful implementations. Seventy-four percent of respondents said that lack of, or a poorly implemented, sales automation system was affecting sales performance to some extent or more. And when we looked more closely, we saw that the problem gets worse as the company gets larger. So we were heartened to see that 77 percent of respondents said that it will be very or extremely important to implement or improve their sales automation system next year.
The overwhelming majority of survey respondents reported that 60 percent or more of individual sales reps hit their targets last year (but of that, one third said the number was more than 80 percent). Even with all this purported success, only 35 percent of sales teams hit their targets, and 50 percent of those teams will do the same or worse this year. Perhaps this is why: Seventy-five percent of sales targets are set by the back office (in other words, finance) with little or no input from the field. And of that, 40 percent of targets are set with no input from the field at all.
But the obvious question is: If poor sales automation affects this many people; and this many people want to fix it; and fixing it has been doable for years—why isn’t it being fixed? Because fixing sales automation is hard. When it’s implemented by sales, it ends up as a sales management tool and no one wants to use it. When it’s implemented by IT, it ends up as a cool system. And no one wants to use it.
So what’s the answer? We each feel like a broken record, but here goes: The system must model, and be integrated with, the sales process; it must be built to make sales reps more efficient and to provide them with some level of value (based on their perception of value); and training must be process training, not systems training.
At the end of the day, 2006 was not the year when sales effectiveness moves to the top of the next inning of its baseball game. Rather, the past year showed us that simply admitting you have a problem doesn’t get you anywhere. The key is putting together a cross-functional sales effectiveness strategy (taking into account things like sales process, targeting, technology) and actually getting started. Ultimately, getting this right doesn’t cost you anything because cost of sales will decrease by more than you’ll spend. Talk is cheap. Let’s put our money where our mouths are. Here we come, 2007!