Key Findings
- Developing and continually measuring meaningful sales metrics tied to business goals are key to showing value in SFA deployments.
- Setting realistic expectations and gaining consensus on the needs of sales management and salespeople are critical to securing, buying and pursuing attainable business goals.
Recommendations
- Develop meaningful sales metrics tied to business goals (rather than to sales activity); this is key to showing value in SFA.
- Continually measure, interpret and take action based on sales metrics; this makes these metrics "meaningful."
- Create reporting processes to assess achievement against metric goals that are nonintrusive and don't burden salespeople.
- Establish a feedback loop technically, via a community site, or organizationally, through sales support, and use the data collected to tweak the metrics, processes and SFA system.
ANALYSIS
Context
The DEAL approach is a process that will improve the ability of a sales organization to capture and continually improve the value (for example, through increased sales, lead conversion rates and shorter sales cycles) attained from SFA deployment.
The top question Gartner receives about SFA is: How do you measure ROI for SFA? Even in cases where user adoption approaches 100%, sales organizations struggle with understanding the value delivered by their SFA to the sales organization. Sales executives often say they have improved visibility, or more accurate sales forecasts, but they cannot translate these "soft" benefits into real revenue or margin improvement. The primary difficulty in determining value is that there are many parameters besides the technology that will determine performance. Devising the right sales process, developing optimal sales territories, creating the correct incentive compensation plans, or just having good products or services to sell have significant, if not decisive, impact on sales performance and outcomes. However, the variability in nontechnical factors should not excuse organizations from measuring the success of an SFA deployment. The Gartner DEAL approach, when followed, will improve the ability of sales organizations to benefit from an SFA deployment.
Assumption: The Gartner DEAL approach focuses on the deployment of SFA. The assumption is that a sales organization already has implemented a sales methodology and has developed territories and compensation plans to pursue business goals. The DEAL approach is designed to provide insight into the effectiveness of sales strategies to enable you to make refinements.
Develop
The "develop" phase of the DEAL approach is the most critical and should not be circumvented. In this phase, your sales organization will determine the sales metrics to be tracked and measured during the life cycle of the deployment. The metrics are not for management only but also for salespeople. The intent of the metrics is to provide insight for all system users, to determine whether they are receiving value that is meaningful to them (such as increased close rates for salespeople). Each industry has specific metrics they consider most important; however, some basic metrics tend to be common. For sales management, metrics may include lead conversion rate, confidence levels in forecast pipelines/pipeline health, opportunity funnel velocity (the time it takes for a sales opportunity to move from qualification to close), opportunity close rates and new salesperson ramp-up time (the time it takes a salesperson to be as a effective as comparable performers).
These metrics are not meant to replace analytical reporting on sales performance, where managers gain forecast insight into such issues through win/loss reports, or specific territory performance. The sales management metrics for the SFA project are intended to focus more on the effective use of technology. For salespeople, metrics may include sales content effectiveness (which sales content has been proved most effective in winning new deals), lead quality/source conversion (which lead sources have proved most valuable for sales opportunities), sales methodology effectiveness and activity-based forecast collaboration (helps salespeople measure how well their committed forecast maps to committed sales activities). This is not an exhaustive list of metrics but provides a general guideline to determine the type of metrics your sales organization should consider.
In general, sales objectives and associated metrics tend to be focused on:
- Acquiring new customers more effectively
- Cross-selling
- Improving margins per sale
- Reducing costs of sales
- Retaining or reducing the churn of established customers
- Selling more frequently
- Upselling
Top-line financial metrics must be supported by operational sales metrics, which are more difficult to select and monitor effectively. (See Note 1 for examples of sample metrics that enterprises have used to gauge performance in their sales initiatives.) A key issue in SFA projects for field sales is user adoption. These performance metrics can be augmented by measuring activity and operational metrics, such as the number of people accessing the total functionality of the system and system adoption rates. Sales organizations should develop and distribute activity metrics, in addition to performance metrics, to salespeople to enable them to thoroughly understand their sales results, as well as why these results are occurring.
Education
Education is critical to the success to any SFA project. Most SFA training is focused on how to use the application, such as explaining the mouse clicks to create an opportunity, or the menu item needed to associate a contact with an opportunity. These are important elements in the successful use of the SFA application, but if this is all you do, then you will be destined to poor adoption, or to obtaining subpar value from the technology.
Ideally, the SFA application would be rolled out at an annual sales meeting, with a launch theme that reflects the value statement and metrics. However, if the timing does not work, e-learning and smaller, regional training groups will work as well. The goal is to create shared ownership of the application, not a top-down management mandate of forced adoption. Before you show the application during sales training, explain the value each person should receive and how he or she will be able to measure that value while using the SFA tool. Once you have buy-in for the value, you can proceed to teaching the mechanics of using the application.
Other key value-added tasks during the "educate" phase:
- As you hire new salespeople, first reinforce the value proposition of the SFA application before teaching them how to use the system. The one-on-one or peer-to-peer training approach is optimal for bringing a new salesperson up to speed on the SFA system and goals.
- Build case studies into the learning modules to simulate the steps, stages and effective use vs. required use.
- For e-learning, include just-in-time learning nuggets that require five minutes or less and will address an immediate problem.
- Have a hot line to sales support for help prominently showing (for example, at the top) at all times in the application.
- Offer e-learning capabilities within easy reach (not buried within the help function) so that training can be accessible to those who wish to help themselves.
- Validate system usability with a select group of achievers.
Assess
Once the metrics are determined, you must put in reporting dashboards to collect the data, to report and review on it a weekly, monthly or no-less frequently than quarterly. The frequency of the reports will depend on the velocity of the business. Specific metrics may have different update cycles. The ultimate test of the metrics you have defined is whether you can assess the progress of the metrics against sales goals, such as revenue, market share or earnings. To demonstrate the value of SFA application, metric reports must show the association between organizational and personal objectives.
The quandary surrounding the "assess" phase is capturing experiences, which can be an art in itself, because you do not want to overburden salespeople with tasks such as entering large amounts of data into opportunity management systems, recording forecasts, or fulfilling administrative tasks. Thus, the key is limiting the demands placed on salespeople, while still capturing the relevant sales experiences and insights that lead to good sales activities and processes. This requires setting up an architecture that may rely on a single database or a set of federated databases, typically capable of handling alphanumeric and text data types, to incorporate data points, feeds and perspectives from different systems.
- The system should have analysis tools to capture insights on lead quality, pipeline health, documentation quality, presentation resonance, proposal resonance and best practices on the most propitious timing and context for applying sales resources to an audience in a sales cycle.
- The system should be set up to support taking the insights captured in the analyses stage and translating key findings into effective guidance that is communicated via key systems (such as proposal generators, presentation Web sites, opportunity management systems and sales team Web sites), or is introduced in initial training and continuing education programs, and if serious or significant enough, then delivered orally in team meetings.
The "assess" phase is not just a management activity; it is imperative that salespeople have a view into their personal metrics to determine the value of the sales force application and how they compare to other salespeople using the system. The view into the metrics should be provided as part of the SFA system user interface. For example, if only 5% of sales content produced is effective in closing sales, then this will be readily apparent to all concerned. This will enable the organization to take the information and move to the next phase – "learn" to take action.
Learn
After assessing progress against the defined metrics, its important for the sales organization to be oriented toward becoming a learning organization that can effectively discover key trends and facts from information and can take corrective actions to improve practices and outcomes. For example, if the lead conversion rate is 40% below goal, and the two or three lead sources are the main cause of the problem, then the sales organization can make the appropriate adjustments to their lead source investment and can begin improving conversion rate. Ultimately, this will improve the quality of leads, which will, in turn, improve salesperson "stickiness" of the application and will increase value. The bottom line is that SFA is a continual deployment process that must be adjusted and tweaked as values for key metrics are reported.
A key element of continuous learning is interviewing and surveying sales teams. This could include having technical or marketing or sales support personnel listening to or attending sales calls to witness approaches to selling. In addition, consider one-on-one interviews with overachievers who are willing to share the secrets of their success by sales support (preferably sales operations personnel or business analysts) or marketing resources. Finally, have team managers, or first- or second-line management, polling selling personnel on what does and doesn't work. IT should have resources dedicated to detecting problems with technology and capturing requirements from a technical perspective. For example, "This interface is confusing, and all I want to do is get to my last five favorite presentations."
Key Facts
- Most sales force applications fail to show measurable ROI.
- A major cause of poor ROI is limited or no investment in evaluating metrics for success.
- Metrics and reporting that result in no actions probably need redesign.
Note 1 - Same Sales Metrics
- Amount of recurring revenue
- Close rate
- Days sales outstanding
- Margin
- Number of cross-sells
- Number of new customers
- Number of open opportunities
- Number of proposals given
- Number of prospects
- Number of retained customers
- Number of sales calls
- Number of sales calls made
- Number of sales call per opportunity
- Number of upsells
- Profit by customer
- Renewal rate
- Revenue by channel
- Sales cycle duration
- Sales stage duration
- Time to close by channel
- Competitive knockouts
- Deal margin
- Wallet share
No comments:
Post a Comment