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NEW YORK — The current economic conditions are forcing companies to scrutinize their actual costs of doing business. Where are the cracks? Where is the precious budgetary spend going? An opening-day track session at CRM Evolution 2009 here this week, focusing on sales operations, stressed the importance of shoring up sales as a way to survive during -- and thrive after -- the economic downturn.
Kevin Bandy, global lead at Accenture -- and a past recipient of CRM magazine's Influential Leader award -- guided the talk and started off by sharing a handful of harrowing statistics about the contemporary state of sales professionals:
- The top 20 percent of sales performers are bringing in 62 percent of the average company's revenue; and, as a result,
- 80 percent of the sales force typically accounts for only 38 percent of revenue.
"That's why we are talking about sales operations in a CRM discussion," Bandy said. "We know the bad things, and now we're trying to figure out how to maximize our exit strategy."
Many companies will immediately start to look just at sales professionals, and while Bandy affirmed for the audience the importance of that assessment, he also emphasized that the entire organization -- sales, marketing, customer service -- must be laid flat in order to determine the best results. Why? Because customer retention is a key focus today, and contact centers are becoming more influential in that process. "Service is not just a post-sale function anymore," he said. "Industry leaders today, when talking about growth strategy, bring up customer retention first."
Marry this paradigm shift with an increasingly complex overall growth strategy -- Bandy noted that the average company has six such strategies today, but had only two in 2005 -- and you have a recipe for disaster. "The majority of growth strategies today are nontypical core competencies, and the cost of failure is enormous," he said. "CRM is more of an operational discipline and less of a customer one today. That's a unique shift in large corporations."
As if to compensate for all this juggling, sales professionals are also being saddled with increasing expectations, Bandy said -- and he cited two expectations in particular:
- selling value; and
- selling collaboration.
"Traditionally we sold in a product-centric manner, and we failed to understand value," he said. "Why? Because we separated between what people in the field [did] and [what] those in headquarters did."
The clash of new and old is drastically affecting sales productivity, as professionals are only spending an average of 37 percent of their time selling, according to Bandy. He pointed to five functions that erode up to 50 percent of productivity:
- opportunity management
- pricing/quote management;
- order management;
- contract management; and
- incentive compensation management.
All of this, Bandy said, lays the groundwork for re-engineering sales operations to get ready for the new business reality. He noted that companies will never revert to the days of having just two growth strategies. If anything, he argued, companies will find themselves juggling even more balls as we move forward. "If you look at sales operations by taking the organization, laying it flat, and measuring on process -- not function -- you can create an iron-clad business case to create alignment across the organization," he said.
In order to do this, CRM must be looked upon as an operational discipline, he said -- not a customer one. Bandy laid out the steps for assessing the organization:
- rigorous data collection;
- analysis of cost and performance;
- improvement valuation; and
- roadmap development.
Bandy said that firms that had been anti-CRM in the past were now recognizing the error of their ways, as he recalled executives who now say they understand how they created their own failures, and how they could have done better. Those lessons should be taken to heart as companies begin their out-of-the-recession strategies.
"The down economy is creating upward, positive momentum coming out of it," Bandy told the crowd. "We think about things more from an organizational perspective now. Without strategy, anything 'CRM' won't be successful."
CRM Evolution '09 runs through Wednesday in New York. Full coverage can be found here.
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