As part of our 1999 Customer Relationship Management state of the Marketplace surveys, we asked companies to identify the key business drivers behind their CRM efforts. This year, as in the past three, the need to increase sales effectiveness emerged as top priority for these projects. Respondents obviously feel that in certain areas, their sales functions are ineffective, but where?
To help us find an answer and explore this issue in detail, we recently solicited input from 122 firms. As the basis for this research project, we asked survey participants to identify and rate the specific sales performance areas where they felt ineffective. We gave them a list of 25 functions that sales organizations are typically asked to perform and asked them to rate their own performances in each of these areas using the following scale: 5 = world-class, 4 = very good, 3 = adequate, 2 = poor and 1 = dismal.
The following is a summary of the major sales effectiveness challenges these firms report they are still facing.
Share Best Practices: Most firms understand the value of sharing best practices Xsales strategies, qualification techniques, objection handling, presentations, letters, proposals and so on Xbut few report doing this effectively and consistently. In the vast majority of the cases, sharing ideas was done very informally, if at all, leaving a major corporate asset underutilized.
Support Channel Partners: Many companies report they intend to increase utilization of channel partners to drive business in the future, but are finding the policies, procedures and tools they provide their own sales representatives do not always work effectively when used by the channel. They also recognize the need to greatly simplify their operations if they are going to gain mind share from the channel reps to aggressively sell products or services.
Ramp Up New Reps: As product lines become broader and individual offerings more complex, getting new reps up to speed quickly becomes a greater challenge. Achieving a base level of productivity often takes six months or more, and many firms report that achieving full productivity often takes one to two years.
Generate Leads: To meet revenue goals, many salespeople must generate leads on their own, independent of corporate marketing programs. Targeting potential prospects and then developing and implementing local direct marketing programs are time-consuming and hard to do. Survey respondents report that marketing additional offerings to existing accounts is a challenge because, among other reasons, determining what products or services a client already has is often difficult.
Easily Access Information: Few firms report lack of information as an issue. The issue, however, is getting the right information to the right person at the right time. Two sets of problems emerge here. Either the reps are being bombarded by too much information-Xa never-ending flow of new product announcements, price changes, competitive bulletins and so on, making it difficult to stay current-Xor the information they need exists somewhere in the company and they must spend a significant amount of time tracking it down. In both cases the need for effective management of information flow is seen as a major requirement for improving sales effectiveness.
Communicate XEnterprise-wide: To close a deal, sales representatives often need support from other functional areas such as finance, manufacturing, distribution and R&D. Communicating effectively with those departments is difficult and, for many companies, is becoming even more so. One of the major trends, as reported by 81 percent of the firms surveyed, is the move toward the virtual sales force, where reps work out of home offices, customer sites or executive suites to be closer to clients and to reduce costs. As the percentage of the total sales force working remotely increases, the challenge of working collaboratively should also increase.
Introduce New Products: As product life cycles collapse, the rate of new product introductions is hitting an all-time high for many companies. This makes it difficult for sales managers and reps to find the time they need to remain current on these new offerings and take them to the marketplace, while continuing to manage opportunities already in the pipeline.
Forecast Accurately: Forecasting is all too often more magic than science, and for many firms it is black magic at that. Consider the ratings the firms we surveyed give forecasts. Only 7 percent describe their forecasts as always reliable. Of the remainder, 34 percent say forecasts are normally reliable, 44 percent say they are often inaccurate and 15 percent say they are always inaccurate. Since many companies make key business decisions based on forecasts, inaccuracies in forecasting can cause enterprise-wide effectiveness problems.
Qualify Prospects: Determining which product or service offering best fits the needs of a prospective customer, if any do at all, is becoming a serious challenge. Sales representatives are expected to be experts on all aspects of the product line. In light of reductions in sales support staffs, many organizations report this expectation is unrealistic.
Communicate XSales Management: Survey respondents find a second communication challenge in allowing sales reps to easily discuss workloads with management and vice versa. One interesting trend we noted is the increase from past years in the ratio of sales reps to sales managers. The average across all companies surveyed is 9.1 reps to 1 manager, with one company on the extreme side reporting a ratio of 24:1. Ratios like these are making it harder for sales representatives to get the coaching and counseling they need.
Service Existing Accounts: To all survey respondents, the value of customer service is clear-Xdo a great job servicing existing clients and they will buy more from you in the future. However, how to provide great service consistently is not so clear. Many firms report lacking the bandwidth and mechanisms to have sales representatives do the necessary account development work to build true customer loyalty.
Generate Proposals and Configure/Submit Orders: Many sales forces experience these two interrelated problems. The complexity of the orders themselves and the number of sign-offs required to approve nonstandard deals are making sales representatives ineffective and inefficient at completing these two critical tasks.
What is the net impact of these effectiveness challenges? The CSOs we talked to cited four negative outcomes:
- Margins are eroding as sales representatives have less time and knowledge to do a comprehensive job of consultative selling.
- Sell cycles are lengthening as we introduce unnecessary delays into the sales process. This results in salespeople having to spend more time tracking down others to help them complete tasks such as needs analysis, configuration and proposal sign-off.
- Competitive loss and no-decision rates are increasing due to our ineffectiveness at presenting the full value of our offerings and injecting a sense of urgency into the decision process.
- Customer loyalty is declining because we do not invest the time required to build true business partnerships with our clients.
Clearly, we are seeing the sales landscape changing dramatically, and with it we are finding the strategies and tactics that served us well in the '70s, '80s and even early '90s don't always work anymore. Product complexity, customer demands and competitive pressures are all driving demand to reinvent the way we sell to and service customers. The alternative is to face corporate Darwinism.
Fortunately, we are seeing new solutions enter the sales marketplace. New business paradigms, innovative processes and next- generation CRM tools are all proving we can have a significant impact on increasing the effectiveness of our sales operations. Hopefully, you can use the information contained in this article as a template for identifying critical issues. Once your organization's problems are clearly understood, you will find the task of identifying and evaluating the CRM solutions that will positively impact your sales effectiveness much easier.