How Will CRM Evolve?
Changing the game with predictive analytics.
Posted Nov 30, 2012
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Talk to a salesperson who uses customer relationship management software and you'll find someone eager to discuss the software's many shortcomings. Among those complaints is time wasted on "administrative responsibilities." One salesperson described it to me this way: "The CRM is designed for management, not me. They get reports and I get less time selling. I put information in, but get nothing out. What's the benefit to me?"

The biggest time-waster for a salesperson is not administrative tasks in the CRM. It is time spent with the wrong customer—one that will not buy. But salespeople are not mind readers. How can a salesperson know which of his prospects is more or less likely to buy? Can CRM help salespeople focus their selling time on the best prospects?

CRM Systems Aren't Built for a Big Data World

Current CRM software is not very good at this. You can start calling your prospects in alphabetical order, or even by revenue rank. What if CRM could order your accounts based on the probability that they would close this quarter?

Today there are data sets that allow this to be done. Internal data (purchase histories, clickstream data), external data (job postings, government contract awards, executive changes), and social data (LinkedIn connections, tweets, blog posts, and comments) contain the gold. But similar to the California Gold Rush, less than 0.01 percent of this information is actually useful for uncovering intent. Pity the poor rep who tries to pan through this mountain of data in the hope of finding a nugget.

A recent study by CSO Insights found that only 44 percent of sales executives believe that their CRM system is helping them find internal information (what it was designed for). Nearly 80 percent find it ineffective at helping them find external company information.

Companies like Dell, ADP, EMC, and SunTrust are using the power of predictive analytics to enable their sales teams to focus on the customers most likely to buy. The sales teams are not overwhelmed by big data because only the insight is brought into the CRM system. The predictive analytics rank the accounts by their likelihood to buy, suggest what product that account would buy, and even present talking points to the rep.

There is a new set of customer intelligence capabilities that is enabling CRM to do more and help reps perform better.

The Analytics of "Persistence"

For one selling organization, sales persistence was highly praised. The sales manager encouraged reps to "keep calling and emailing as many times as it takes to get the prospect on the phone." The manager was fond of telling the story of a young rep who called someone 30 times, finally got a meeting, and closed a big deal. This story became tribal legend. However, the data told a very different story. In fact, at this company, the probability of closing a deal falls dramatically after eight attempted calls. Predictive analytics were applied to the histories of thousands of accounts and the stunning conclusion was that persistence—beyond eight attempts—is a waste of time.

In many selling organizations, anecdotes like the one about the rep who called 30 times become calcified on the culture of a sales team. The power of data can wash away years of calcification by providing objective evidence of best practices. The big data explosion is driving a fundamental shift from gut decisions and managing by anecdote.

More Insight, Not More Information

The average sales rep spends 24 percent of his time preparing for sales calls. Rather than feeling empowered by all this data, the rep is overwhelmed. Reps are struggling to find the information they need to close deals. CSO Insights found that 82 percent of sales reps are challenged by the amount of information available and the amount of time it takes to look through it all. The study found that reps were searching as many as 15 different data sources in the course of their research. The data deluge is real. The key to sales productivity is not delivering more data to sales reps. It is providing the insights that allow them to focus on their best opportunities.

A Better Way

The way most sales organizations operate is obsolete. And the results prove it:

  • Ninety-four percent of all "marketing qualified leads" will never close.
  • The average sales rep spends 68 percent of his time on administration, research, and preparation, not talking to customers.
  • Fifty-two percent of sales reps in the U.S. do not achieve their sales quota.

Do salespeople have the insight at their fingertips needed to beat their sales targets? If their sole tool is a traditional CRM system, the answer is probably not.

While often maligned, traditional CRM has become the system of record and central to the workflow of millions of sales professionals. Yet 20 years after they were introduced, CRM systems are still largely used for contact and pipeline management. Information is input when an opportunity is created, and updated before it closes. Add a layer of predictive analytics, and the game changes for CRM and the sales rep.

Brian Kardon is the CMO for Lattice Engines, responsible for the company's market positioning, demand generation, thought leadership, and integrated marketing to ensure strong connections with customers and constituents.

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