Revving up Revenue
The long recession and the rise of social CRM were not simply co-incidental. I believe they happened together. That’s not to say that social CRM happened for some cosmic reason, I neither subscribe to the belief that all things happen for a reason nor do I believe I am qualified to hold forth beyond what I’ve just written. I think social CRM — whose roots precede the recession — became important during the recession because it represents a good and inexpensive way to keep tabs on existing customers and possibly capture some new ones at low cost.
That’s recession 101 in my book. Manage the installed base, capture the business that’s available, keep the maintenance stream coming in and, whatever you do, don’t give a customer a reason to leave you. In the process you can promote your thought leadership and that’s valuable too. Social is perfect for that and a good deal more. But now that the recession is giving way and job growth — a frustratingly lagging indicator — is making tentative gains, many companies that I speak with are turning their attention to revenue and how to accelerate it.
Just as managing the customer base is recession 101, accelerating revenue is recovery 101. Some of us may not have made the psychic switch yet but that’s coming. Lots of people I speak with, especially vendors and VC’s, have the revenue idea firmly in place and, just as social predates the recession, revenue performance management (RPM) predates the recovery.
VC’s like Bruce Cleveland, a former high-ranking executive at Siebel, have been writing about RPM for a couple of years and today I can speak with him and people like Phil Fernandez, Founder and CEO of Marketo, or Swayne Hill, CEO of Cloud9 Analytics and many others about RPM and have good discussions. The talks aren’t simply about revenue and how nice it is but more substantively, they’re about accurately identifying opportunities and bringing them to fruition not just in a reasonable time but like clockwork.
Unlike other trends that we’ve seen over the years, RPM is unique in that it focuses on end-to-end business processes and quite possibly the overlap of responsibilities and systems to manage those processes. One of my favorite examples of a sales manager and a company that “gets it” is Dave Fitzgerald an EVP at Brainshark who has a constellation of SaaS applications covering the end-to-end spectrum. From lead nurturing to forecasting to compensation, Fitzgerald has RPM covered and he could be its poster child.
Every recession has an end and there’s always an idea or technology that leads us out. Often, what leads us is a tacit agreement to do things better and at less cost than we did prior to the meltdown. The idea makes sense and it spreads virally and no one wants to be left behind with a business practice that is outdated and relatively expensive. On-demand computing was one of those drivers from the last recession, so was the on-line meeting. Companies like Salesforce.com and WebEx became big players in the process.
You might say that those companies were too small to have a concrete effect on the economy at large. But keep in mind that they weren’t alone and in any case, no trend has to carry the economy on its back, the trend need only be leveragable and contribute to the growth rate, which is a more doable thing.
Revenue performance management fits the current need. It is a blanket term that can easily apply to managing anything in your SG&A line as it can apply to revenue generation. Its orientation is growth, not simply maintaining a hunkered down pose waiting for things to get better. The economy is shifting; everywhere I look experts are showing us how to do more with a little less.
Anneke Seley of Sales 2.0 fame is telling us to look at hybrid Web-phone-and field selling. Analytics vendors are showing us how to mine our social data to find the customers and prospects and customers who really need our attention. And experts like Thor Johnson are telling marketers to get more quantitative in discussions with the C-level both to justify their budgets and to have greater impact on a company’s direction.
When you boil that ocean down one of the surprising things you are left with is that the distance between sales and marketing is shrinking and that might be the biggest thing to come out of this recession. Sales and marketing each have their jobs to do and each is different from the other. But what’s clear is that if there was ever an either/or discussion about sales vs. marketing, the conjunction is changing from “or” to “and”.
As that change takes place we are already seeing the emergence of a new job title, the Chief Revenue Officer or CRO. I’ll admit CRO doesn’t exactly roll off the tongue but I am old enough to remember when CIO didn’t roll off the tongue either. I am also seasoned enough to recall other gems like vice president of first impressions, proof that some trends are fads. But CRO looks to have some staying power, most importantly because of that “R” word. Who doesn’t love “R”?
The CRO is the person who will need to understand both sales and marketing and most importantly also know that the two need to be mutually reinforcing. It does no good for one to be the servant of the other. CRO is a status to which both the VPs of sales and marketing can aspire. Does this mean that CMO and CSO go away? I don’t know. Does the CFO report to the CEO? The Board? Or work with the CEO? It matters.
What’s certain, as I look at the landscape is that marketing and sales are a lot different today. Customers are in control and many people recognize that the sales process is rapidly giving way to the buying process and that sets the stage for some interesting realignments.
Happy Groundhog Day!
Tablets, CRM and more
Tablet vendors at the recently concluded Consumer Electronics Show (CES) in Las Vegas had a coming out party. Driven by the wild success of the iPad, they introduced something like eighty — that’s 8-0h my goodness — tablet PCs to the world. Now, by itself that’s significant, especially for CRM, and something hard to miss even if you’re a proverbial blind horse. But let’s not stop there; to understand the significance for CRM we can analyze more information.
For instance, it was widely reported last year that for the first time social media out-competed email for our attention. Add to that the growing importance of video as a content medium and you can start to see a trend emerge.
One thing I conclude immediately is that we’re increasingly mobile, hence the need for a form factor that is easy enough to carry and big enough to do things with. But with this we are also becoming a bit more passive in our technology use. Passive? With all these devices and movement? Perhaps. And with social media’s impact picking up the volume of transmissions will likewise and the demand for better quality interactions will follow.
Tablets, or at least the iPad, which so many vendors are trying to emulate, were developed as receiving devices, things used to surf the Internet and increasingly that means watching video content. Granted you can use an array of screen-based and hardware oriented keyboards, but the primary use of these devices is to slurp information from the Web. There was a report last week, surfaced by my friends at The Enterprise Irregulars, that Apple was removing the only button from the iPad for a future revision of the device. That’s a direction keyboard enthusiasts should monitor. TV is a passive medium and it would appear that our computing is becoming more TV-like.
I’ve spoken to a variety of marketing people recently about video and its surging importance to CRM and I’ve written about it here. The sense of these marketers is nearly universal that tablets are fine for watching videos and that means corporate videos.
Graphics packages — Harvard Graphics and PowerPoint — were thought by many to be the killer applications for the laptop because sales people could take them anywhere and deliver a more or less standard pitch.
Video will certainly become the killer application of the tablet and that will place more responsibility on the marketing group. Video eliminates much of the need for a presenter and makes the viewer responsible not only for attention but for presenting as well.
Thor Johnson tells me that business-to-business marketing is still by many accounts a PR and brochure business. But increasingly tools from Eloqua, Marketo and others are turning marketing from art to science. As marketers generate and analyze more customer data they become more astutely aware of real needs and they will have plenty of incentive to meet those needs through advanced communications, e.g. video.
Already companies like BrainShark are delivering to market the infrastructure required to develop high quality videos that play anywhere — from the smallest screens to the most advanced tablets as well as desktops.
The increased use of video will multiply the amount of data we push around the Web daily and drive demand for bigger networks with fatter pipes (or tubes if you are a member of the U.S. Senate). And just as tools like PowerPoint gave everyone the ability to develop presentations, we must expect that before long we will all become experts at developing and delivering live or recorded full motion video.
But increasing mobility might not pan out exactly the way many people see it. The presumption now is that mobility means more face time and that’s probably right though we’ll certainly need to pick our spots more carefully as the cost of transport rises. In such an environment mobility might become synonymous with remoteness, as in working at some locations not associated with your corporation.
The transportation issue, which I have bored you with before, could become a serious drain on the economy. It’s simple math, but if a gallon of regular goes from two-fifty to five bucks, your cost of transportation just took a sharp rise. Transportation comes out of the SG&A (sales, general and administrative) line and eats into your margin like a worm through an apple. At that point your choices all look iffy. You could drive something smaller to your customer appointment but the cost of switching is not small. Regardless, you can’t do much about the fuel economy of the jet that takes you to another city. The alternative of not going is only supportable if there is a credible alternative.
At that point, the benefits of mobile and video technology that right now look like a leap in efficiency that will flow directly to the bottom line, will become fixes that help you maintain your position, to tread water. Economists have a term for this, it’s called consuming the dividend. You could save the benefit, which is what happens when it really does hit the bottom line. Or you could plow the benefit back into the business and that’s what I see happening with video and mobile technologies. That’s why it’s so important to get on this bandwagon. Eighty new tablet introductions is more than a straw in the wind.
Sustainability and CRM
Using emerging technologies to foster more sustainable front office business processes.
Sustainability might be the next big thing in CRM. I’m betting it is and Beagle Research is initiating an award for sustainability in CRM. Today. Now.
Everywhere we look we see not just an industry but also a civilization straining under the demands of growth. Now, growth is generally a good thing for an economy but one of its hidden characteristics is that it periodically forces us to change the way we do things. What is affordable and practical one day can become expensive and cumbersome overnight. We’re living in one of those times. The solution to such challenges is to find ways to make what we do more sustainable, to substitute, change and innovate new and better ways of doing things. In business that means our processes and then some.
The things we take for granted in our business dealings are becoming less constant. Customers are tapped out, the new product engine has stalled and travel is becoming so expensive that it may soon squeeze margins and affect our ability to meet with people. Some of this is blowback from the recession but other aspects may be a long-term trend forming. Regardless of the causes, as business people we need to discover and develop solutions that mitigate these influences so that we can continue doing business.
We’ve given these issues considerable thought and in response, today, Beagle Research introduces a new award and report focusing on sustainability and the things that CRM can do to help every business to become more sustainable.
The award and report are called ThinkForwardä. We borrowed the idea of “think” from Thomas Watson, Sr. of IBM fame and from Steve Jobs each of whom asked us to think and then think differently at critical points in the evolution of our industry.
We believe it’s time to think again but this time we need to think ahead about a world that will be resource constrained in many dimensions. The conditions we watch and write about in the report show slower growth and rising transportation costs coupled with a customer-base that is growing less interested in absorbing more goods.
Just in time, we also see a market brimming with front office technologies that help vendors and customers to identify opportunities and satisfy them with maximum efficiency, using resources wisely. We think sustainability provides the organizing principle for the next phase of CRM, a phase filled with opportunity if we focus on crowdsourcing, social media and strategies for substituting intelligent technologies for travel.
We see numerous front office software companies bringing products to market that by themselves may not garner a great deal of attention from the mainstream market but we also see these solutions as keys to a more sustainable business environment.
The ThinkForward report identifies seven companies whose solutions typify the kinds of solutions that, in some cases, may not be core to CRM today but which will be essential in the future. In one way or another these companies evidence solutions that help vendors better understand and target opportunities, marshal resources and engage customers in new and more sustainable ways.
The award winners include Brainshark, Cloud9 Analytics, Communispace, iCentera, Kadient, Salesforce.com, Unisfair and Zuora. As our report documents, each of these vendors offers solutions that help their customers to do business in more sustainable ways either by treating customers more like renewable resources, reducing the travel and energy requirements of many front office processes, or by capturing and leveraging crowd wisdom to enable companies to better hone products and messages.
We salute these pioneers and encourage you to consider how making your businesses more sustainable can help drive new revenues and profits as the world continues to change around us.
Cloud9 and Jim Dickey entertain sales enthusiasts in Boston
I was a guest in the audience yesterday when Cloud9 Analytics came to Boston to meet with customers and talk about the releases that will be part of their offerings later this year. The presentation lasted a bit over an hour and included presentation of new sales management data by Jim Dickey of CSO Insights and a customer testimonial from Brainshark, EVP, Dave Fitzgerald.
Cloud9 CEO Swayne Hill spoke about the future releases and current status of the company. The company must be doing a few things right because Hill said they have more than 90 customers now and a 50% revenue increase quarter over quarter. That’s good news given that it’s so expensive to launch a SaaS company and capital is not exactly overflowing.
Last year was the worst year for VC investments since 1997, if you want to know. And the industry actually raised less money than it invested and I don’t know how long it’s been since that happened. Last year was also the year a competitor, LucidEra — another SaaS sales analytics startup — went to the boneyard. So, long story short, Cloud9’s advances in such a market speak volumes.
We also know that if last year had been terrible it would have been an improvement in most companies. Jim Dickey, whose company performs an enormous survey of sales and sales management professionals each year was there to talk about his most recent survey and analysis, which is due out shortly. Without giving away all of Jim’s IP (which I can’t do simply because it is so voluminous) some numbers that blew me away: Last year the win rate on forecasted deals was 44 percent. Forty-four percent makes picking red or black look like genius work. Forty-four percent makes a mockery of the whole forecasting process. It means you’re better off not forecasting.
But there is more. In the same year, in the face of an economic tsunami, 86% of the companies studied raised sales quotas. That’s right, they raised their expectations in the face of overwhelming odds against. I’m sorry but Tennyson is screaming in my ear about the Light Brigade,
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die,
Into the valley of Death
Rode the six hundred.
Eighty-six percent is just about everybody. Now I can understand if the rise in quota had something to do with layoffs and consolidation of territories but you can’t have it both ways. If you jettison the underperformers in the face of the tsunami, you can’t simply put their quotas on the backs of others. If you have a realistic expectation that the quota can be attained, why get rid of some staff to begin with?
But I digress. Dickey’s big point, which I think is very good, is that too often management flips coins when it comes to forecasting and you can’t completely blame them. The sheer number of deals in a pipeline and forecast make it impossible to know much about any of them. That’s why Cloud9 Analytics makes so much sense.
The Cloud9 approach is to manage the exceptions. If nothing changes in a deal then it is assumed to be on track. When something does change notifications go out to relevant parties like managers and others who subscribe to a forecast’s or even a deal’s feed. The whole subscription and feed idea is very Sales 2.0-ish and a good thing to have.
But what Hill spoke of and Dickey gave numerical support for, is the next piece in a sales analytics maturity model that I see evolving. Hill’s contention is that we already use performance management tools in the back office for things like manufacturing. For instance, we don’t use spreadsheets to monitor quality or relationships with vendors in the supply chain but too often we do the equivalent in the front office.
Hill’s goal is to make sales performance management as rigorous as other performance management and his road map for additions and enhancements to the Cloud9 SaaS service point in that direction. All this reminds me of Davenport and Harris’s very good book, “Competing on Analytics” which discusses an organization’s need for an analytics maturity model ranging from tactical to strategic use of analytics to improve performance. Cloud9 appears to be on an interesting track to help customers do this and their further announcements for this year will be interesting to dissect.
I owe you an analysis of Dave Fitzgerald’s testimonial about how Brainshark is using Cloud9 as well as a broader constellation of tools but that will have to wait.
Necessity and change
There is opportunity in adversity, I have been told, and I happen to believe it. Since adversity is unpleasant it is sometimes hard to look close enough to find the silver lining, but if we can get over the unpleasantness we might be able to prosper.
I have been reading and writing about the economic consequences of this recession recently and last summer about what was then the high price of petroleum. The two have come together in interesting ways presenting one of the best opportunities to come along in a while.
We recently did a survey of people who manage sales in which we tried to identify the issues of most concern to them. While the idea for the survey originated in the summer energy crisis, it ended in the panic of the early recession. One choose-all-that-fit question stands out in my mind. “What changes are you making in your sales organization as a direct result of the economy?”
Most obviously, the people who answered—nearly three-quarters managed sales at some level—said they were cutting back on non-essential hires. That’s typical of a recession and almost serves to define it. The next highest scoring issues involved travel, either cutting back or finding alternatives and these issues caught my eye.
In some ways it’s easy to cut back on travel. Fewer people in the sales group automatically results in lower travel costs, but at the price of less coverage. Alternatively, simply driving more and flying less can improve bottom line results, but what we do instead of traveling is the heart of the issue.
Last week I noted how Oracle held an on-line trade show and how the company and its customers saved a boodle on housing, entertainment and transportation costs. How much? I don’t know because I don’t have the raw data nor do I know how many people would have stayed home if the option was a conventional show. And it will take time to know if the event was positive for sales, so there were many unknowns.
As luck would have it, though, I met up with Joe Gustafson, CEO of Brainshark, the other day and he gave me an inkling of the magnitude of savings. Brainshark is not a virtual trade show company like On24 or Unisfair. Instead, Brainshark produces an on-demand environment where companies can deposit their marketing media such as video, audio and PowerPoint slides. Users of the media can review and rate the content and the system can rank them for effectiveness. Users can be anyone. Think of it more as the library you go to simply because it’s what you like to do and you’ll be close.
Brainshark’s approach is somewhat like Kadient’s, another company in the same approximate market, which uses its tool to support the sales process through playbooks. To oversimplify, the two differ in their uses and the audiences they serve.
At any rate, Gustafson told me this story, which is equally useful in a recession or in a carbon footprint abatement strategy. Brainshark had a customer with a thousand sales people and no money to put on its annual sales kick-off. The company had been planning to spend north of three million dollars for the event when the CEO said there was no budget.
Obviously when the CEO says there is no budget he or she does not mean don’t have the event. It is simply the driving force or necessity that is the mother of invention. Gustafson’s company helped this customer stage an automated and asynchronous sales kick off that delivered the training and information to the sales team for about $500k—a fraction of the original budget.
Was it the same? No. There is a lot gained at a sales meeting from the group dinners and workshops and tall tales told around a hotel bar, but it got the job done. There is also a lot to be gained from learning a lot of new material at your own pace rather than through two days of bombardment by PowerPoint too.
The stale economy is cause for numerous re-thinks like that sales meeting. I suspect that even when the recession ends there will be lessons learned from it that will cause permanent changes to the ways we sell and market. As I have noted before, face-to-face meetings were more frequent before on-line conferences made them less necessary in the last recession. This time, larger meetings and information dissemination might be up for permanent change.
Companies like Brainshark and Kadient have been around for many years, tending small patches of the market. A discontinuity like a recession or the high price of fuel or the concern about carbon footprints is often enough to tilt the scales and cause a tipping point. Put all of them together and, regardless of the health of the economy, a permanent change looks to be afoot.
