Evolving CRM
Last week’s CRM Evolution conference in New York was interesting for multiple reasons. Most importantly, perhaps, is the perception that the market is moving into a higher gear, slipping past the restraints of a recession that would not quit. Good things are in store for the industry, I think, as buyers step up their games and vendors unleash a passel of new solutions.
There was also no small amount of contention as vendors and analysts jockeyed for position to be remembered as the one who rightly predicted the future first, or perhaps loudest. “CRM is dead,” announced Bob Stutz of Microsoft. He should know because he’s had a strong hand in building CRM first at Siebel, then at SAP, and now for Microsoft. But even if you take Stutz at his word you still need to account for the rubble and debris of a 20-odd billion dollar break up.
The fact is that CRM, or whatever we want to call it these days, is far from dead but it has certainly morphed from the stove-piped applications of fifteen years ago to the social, mobile, collaborative, cloud-based, work-flow infused thing it has become. If that’s what Stutz was thinking, then I concur.
I ventured that we are already in a “post-CRM era” at a breakfast roundtable and, because of this, I think Bob and I are on the same page. The species that we knew long ago have evolved into forms that would be barely recognizable to a time traveler from the turn of the century.
All this is well and good, and there’s no better place to discuss CRM’s evolution than at an eponymously named show. So perhaps the better question to ask, and the one I tried to answer in a breakout session, is what has it become? Also, where is it going is never a bad thing to contemplate. Kind of reminds me of Gauguin.
So what has it become? It largely depends on which Church of CRM you belong to. If you or your vendor have moved aggressively into platform technology, then you see great value in applying all of those formerly disparate apps like social, collaboration, and workflow into CRM apps to produce wonderful systems that can anticipate and even recommend courses of action for vendor personnel and customers. If you also adhere to a mobile first strategy then you know the importance of not only building for small screens, but of maximizing the ability to specify rather than code.
However, all of this lacks a unifying principle because it assumes our applications have become smarter in numerous ways and that we can blithely continue with business as usual — a comforting thought, but is it realistic? I think not, and I wish to convince you that this is no bad thing.
Our time traveler would have a hard time recognizing today’s CRM but he or she would have equal difficulty recognizing today’s front office work. When the millennium turned email across the Internet was not very old, social networking was an idea embedded in a paper that came out of the Harvard Psychology department in the 1950’s, Windows ruled the desktop, and my favorite, sales people made appointments to take orders.
Static, discrete front office applications were all you needed in that business world. Actually, one argument then raging was whether you needed even that much — after all spreadsheets ran SFA just fine. But look where we are today. Customers shop on-line selecting, or more often eliminating, vendors without them even being aware that they were under consideration.
We are in a post-CRM era by my estimate precisely because the old technology can’t keep up with business any more. Moreover, the new apps are being used in only a so-so way as many users pick and choose which functionality to implement (Why do I need workflow and why can’t I skip a step in the sales process?) or use it in only the most rudimentary ways (My analytics package tells me what we sold last month).
The missing element in all this, I say — and I know I will get mail on this — is leadership, specifically leadership from the vendor community. If you watch closely, virtually all vendors are happy to bring out a bit of functionality such as social, collaboration, workflow, and all the rest but they are also careful to discuss these bits in isolation. I have not heard a convincing argument from any of the vendors for why it all needs to be incorporated in our entire suite of customer facing applications.
That conversation doesn’t happen because no one wants to utter the words “best practice” any more for fear of losing a deal because a customer liked the software but didn’t want to be told how best to use it. If you doubt this refer back to CSO Insights famous research showing that half of sales organizations have no process or technology supporting the sales effort. That’s too bad because the post-CRM world is a process-centric one.
If CRM is “dead” or we are in a “post-CRM” era, then it is because of the obvious fact on the ground that we do business very differently today than during CRM’s golden era. CRM was fundamentally a transaction tracking system or system of record. The era we are in deals with a great deal of business process complexity and requires systems of engagement. The glut of new technology that every vendor offers is bringing this reality home and businesses that make the leap from transaction orientation to process are reaping new rewards. It’s time for everyone to reap those rewards and time for vendors to get on with thought leadership in that direction.
Moving the Sales Needle
Today Apttus and Adobe Echosign announced the results of a survey of more than 100 Fortune 1000 sales leaders conducted earlier this year. Titled “Five Blind Spots in the Sales Process” — I assume you can download it but as I am writing this in advance, I don’t have a link yet — the report focuses on things that have been perennial issues for sales managers.
Net Results
Here’s the big picture view.
- 1 in 4 companies don’t have sufficient KPI insights for average pipeline multiple, deal size, quote-to-cash cycle time and win rate.
- 4 out of 10 companies require 3 days or longer to generate a quote
- 50% of companies have experienced costly mistakes on quotes
- 1 in 3 companies are not managing renewals effectively and are missing opportunities to capture value
- 1 in 5 report that forecasts are chronically inaccurate and have a material impact on the business planning and spending
This reminds us of the fog of war. Everything looks so logical, so pregnant with success, in the plans but once we get started random events quickly consign the plans to the waste bin. That’s not to say that we’re helpless in the face of reality though and, frankly, I am surprised that some of these numbers look so good. For instance, only 1 in 5 companies report chronically inaccurate forecasts should not be taken beyond the Fortune 1000.
We can reliably assume that in getting to this lofty perch, companies have gone through multiple iterations of sales modeling, planning, and training and that few if any of their reps just wing it. If you compare this to CSO Insights’ information about a broader population you can see that the numbers are higher for mistakes and that much of the cause can be laid at the feet of the 50% of companies that don’t have a sales process and therefore don’t enforce one. As I say, that ain’t the F1000.
So take this, if you dare, as a best-case scenario in which most of the right things are being done the right way most of the time in the F1000. This leaves literally millions of companies worse off and suggests to me that the sales profession is way late in adopting newer and better approaches to business.
Modeling
I’ve been doing a lot of work lately with analytics companies like Scout Analytics, Aviso, and I have past experience with others like C9 and Mintigo and many others. In all of this experience the thing that always rings true is the false security too many people get from using spreadsheets to run forecasts. A spreadsheet is merely a list of deals and our hunches about how they’re going to turn out. But because spreadsheets work with numbers, we tend to give them greater value than they should command. Consider this: if your forecast was in a Word document rather than a spreadsheet, would you regard it as highly? Me thinks not.
Getting beyond spreadsheets and simplistic forecasting will improve results. But that means developing real statistical models that offer accurate probabilities of deal closure. It also means tracking more deals than we currently do because the tendency today is to winnow down the list as the quarter winds up so that you can focus your energies on what’s really important. Unfortunately, what’s important is usually based on a spreadsheet containing someone’s hunch represented as a number. See the problem?
A better approach, or at least the one I favor, involves machine learning and treating the forecast as a portfolio rather than as individual deals. When you have a portfolio you might be more reluctant about winnowing because every deal has some value. The key is accurately assigning how much value and in using modeling and statistics to figure out not only what’s closable, but also what could be closable given appropriate inputs of time and effort. For instance, maybe a deal is likely to close if you do a second and more detailed demo. Do you have the bandwidth to do that? What else shifts if you do? Most importantly, what combination of tradeoffs like this produces the greatest yield from the portfolio?
While we’re at it we also need to include renewals and other installed base revenue in the real forecast. Too often they’re kept separate and maybe the chief sales officer has an understanding of their impact but not always. If you’re segregating hunting and harvesting, you might want to take a new look at it. I know all the arguments about not wanting the sales force hunters to spend their time harvesting the easy revenue but that’s an idea past its prime.
Reps should be responsible for all the revenue from an account because accounts are becoming more complex — we’re not just selling version 1.0 any more — and tools like Xactly, which manages compensation processes, make it easy to assign multiple or multi-part quotas to reps so that each may have an installed base goal as well as a new revenue goal as well as any other goal that makes sense such as new product introductions.
Selling hasn’t changed much in the last couple of decades. It’s gotten faster thanks to technology but as I have said before, we’ve gotten just about all the acceleration we can get at this point so finding ways to work smarter is what will fuel the next performance increase. In my experience sales people are notoriously conservative and don’t like change. Fair enough. The route to further growth has to start with businesses forming win-win coalitions with sales teams to evolve their practices through advanced technologies. For me, the message of the Apttus Adobe-Echosign report is that mistakes are rather costly and it’s time to take well-considered actions.
Beagle Research’s WizKids 2014
Beagle Research Group today announced the winners of the company’s annual WizKids award for innovation in front office technology. The 2014 winners include many conventional software vendors as well as companies that developed innovative cloud-based business applications and only later spun off their solutions for the general market. This year’s WizKids include:
BasicGov, provider of cloud based solutions for local and regional governments; Evariant, woth a solution that knits together healthcare providers, institutions, and patients to encourage wellness; GreatVines, offering sales solutions for the multi-tier beverage industry; Kenandy, a cloud-based ERP company; Orchestrate, provider of a process management system for handling complex financial business processes; Smarsh, provider of recordkeeping, compliance, and e-discovery solutions for corporate email archives; TD Ameritrade Institutional, which produces a management system for independent registered investment advisors (RIA’s); and Veeva, a provider of cloud-based solutions for life-sciences.
“All of the companies honored build important business applications based on Salesforce1, the application development platform from Salesforce.com and sell them through the AppExchange,” said managing principal Denis Pombriant. “But the significance of these awards is really that all of these solutions were developed at least in part through, and are deployed on a single multi-tenant platform from a single vendor, Salesforce.com,” he said. “In a way, Salesforce is the ultimate WizKid, because they made all of this possible,” he concluded.
The Award winning applications and their developers share the distinction that they have developed ground-breaking information management solutions for a disparate set of business processes. An eBook describing the award-winning applications is available HERE.
About Beagle Research Group
Beagle Research Group, LLC is an analyst, consulting and market research firm focused on emerging front office software companies. Beagle Research investigates market trends and provides analysis and insight to vendors and buyers of front office computing solutions. Our content is presented in articles, blogs posts and free downloadable reports at multiple locations across the Internet. WizKids is a trademark of Beagle Research Group, LLC.
