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.
Discussion
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Agree 100 percent, Denis. The exciting challenge is not necessarily going to be choosing the right technologies – the market will help with that quite a bit – but in helping people working in sales and marketing manage change. We often talk about change as an organizational thing, but ultimately it’s an individual activity – especially when we’re automating tasks that sales reps and marketers have become accustomed to doing themselves. The technology takes some of those tasks off their plates, and simplifies how they do those tasks in other cases. Regardless, it’s a change to how they work and there will always be a period of apprehension before the new technology is fully embraced. With change becoming a constant, if we aren’t careful managing change may become the activity that keeps sales and marketing people from doing their jobs (as opposed to the current time-wasting tasks technology is intended to overcome).
Good pick up Chris. Hope you are doing well!