Sales Analytics: Forecasting Success Through Improved Data Visibility

June 25, 2008

A few weeks ago I posted a link to a Sales Analytics Survey by Aberdeen Research. Today the analyst, Peter Ostrow, was kind enough to send me an overview of some of his findings.

The conclusion:

“Sales analytics and forecasting tools, with their premise of both understanding the various data sets and predictive elements that color a sales forecast, hold the potential not only to close the knowledge gap between Best-in-Class and other companies regarding pipeline data, but to “raise the tide” of all organizations by providing more insightful, trustworthy forecasts that are accessed by all executive stakeholders within the enterprise. “

You can read the survey overview report here.

Written by dcunningham · Filed Under Features

Business Intelligence for the Mid-Market Survey

May 7, 2008

Industry analyst firm Wise Analytics has launched an online survey on BI for the Mid-Market. There are no vendor sponsors for this survey and everyone who takes the 10 minutes required to fill it out are automatically entered to win a $50 gift certificate for Amazon.com. You’ll also receive a complimentary copy of the results summary report.

You can find out more about the analyst firm here and take a few minutes to fill out the survey here. The results should be quite interesting.

Written by dcunningham · Filed Under Features

The Keys to SaaS Business Intelligence Success

April 25, 2008

The shift from on-premise to on-demand business intelligence applications continues to get a lot of attention in the market. Here are 4 critical factors to look for in a SaaS business intelligence solution:

1) Simplicity (“Simplicity is the ultimate sophistication.” - Leonardo Da Vinci)

The concept of simplicity always rises to the top of the list when discussing the software-as-a-service model. With Microsoft jumping on the SaaS bandwagon this week, launching their Dynamics CRM Online, it will be interesting to see if the folks in Redmond have learned a few things from salesforce.com over the years. If not, they’ll want to check out this excellent presentation called 7 Secrets to SaaS Startup Success, from the recent Tour de Force roadshow. SaaS vendors take their cues from the consumer web – with sites like Google, Amazon, and NetFlix paving the way. As Rick Sheman writes on his blog:

“Part of the appeal of various BI products from SaaS, open source software (OSS) and other “small” software vendors is that they are easy to use and get the job done. This is in contrast to BI products that may win classic product evaluations but are overloaded with features and products stuffed into a BI suite. Feature-rich may win evaluations but not necessarily business users if the offering is too complex.”

As outlined in this introduction to on-demand business intelligence, SaaS applications must be:

Simple to set up. Gone are the days of the SE flying in to do a killer on-site demo that dazzles the execs and leads to a buying decision. With SaaS applications you should be able to “try before you buy” on your company’s data. Set up should take hours or days, not the months (or in some cases years) we’ve seen with traditional on-premise tools and data warehouse projects.
Simple to use. You don’t need advanced training courses to use websites like NetFlix. Why should software vendors not be held to the same standard? SaaS vendors have the advantage of being able to monitor and measure user adoption and they can intervene and assist if usage is low. Some even go so far as to say that the future of SaaS is all about the data because of this unique capability.
Simple to buy. Studies have shown that the pay as you go (and “pay-as-you-grow”) model reduces capital and operating costs by an estimated 10-30%. The subscription model itself is a huge simplification compared to the historical approaches of BI vendors, who have always counted on million dollar deals, annual maintenance fees, and a heck of a lot of shelfware.

2) Analytic Application Focus

When IDC’s Henry Morris coined the term years ago, he stated that ”an analytic application must do more than just provide information. They must guide the decision making process, leading to actions that improve business performance.” (See this article as well as his comments to this post for more details.) While the on-premise BI vendors tried to move towards analytic applications, their DNA as tools vendors made it very difficult to make the leap to becoming higher-value solution providers. The challenges associated with on-premise customization and the required built-in domain expertise also proved to be difficult to overcome. SaaS business intelligence applications should focus on analyzing and optimizing specific business processes, such as lead to cash, instead of simply being tools for IT and advanced business analysts.

3) Platform Power

The real benefit of business intelligence delivered as an on-demand service is that you don’t need to build an on-premise nuclear reactor when all you want is power. The “heavy lifting” of traditional on-premise business intelligence is managed behind the scenes so you can focus on getting the information you need to succeed in your role. Yes, the analytic power and performance have to be part of the underlying SaaS business intelligence platform, but this should be fairly transparent to the business users. This means that the sales cycle is no longer all about how to connect, combine, cleanse, aggregate and deliver data from multiple sources. Instead it’s about:

What metrics do you want to measure?
How can the analytic application help you improve the velocity of your sales pipeline?
Are you interested in measuring sales rep performance or historical customer acquisition trends by product line?

This is a refreshing change from the speeds and feeds discussions of traditional BI sales cycles and it should help organizations deliver on the promise of operational business intelligence.

4) Customer Success

As Byron Deeter outlined in his “Laws of Being SaaS-y” sandhill.com article:

“The top performing SaaS companies typically achieve annual renewals on a customer count basis above 90%, and over 100% renewals on a dollar value basis due to up-sells into this installed base.”

With the SaaS model, customer success must be at the forefront of everything the vendor does. Adoption must be high and the customer must see real, measurable value from the application. This is another refreshing change for the business intelligence market and perhaps the most exciting aspect of business analytics being delivered as an on-demand service.

It’s going to be interesting to watch this market evolve over the next few years as business process improvement and business intelligence applications continue to be the top business and IT priorities.

Written by dcunningham · Filed Under Features

Are You Living a Forecasting Nightmare?

April 11, 2008

Earlier in the week I posted an article by Mark Sellers, CEO and Founder of Breakthrough Sales Performance called Rethinking the Funnel. Here’s a follow up article from Mark on something that I’m sure many of you can relate to…

Are You Living a Forecasting Nightmare?

I saw a statistic recently that made me think of a comment a client of mine made about twelve years ago. First the statistic: The average tenure of a Vice President of Sales today is 19 months. I guess this is one more reason to avoid being average.

Now the comment: Given a choice between blowing out quota by a mile – but not having a clue that was going to happen – and accurately predicting sales for the period, even if they’re short of goal, most VPs of Sales would actually choose the latter. While blowing out quota seems to deserve the vote, when it’s a surprise it doesn’t reflect well on the VP of Sales. If she can’t predict a blowout this quarter or this year, how will she predict a crash next quarter or next year?

The ability to forecast accurately and consistently is still the top responsibility of the VP of Sales, just as it was last year or five years ago or ten or twenty years ago. Years ago, the well managed companies were in tune with the need to forecast well even if the price of getting it wrong was minor. Today, it’s a more unforgiving world. Despite the rising premium placed on nailing the forecast, how far have we really come as a trade in the hitting the mark?

Some expected CRM to be the answer. It was supposed to give VPs of Sales a newfound management control – an uber handle - on what was going on in the field without actually being there (when did that become possible by the way?) Why is it that when asked about the effectiveness of their CRM tools, and the satisfaction of their CRM investments, a sizeable percentage of VPs of Sales consistently report dissatisfaction? Has the promise of CRM for forecasting become like another blind date for the bridesmaid that ends in a heartbreaking disappointment?

First off, don’t blame your CRM. It likely does what it was supposed to do, that is, give you visibility of the funnel, run fancy reports, keep track of your top opportunities, and let you throw pop quizzes on certain deals every Friday morning. CRM was never supposed to do the one thing that is the key to accurate and consistent forecasting - improve the integrity of your sales funnel data. If you are expecting it to do that, then you’ve found the root cause of your problem. The good news is you’re now ready to effectively do something about it.

What do I mean by improving the quality of sales funnel data, and how can CRM be off the hook? Well, let’s do a quick review. A funnel is filled with sales opportunities (and lots of them, you hope). Each opportunity is defined by 1) something you’re selling, 2) a company or location or division you’re selling to, 3) a dollar value of the sale, and 4) an expected close date. Although that’s only four points of data, it’s important to be spot on with the information.

For example, if John in territory 213 says he’s working a $300,000 sale of widgets to ABC Industries, and it “looks really good” to close May 20, he’d better be right. Lots of people are looking at that sale, its size, when it’s going to close, and how likely to close. John’s sales manager, his manager’s manager (the VP Sales) and maybe even someone in finance. If it doesn’t close until September or if it’s really a $125,000 sale, those inaccuracies could be a problem.

But this is just one sale. And let’s say that if John’s off on his data, then no one else but John is affected.

However, what are the chances that John’s data for other sales opportunities is also off? And what if John’s manager has six other salespeople and they all have one or more sales that they’re all off on? Now this sales manager might have a little problem on her hands.

Let’s take it up one more level to the VP of Sales. What are the chances that his or her other sales managers have salespeople who are also off on one or more sales opportunities? Now it’s getting interesting. Let’s put some numbers to it.

One salesperson who incorrectly forecasts a $300,000 sale to close presents only a $300,000 problem. But one hundred salespeople incorrectly forecasting one hundred $300,000 sales opportunities presents a thirty million dollar problem for the VP of Sales.
Now back to CRM. The reason CRM is off the hook is because its role is to run the reports and give you visibility of the funnel. The reports you run and the visibility you have through your CRM is only as valuable as the integrity of the sales funnel data it’s using. What good is a fancy report that slices and segments and has colorful bar graphs if the data it uses is bad? If the close date changes, CRM won’t catch that – it’s up to the salesperson to make the update. Same with a sale value that changes.

So what’s the key to ensuring good funnel data with high integrity? Simply, making sure that every sales opportunity is correctly placed on the funnel where it belongs.
This is most effectively done by using a BuyCycle Funnel™ design. The BuyCycle Funnel™ defines the customer’s buying process and uses customer commitment as the best indicator of where the opportunity is. It’s the salesperson’s best guide to correctly placing the opportunities, and since it’s his or her burden to do so the BuyCycle Funnel™ becomes one of the best tools they have.   It’s up to the manager to coach, kick, cajole and otherwise motivate the salespeople to get increasingly competent with this approach.
Also, since funnels change all the time, as salespeople find new leads, advance some, lose some and win some, the opportunities move up, down, or out. To stay on top of this the sales managers have to regularly inspect the funnels and demand that they’re updated and fully stocked. Salespeople have a million reasons to not do this. I once heard a rep say that he was reluctant to enter all of his opportunities into his CRM funnel because it triggered additional work for him. Maybe true, but he just didn’t see the value of working this system. However, to make progress in forecasting, no one can opt out.

The technology of software can be impressive. We just can’t expect it to replace the fundamentals of entering accurate information about the funnel. Forecasting doesn’t have to be that complicated, though it will cost you some time and require commitment to a standard funnel process. What’s it worth to you?

Written by dcunningham · Filed Under Features

Rethinking the Funnel

April 7, 2008

Last week I had a great conversation with Mark Sellers, CEO and Founder of Breakthrough Sales Performance. Mark is also the author of The Funnel Principle, and therefore keenly aware of the importance of the right metrics and analytics to sales success. Following our discussion, Mark sent me a fantastic article about rethinking the sales funnel.

With his permission, I’ve reproduced it here:

Why Should You Rethink the Funnel

In the recently released book, The Funnel Principle, I make a case for putting a new focus and attention on the sales funnel. What’s the rationale behind this?

Let’s start with the most important reason: achieving quota.

More than anything else, achieving quota is what will define your success this year. Your performance evaluation might include ‘soft’ measures, but the one that matters most is achieving quota. Your commission depends on it. Your bonus depends on it. Your income depends on it. Your boss or your people depend on it. Your credibility depends on it.
Quota is all about net new sales opportunities, right? And guess what else is all about net new sales opportunities? The funnel. Let’s look at quota first.

You’re going to have to win new business to hit quota. Because your quota likely includes business that recurs from last year, business you don’t really have to win again, let’s focus on new sales you’ll have to produce to hit that quota. For example, if your territory did $1M last year and this year your quota is $1.1M, then you’ve got to find another $100,000 in net new sales.

But wait – you’ll likely have to find more. What’s the chance that all of the $1M you sold last year will also be sales this year?

Let’s say 25% of last year’s business turns over this year. There’s another $250,000 of net new sales opportunities you’ve got to find and close. Now we’re up to $350,000 of new business to hit this year’s $1.1M quota. If your sales turnover is more than 25%, then the delta is even bigger and you’ve got some serious funnel work to do.

How’s the funnel all about quota? It’s a funnel of net new sales opportunities and therefore it’s tied to achieving quota in the strongest way. If you’ve got to find and close another $350,000 to achieve quota then the first place you should look for your ability and the plan to achieve that is your funnel.

Which leads me to the second reason you should Rethink the Funnel. Your funnel provides leading indicator information that helps you answer the funnel’s ability question. Unlike sales, a lagging indicator, funnel data is information you can still do something about - as long as you’re not too far into the year.

Let’s say your funnel’s ability to close enough business to achieve your quota is weak. What do you do? You find more sales opportunities to chase. If your funnel has a 1:1 ratio of sales opportunities to GAP (GAP is what you have left to close to achieve quota), then you’d better have a 100% hit rate. If that makes you nervous (it shows you have a pulse) then you should immediately plan to increase your funnel value to something more than a one to one ratio to your GAP. Otherwise, it could be a long off season.

And here’s reason number three: the funnel is a behavioral tool. Meaning, it tells you what you should do next when you’re working an opportunity. How? The funnel’s stages tell you where the opportunity is in the process, which then suggests what you should do next.

Now, here’s the catch. To be most effective as a behavioral tool, your funnel has to be designed the right way – the BuyCycle Funnel™ way. This funnel design is based on the customer’s buying process, not on selling activities (like a traditional funnel). The BuyCycle Funnel makes you think of what the customer’s commitment should be before you decide what you’re going to commit to. For example, for some given opportunity should you prepare the proposal next? Or should you have the customer give you more information first? For another opportunity should you give some person a sample to use? Or should you first get a commitment for when and how that sample’s going to be used? For some other opportunity should you buy the plane ticket and make the sales call? Or should you first make sure that the right people are going to be there and know why you’re there?

If you’re a sales manager and you want to develop and help your salespeople succeed, think of how effective your coaching could be using a tool that gets your salespeople to focus on the customer’s buying process. You’re using the funnel to facilitate a conversation with them, a richer, more meaningful conversation, says John Hoskins, co-founder of Advantage Performance Group (APG). This funnel dialogue helps you challenge assumptions that your salespeople are making. It helps them be much more productive and improves the quality of the funnel data you’re looking at.

While the funnel has value as a quantitative measure, we can’t let the funnel be misperceived as just a source for quantitative information. Metrics and probabilities can be important, but the real leverage points are in improving the integrity of funnel data, one conversation and one sales opportunity at a time. Better funnel data is what makes the metrics and probabilities valuable at all. This is done through a BuyCycle Funnel™ design and an ongoing dialogue between salespeople and managers.

Mark also sent me an article called Forecast Nightmare, that I’ll post later in the week. If you like the article and want more, be sure to sign up for the Tips to Breakthrough Newsletter on the Breakthrough Sales Performance website.

Written by dcunningham · Filed Under Features

Business Analytics Deployment Strategy Research

March 24, 2008

Aberdeen Group is working on a study that focuses on the deployment of business intelligence tools and analytic applications. According to the survey introduction, “BI initiatives involve any undertaking that is targeted at improving a company’s awareness of the drivers affecting the business, and the desire to improve decisions and actions based on new understanding gained from exposure to previously unavailable business data.”

I think it would be interesting to get the input of salesforce.com customers and partners. If you’re considering deploying business analytics more broadly in your organization, take 10 minutes to fill out the survey and you’ll be sent the results when the research is published in May. Note that the survey wraps up this week.

Written by dcunningham · Filed Under Features

Managing March Madness with Sales Analytics

March 19, 2008

I received an email from Claudia Kulaga today, an independent consultant, on the topic of sales analytics. It’s quite topical as Q1 winds down and the NCAA basketball tournament gets ready to roll. Here’s what she writes:

Sales can be a mad, mad, mad game. Just like in basketball, you may have the best team, your star players may be at the top of their game, and you may be in the running for coach of the year. But when the last buzzer rings, are you celebrating a score that meets or exceeds what you had been predicting at half-time, or do you have your star player still airborn in one last desperate attempt at victory before the clock runs out?

Sometimes that last attempt works and wins you the game, and sometimes it doesn’t. That’s fine for basketball, but it’s definitely no way to run your sales organization. You don’t get any more points for the acrobatics and maneuvers you’re stuck performing to try and make your numbers when your pipeline isn’t shaping up the way you thought it would at the end of the quarter, and you certainly don’t get additional revenue. All you’re likely to get is a back-ache, and just maybe you’ll make your number.

Profitability comes from predictability, and in this mad world of business you need as much predictability and visibility as you can get, especially when monitoring your sales pipeline - the source of your revenue. And, unless you’ve got a multi-million dollar IT budget and existing IT infrastructure to match, you’re probably not getting all the information you need about your pipeline from your CRM data and Excel spreadsheets. A big part of the reason for that is that while CRM systems are useful, they are designed to process transactional data, not for analysis and dynamic reporting.

That’s why the market shift to business analytics as a service (BAaaS) is getting so much attention right now. With just a few clicks, an on-demand sales analytics applications will allow you to see not just how many deals you have lined up, but critical information that defines the meaning those numbers have for your pipeline, your predictions, and your profits. You’ll have immediate access to information such as what stage of the sales cycle each of your deals is in and how likely they are to close based on variables such as individual sale’s rep’s abilitities, product or industry verticals, competitors, or regions. You’ll be able to splice that with information from other data sources such as Excel sheets and your financial solution, and view the results in a simple and easy to understand format. You’ll have easy access to simple to understand, actionable information at your fingertips, so you always know where you are in your pipeline, where you’ve been, and where you need to go to win.

With one of the emerging business analytics as a service applications, right from the start and through the end of the quarter, you’ll always know exactly where you are in the game and just what are the stengths and weaknesses in your sales pipeline. So when the last buzzer rings at the end of the quarter you won’t be stuck performing acrobatics to try and meet forecasts that were based on incomplete or innacurate information. You’ll be breaking open a bottle, not your back.
The world is mad (enough). With business analytics as a service you don’t have to be!

Got an interesting angle on sale analytics and the business intelligence market shift to SaaS? Send it to me and I’ll post it here.

Written by dcunningham · Filed Under Features

Lead Nurturing With Salesforce.com

March 19, 2008

Drip Marketing: more than an email and a phone call.

By Jason Kort.

Traditionally known as “drip marketing,” lead nurturing in its most general sense is “any sales activity that happens when you aren’t there.” For most companies it’s a one or two-shot effort, consisting of sending a plain-text email, then making one follow-up call.

Effective lead nurturing is more than just emailing and “checking in.” Successful lead nurturing follows a well-thought-out strategy that maps out communications and processes designed to gradually increase your potential’s understanding of-and trust in-you, your company, and your products and services. It requires planning far beyond the typical, “if you don’t close the sale by the second phone call, send the email.”

Lead nurturing campaigns integrated with Salesforce.com extend a company’s reach automatically. A typical strategy for SoftVu clients is to have a personal introductory video message, automatically generated and triggered the instant a prospect completes a lead form. Next, unless the prospect converts immediately, the lead nurturing strategy begins.

SoftVu can dynamically add sender images, voice, video, contact information and other personalized content to humanize campaigns. Relationship building is improved when customers see the sales reps face or photo on a customized landing page. Instant view notifications allow the sales team to know exactly when the customer is viewing their communications and when to call. All message tracking integrates with Salesforce.com so that businesses get a full view of the sales cycle.

We found in a recent study of 100,000 aged lead survey responses across 38 different lending clients, that 60-70% of aged leads remain viable after the second contact-some beyond even six months after applying online. The typical practice of not following up with leads after one or two contacts-not nurturing leads effectively-means you’re throwing away 60-70% of your total investment in leads.

Now more than ever before, lead nurturing practices can help companies get value from leads that companies may have never have touched. Businesses can stay in front of the customer from day one to purchase and be well positioned to continue to nurture customers for life.

Jason Kort, is Marketing Director of SoftVu, a leading provider of marketing automation software. Founded in 1999, SoftVu has earned a reputation for engaging customers with personalized, relevant, and timely communications to help businesses close sales. The company creates automated campaigns for lead generation and incubation, sales follow-up, and client retention programs. Jason is an advocate for marketing automation and his writings can be seen in a variety of business publications and blogs. Read more about Jason on his blog.

Written by admin · Filed Under Features

Signs Your Sales Pipeline Might be Based on Fiction or Fantasy

March 14, 2008

Is your sales pipeline based on fact, fiction or fantasy? According to recent research from IDC, sales productivity is now the #1 priority of CEOs, but many organizations are still focused on activity management instead of tracking the right performance metrics that will drive bottom-line results. Here are 5 signs that your sales pipeline might be based on fiction or even fantasy:

You expect deals to close without knowing that they’re actually stuck in your pipeline.
You’re looking at the overall pipeline totals, without looking at what’s moved
into the pipeline and what’s moved out.
You’re counting on specific deals to close, without looking at the performance of the reps responsible for closing those deals quarter over quarter or year over year.
You don’t have a clear understanding of the trends in your conversion rates.
You don’t know how long it takes for your sales reps to ramp up and instead rely upon antiquated industry rules of thumb.

It’s been said that sales is both art and science, but when your pipeline is truly fact-based you’ll have confidence in your forecast and be able to avoid nasty end-of-quarter surprises. And believe it or not, according to this CSO Insights whitepaper, you’ll also have better retention as your sales reps will have a clear understanding of how they’re being measured and your objectives will be aligned.

We recently did a webinar with Selling Power that focused on some of the best-practice analytics you need to deliver a fact-based pipeline. More on this topic next week. If you have other suggestions for posts on the topic of analytics best practices, feel free to email me or share your feedback in the comments below.

Written by dcunningham · Filed Under Features

Sales Operations Forum

March 12, 2008

If you’re in Sales Operations in the San Francisco Bay Area, be sure to sign up for the Sales Ops Forum. It’s a great way to network with your peers and learn best practices in this increasingly important area of the business. The last session I attended was focused on the importance of analytics to CRM success. Alison and Price do a great job of organizing the group and most of the attendees rely upon salesforce.com as their CRM system of record.

Written by dcunningham · Filed Under Features