We’ve all been there.

It’s Friday afternoon after a busy week, or worse, Monday morning after a busy weekend. Your task is to compile a sales report for your manager. You check your notes from the week, look in your “Sent Items” folder, review your schedule from last week, and try to piece together what is happening in your sales territory.  After an hour or two of work, you send out the details: mostly talking about business you closed (put that at the top!), your production numbers versus your budget from last week, where you went and what you talked about. Sometimes, you have to talk about the dreaded lost business (put that at the bottom).

This represents one of the traps sales organizations fall into: only looking at the past week, month, or quarter and managing to that information. With today’s reporting technology, it’s easy to report our numbers; how many sales calls, which gold level clients we visited, etc.  The information is available on our dashboards or on a formatted spreadsheet before we have our first sip of coffee on Monday morning.

It is equally easy for management to fall into this trap. As long as information is flowing to you, there is less of a need harangue your charges for information and you can focus on other management details. The problem is compounded in sales meetings, which follow the same script. Often the sales person will simply recite their “rear view” information, wasting valuable meeting time.  Management not only gives the practice a tacit approval, they often follow suit and report in the same way to their superiors.

This reporting style is akin to driving your car while looking solely in the rear view mirror; you are destined to crash. The organizational perspective must be shifted from looking at past production towards a more forward-looking view. Specifically, what opportunities will I close this week/month/quarter? What help do I need from the pricing, management, or operational teams in order to close what’s in my pipeline? Who do I need to visit, call, or correspond with to close these opportunities? What business do I have that is on the precipice of being lost and what steps should be taken to prevent that? These are the questions that should be the focus of successful sales teams and answered when reporting on or meeting about sales opportunities.

Granted, there are instances where a backward glance is important — catching downward trends, reporting service failures, discussing growing or slowing receivables — but a good sales person will generally see these issues coming if their eyes are out front.  As a manager, I would much rather be aware of business that I am about to lose and understand what needs to be done to prevent that, than hear about business that I have lost and now need to regain.

With this in mind, here are some tips for managing with a forward-looking perspective;

1. Design your meetings with an eye to the future - As a manager, you are in charge of what the minutes of your sales meeting will look like. Draw up an agenda with specific Terms of Reference (TOR Document) and keep it somewhere (the company Intranet, sales home page, etc.) where everyone has access to it. Keep it solely focused on upcoming opportunities, contracts, important meetings or anything else that is in the future. Most importantly, stick to it. Once the meeting agenda is run through on a weekly basis a few times, it will feel more comfortable. At the end of the meeting, leave 5 minutes or so for the glance in the rear view.
2. Design reports that are forward-looking - Similar to meeting design, you should dictate what you want your sales people to submit to you. If you use a CRM tool, there are many applications that will pull data into a specific report design. Keep the headings to “Closing Opportunities,” “Help Needed With,” or “Upcoming Contracts.” This will help your sales people to manage their customers in the present and future.
3. Keep a list of major opportunities – Keep a list of all major opportunities in your pipeline with notes on where they are. Again, if a CRM tool is used, have your dashboard set up with all of your team’s opportunities and move through the highlighted ones as a group. Remove opportunities that are won or lost to keep the pipeline fresh.
4. Measure the future – Make your key performance indicators (KPIs) future-based; opportunities per salesperson, percentage of Stuck opportunities (haven’t changed status in x days), percentage of opportunities past due (meaning the close date is in the past), and overall opportunity age are usually good indicators of how well your team is managing your pipeline.

John Rounseville is an independent sales consultant and a 15 year veteran of sales and sales management within the logistics industry. Most recently, John was the Director of Sales and Marketing Process Improvement with Horizon Lines, LLC. John has a BA from Georgetown University and received his MBA from the Boston College Carroll School of Management.

Different Lenses, a regular feature of The Sales Operations Blog, is a series of blog posts that presents two different perspectives on how to tackle various sales challenges.  By looking at a different problem each month, first through the lens of a sales manager (Brian Geery) and then through the lens of a sales operations professional (Tom Barrieau), we hope to enlighten sales leaders with solutions they can put to use to improve their organization’s sales productivity.

This month’s challenge:  Dealing with Inconsistent or Undocumented Sales Processes.

As any sales operations professional knows, inconsistent or undocumented sales processes reduce a company’s ability to scale.  Unfortunately, any sales manager will tell you how difficult it can be to get experienced salespeople to change their ways, particularly if their existing behavior enables them to achieve their goal.  They say, “If what I’m doing allows me to hit my number, why do you want me to do something else?”  Typically in these instances, we are not seeking major change, just more consistency or refinements of some processes, like entering CRM data, delivering a standardized benefit statement, or asking specific qualifying questions.

Achieving this standardization allows managers to better see what fine-tuning of the sales engine is in order, while giving sales operations professionals a much easier task when aligning processes with automation goals.  As such, establishing consistent sales processes and documenting them for all to see is of tremendous value to individual team members as well as the company as a whole.

The Sales Manager’s Lens

As a sales management consultant, I am constantly cross-pollinating best selling practices and working to standardize them within each client I work with.  By documenting sales processes and driving behavior change as we refine and update them, I can help clients be much more effective at growing the sales organization and delivering predictable revenue.

So, faced with inconsistent or undocumented processes, I start by spending time with my client’s top producers.  I watch what they do and ask lots of questions.  I go into the field to observe calls or side jack when in a call center to listen to phone conversations.  I review commonly used emails and work with my business partner Tom to establish how various processes are or can be supported by the CRM system.  Very quickly, I’m able to spot consistencies and individual best practices.  Then, I review my findings with management to gain consensus on what the standard sales process should be.

Following this, I counsel the client to drive behavior change across the team in several ways:

• Write down sales processes and best practices learned by shadowing top producers and work with a good editor and graphics expert to make documentation that is scanable and easy to reference
• Lead strategy sessions with the entire sales team to get their buy-in and make refinements to the written document as needed
• Reference and continually update sales process documentation at all sales team meetings – make discussion of the new sales process an integral part of the meeting agenda
• Reward team members who follow documented best practices with public recognition, emails, and sometimes even monetary/non-monetary rewards (e.g., shirts, gift certificates, etc.)
• Discuss documented best practices during individual coaching sessions, particularly with under-performers
• Observe sales activity and coach adherence to established processes by doing pre-call planning and post-call debriefing

The Sales Operations Professional’s Lens

As a sales operations consultant, I am constantly searching for where process refinement and automation can improve selling efficiency for my clients.  Fine-tuning sales processes is predicated upon their being well-established and documented.  Similarly, automation initiatives can only be successful when processes are sufficiently standardized and aligned with the automation objectives (for a discussion of sales process and automation alignment, see our post on the topic).

So, faced with a client who has inconsistent or undocumented processes, job #1 would be to meet with sales management to begin the process of documenting current processes, analyzing which of them work well and which need to be streamlined, and standardizing them wherever possible.  The process Brian outlines above is a great one (I’ve seen it work many times) and I make it a point to be an integral part of it, documenting like crazy along the way.

Following this, I work to ground the newly defined process in the broader selling environment by embedding it within the CRM system.  Specific initiatives would include:

• Make sure sales stages are clearly defined with very specific criteria for how opportunities should be categorized in the CRM system
• Determine what activities are required to produce an advance (i.e., some customer action that advances their buy cycle) at each point in the sales cycle and make sure there is provision within the CRM to document and track them
• Provide CRM dashboards that show the process status for each opportunity, expected next steps, and available resources to assist with the next stage in the sales cycle — this last part is critical because it rewards the data entry necessary to track processes
• Establish clear metrics that measure sales activity and make them available to sales management on a regular basis as a means to gauge process adherence
• Tie these metrics to key sales performance indicators (e.g., time-in-stage, conversion rate, etc.) and analyze where and how the newly established processes will influence these KPIs — this will give you an indication of where ongoing process refinement initiatives will produce the greatest ROI
• Hold regular meetings with sales management to discuss process refinement options, adoption and adherence by the sales force, and alignment with the CRM system

By leveraging the perspectives offered by both the sales manager’s lens and the sales operations professional’s lens, we can not only establish and document a well thought-out sales process, we can also embed that process within our CRM system to drive adoption and adherence, improve efficiency through automation, enable our sales professionals with better information flow, and give managers the visibility they need to make sure the process is being worked to maximum effect.

Referring to a previous post on how to build a successful sales plan, many of the elements that we recommend incorporating into a sales plan would clearly benefit by including input from sales operations.  Obvious examples include “Pipeline Management and Forecasting,” “Compensation Strategy,” and “Sales Automation and Technology Support.”  Other elements, however, may not be as obvious.

Here are five sales plan elements that sales operations is not commonly involved in, but should be:

• Top Tier Prospect Definition.  Clearly defining the characteristics of a top tier prospect allows sales to better understand which opportunities they should be giving their time to.  As the company’s CRM expert, you can provide sales leaders with hard customer data that will make the preparation of buyer personas easier and more precise.  Information on customer demographics, firmographics (information about companies), and market verticals can all be used to better define target prospects that will bear the most fruit.
• Buy Cycle and Sales Cycle.  A major source of forecast inaccuracy is ambiguous sales-stage definitions in the CRM system.  An undeveloped opportunity assigned to a more advanced sales-stage will inflate the forecast while a well-developed opportunity assigned to an early stage will deflate it. Understanding how the typical customer’s buy cycle maps to key milestones in your sales process can help you more clearly define sales-stages, communicate the requirements for advancing from one stage to another, and produce forecasts that are more accurate.  (See our post on improving forecast accuracy for more on this topic.)
• Sales/Marketing Alignment.  Much of the work aligning today’s sales and marketing organizations deals with lead management and handoff.  Marketing automation systems that do lead scoring can often benefit by using sales performance data from the CRM system to fine-tune scoring algorithms.  Lead handoff should include data integration that gives sales professionals visibility into what marketing campaigns a prospect has been a part of, webinars they’ve attended, and so on.  The more customer intelligence that can be transferred from marketing to sales, the better prepared for prospect conversations your sales professionals will be.
• Goal Setting and Quota Assignment.  While you may already be involved in supplying sales management with some of the information they need to set goals and assign quotas, you can often provide valuable details they may not have asked for.  Data on sales trends by product, geographic purchasing patterns, and individual performance can help this part of the planning process but getting that data out of the CRM system may be beyond the typical sales manager’s ability.  Your expertise building reports can make a real difference.  Additionally, being involved in this part of the planning process can give you valuable insights that will help you evaluate compensation management systems, should that be a purchase you’re considering. 
• Training.  Getting a good return on investments you’ve made in sales productivity solutions requires that your company’s sales professionals know how to use them well.  Making sure training, especially CRM training, is a part of your new-hire onboarding program is key to their productivity and your sanity.  As you add new sales productivity solutions to your arsenal, you’ll also want to make sure that time for training has been factored into the rollout plans.

Sales leaders who truly understand the value of sales operations consider their sales operations lead an important partner in achieving their sales objectives.  Being an active part of the sales planning process will not only result in a better sales plan for your company, it will also empower you with a thorough understanding of how your sales organization operates, what challenges it faces, and what it needs to be successful.

The bottom line is that if you’re not currently part of the sales planning process, you should be.

Let us know about your level of involvement by taking our poll below.

The most important renewal is after year one, when customers look back for the first time and review whether or not the utility derived from the purchase justifies continued investment. If they conclude that they haven’t made good use of the software/service, renewal is unlikely. When customers don’t routinely renew, their potential lifetime value can never be realized, the cost of sales will remain high, and the goal of an annuity-based business model is unobtainable. As such, we have a challenge: How can we ensure renewal by making sure customers have a positive adoption experience and find real value in our software/service?

A helpful way of tackling this problem is to look at how successful organizations land customers in the first place. World-class sales organizations understand and implement the concept of sales-cycle/buy-cycle alignment. To achieve this, critical steps in the typical prospect’s buying process are identified and mapped to sales activities that lead them through those steps toward a positive purchase decision. A well-designed sales plan will tightly coordinate the selling methodology that guides sales team behavior with the purchase-decision rationale that dictates the behavior of top-tier prospects (for more discussion of sales-cycle/buy-cycle alignment see our Sales Productivity Blueprint on building a successful sales plan). Here’s a diagram to illustrate the concept:

While this may represent the complete sales process for many products, it is woefully inadequate for SaaS or subscription-based services. Without further action, we are leaving customer adoption—and the likelihood of renewal—entirely up to them. To fully realize a customer’s potential lifetime value we must consider their full experience of purchasing and using our software/service. We need to expand our thinking of customer acquisition to include steps we can take to ensure their adoption and successful use of our software/service.

We can leverage the sales-cycle/buy-cycle approach to do this through understanding the customer’s adoption process and developing an onboarding process that aligns with it. This requires first identifying those customer activities that lead to widespread adoption and full utilization of our software/service. Some questions we can ask are:

• “What will customers most value about our software/service?”
• “What barriers are they likely to run into?”
• “Are there particular successes early in the adoption process that can help build momentum?”
• “Who/what roles in their organization might play a critical role in adoption?”
• “How will the customer track adoption and utilization?”

Next, we need to determine what we can do to influence the customer’s behavior in a manner that will move them toward successful adoption. Questions to ask include:

• “How can we help their internal communications to get the word out on what our software/service can do for them?”
• “What can we do to help them overcome anticipated barriers?”
• “What early wins should we target?”
  
• “What sort of guidance can we provide to facilitate the adoption process, particularly tips on who in the customer’s organization should be involved?”
• “What metrics can be established that will track adoption and how can we report this back to the customer?”

By clearly documenting the typical customer’s adoption process and what we can do to positively influence it, we are now in a position to define a methodology for onboarding them. Here’s a diagram of what this will look like:

By developing a well-disciplined, onboarding process in this manner, we can have a significant, positive impact on the customer’s overall experience of learning how to get the most out of our software/service. Most importantly, we are not leaving the fate of our renewal sales efforts to chance. Under this expanded framework of how we think about acquiring customers (diagrammed below), the goal of the second phase (i.e., after the initial purchase) is to have them conclude that they can’t live without our software/service when it comes time to renew. If users routinely adopt your solution and you’re already enjoying high customer retention rates, this expanded customer acquisition model can be reserved for customer whose usage rate starts out low or suddenly drops (you are regularly monitoring this, right? — for further discussion of how to protect renewal sales by tracking customer activity, see our earlier post on the topic).

An Expanded View of the Customer Acquisition Process

Who should manage the customer onboarding process depends on how your organization is structured. It may be the service delivery team, marketing may play a role, or it may be up to sales/sales operations. In any event, making sure that such a process is in place is vital for the company’s sales success. As people intimately involved with the first phase of landing a customer (i.e., the initial sale), sales operations professionals are in an ideal position to provide valuable input to the development and implementation of a successful customer onboarding program. Moreover, if one does not exist, you have an excellent opportunity to make yourself a hero to the sales team by leading the inception of one.

To highlight sales operations best practices in action, we periodically publish success stories.  If you know of a situation where sales operations has improved sales productivity or solved a particular sales challenge, let us know – maybe you can star in our next sales ops success story.

Leo von Wendorff, CEO of Virtual Knowledge Workers could not have grown his business by increasing the renewal rate from 0% to 100% without the help of sales operations.  In fact, he probably would have gone out of business.

The Situation

Virtual Knowledge Workers (VKW) provides virtual private assistants (VPAs) who have a multitude of skills and abilities that are matched with the unique needs of each client.  The brainchild of Leo von Wendorff, he came up with the concept based on his own experience as a busy executive. “Any time I traveled for business, I would come back to a desk that was on fire,” he says.  “There was a backlog of things to do that easily could have been done by someone else while I was gone.  As an executive, I felt I was being overpaid to do work I shouldn’t be doing, and not getting to do the work I should be doing.”

VKW operates primarily out of a call center based in the Philippines.  Staffed with people who can be trusted to get the work done, and done right, they are obsessed with quality.  Despite this, they suffered from poor renewal rates; after one month with the service, no one renewed.

The Challenge

Investigation revealed a haphazard client-intake process.  A salesperson would sign on a client, the client would be introduced to their personal assistant, and then it was up to the client to make use of that assistant – or not.  Unfortunately, the lack of proactive follow-through typically resulted in clients not making good use of the service and then declining to renew.

The Solution

A three-step, client-intake process was developed which included solution planning, mobilization, and delivery.  The goal of this process was to put each client on a clear path toward getting the most out of the service.  To support this new client-intake process, a sales operations team was put in place.

Under the new process, signing on a client is followed by a solution-planning meeting that is held in conjunction with a sales operations team member.  During this meeting, the salesperson and sales operations team member learn exactly what each client wants to accomplish in using their VPA.  Mutual expectations are established and, when possible, key performance indicators are agreed upon.

During mobilization, the sales operations professional matches the client’s requirements to VKW’s talent pool.  This includes identifying areas where the VPA may need training and equipping him/her with the technology to get the work done. Because of the solution-planning step, the mobilization process is much more streamlined because everyone in the team is aware of what will satisfy the client.  The customer is much better positioned to quickly and easily take advantage of the service.

The third step is delivery, where the sales operations team makes sure that the key performance indicators are met and even exceeded.  Sales operations follows through with what the salesperson has initially promised with the goal of producing results above and beyond what is expected. By focusing on continuous improvement, the client’s needs are constantly met, which leads to VPAs being an essential part of their business.

The Results

Since a sales operations team was established over six months ago, 100% of new clients have continued with the service and renewed their monthly agreement.  That’s up from zero percent!  By establishing a clear plan of work, and matching that plan to the right resources, customers find it much easier to actually offload tasks, as the service is designed.

In a business highly dependent upon renewals like this one, landing the client is only the first step.  Ensuring that the customer’s buying experience seamlessly translates into a positive usage experience requires a tightly coordinated handoff between sales and service.  By managing a well thought-out client intake process, sales operations was able to bridge this gap and turn sales results into the predictable revenue stream that VKW’s CEO was looking for.

Different Lenses, a regular feature we are launching this month, is a series of blog posts that presents two different perspectives on how to tackle various sales challenges.  By looking at a different problem each month, first through the lens of a sales manager (Brian Geery) and then through the lens of a sales operations professional (Tom Barrieau), we hope to enlighten sales leaders with solutions they can put to use to improve their organization’s sales productivity.

This month’s challenge:  Getting accurate and timely data into your CRM system.

As any sales operations professional knows, a CRM system is only as useful as the data in it is accurate.  Unfortunately, any sales manager can tell you how difficult it is to get busy salespeople to take time out from selling for data-entry.  As such, establishing good CRM data-entry practices is a challenge whose solution is of tremendous value to both parties.  With this in mind, let’s look at this month’s challenge through two different lenses…

The Sales Manager’s Lens

A sales manager, particularly a first-line sales manager (FLSM), is going to tackle this problem by trying to directly influence sales rep behavior.  Specific approaches include…

• Ensure the onboarding process includes reviewing the salesperson’s position description, with emphasis on the importance of this responsibility:

Maintain up-to-date CRM pipeline and sales forecast information; enter all contact and company information

• Reinforce good data-entry at sales team meetings
  • Provide verbal recognition to those team members who enter data accurately and timely
  • Review CRM reports during the meeting, leading discussions about how the information helps improve the selling process
• Meet individually with habitual offenders to provide coaching on this issue
• Use only data that has been entered into the CRM system to monitor progress against team member’s goals – set the precedent that, if it’s not in the CRM system, in didn’t happen
• Publish CRM data for all employees to see
• Develop a reward program for those who enter data accurately and timely

The Sales Operations Professional’s Lens

Conversely, a sales operations professional is going to tackle the problem by optimizing the CRM system itself and making sure it provides value to the sales team.  Specific strategies include…

• Recognize the importance of the user experience and make sure your CRM system has a good one
  • Identify the most important data – that which must be entered – and make those fields mandatory and easily accessible (on the home screen or no more than one click away)
  • Inform salespeople how and why the information will be used, providing reassurance that if it wasn’t needed, they wouldn’t be asked to enter it
  • Avoid information overload by only showing as much information as is necessary on each screen
  • Review the data entry process with a number of sales professionals; it should be as intuitive and simple as possible with limited key strokes – use drop downs, check boxes, and auto-fill fields where ever possible
• Reward data-entry by having it return value to the user.  Think “the more they put in, the more they get out.”
  • Deliver customer intelligence – information about companies and people that can help the sales process – based on what data is entered (Note: there are a variety of data subscription services that plug into popular CRM systems – for a list, see our Sales 2.0 solutions guide)
  • Offer links to relevant vertical-market customer deliverables (e.g., collateral, presentations, best practices, etc.) in response to entering a prospect’s industry
  • Make buyer persona information (i.e., customer needs by roles and how your solutions meet those needs) available as soon as job titles are entered
• Make it easy for salespeople to enter data as close to the point it is gathered as possible. Requiring them to get back to office before entering data will reduce its timeliness and accuracy.
  • Deploy smartphones or tablets to facilitate data-entry and make good use of what would otherwise be dead time (e.g., waiting in a lobby before a call)
  • Subscribe to a phone-based, data-entry service that will transcribe information into your CRM system for reps while they’re on the road
• Train FLSMs how to pull CRM reports and use them to increase accountability with their teams and improve coaching practices. 
  • Get FLSMs to use CRM-based reports during team meetings to review performance and account activity
  • Empower them with reports they can use to discuss individual performance during one-on-ones, particularly time-in-stage and conversion rate information, to coach improved sales behavior (for a further discussion of these metrics, see our post on key sales pipeline metrics).

The important take-away from viewing this challenge through these two lenses is that CRM data integrity must be owned by both sales managers, particularly FLSMs, and sales operations professionals.  Working together to show salespeople the value of accurate CRM data, they can make good data-entry practices something to count on.

A request for feedback… 

If you like our new Different Lenses approach to discussing how to tackle various sales challenges, please let us know in the comments section.  We’d also be happy to hear any suggestions you might have for sales challenges that you’d like to see us discuss using this format.  Thanks!

Many of the things that company leaders expect from sales leaders – accurate forecasts, timely reporting, good upstream and downstream communications, etc. – are managed by sales operations professionals.  As such there was a great deal discussed that is of relevance to the readership of this blog.

Here are some key takeaways:

On managing the sales process

• CEOs want sales leaders to carefully manage enterprise deals.  Sometimes it can take two to three years to identify all 50 decision makers so it is important to “ruthlessly qualify” opportunities.  In a down economy, approved vendor lists, procurement requirements, and strict IT specifications are more common so it is vital to understand the purchasing process.
• Use communication tools like Chatter (a Salesforce.com add-on) to keep all the right people involved (for a list of this and other sales productivity solutions, see our Sales Productivity Blueprint on the topic).
• Early on, find out your prospect’s key objectives or metrics and incorporate them into the selling process.
• Ambiguity is not your friend.  Picking the right deals to pursue is important.  Pick your segment and be specific.  Pick targets where you know can solve a prospect’s pain quickly and you’ll shorten the length of your sale.
• For one CEO, “custom demos are the single biggest driver of sales against our major competitors.” As such, performing them well is crucial (for tips on how to give effective software demonstrations, see our Sales Productivity Blueprint on the topic).
• My favorite quote from the day:  “We look at selling as every bit as much a process subject to analysis and refinement as our manufacturing process.”

On sales culture

• To foster a sales-driven culture, start all company meetings with an update on the sales organization’s key performance indicators.
• To help non-sales personnel understand what the sales organization is dealing with, have sales team members complete a standardized trip report for all first-time prospect meetings.  The CEO who recommended this said, “I read every one.”

On CEO involvement in sales

• CEOs should be involved in the sales process.  Three areas of common engagement are opening doors with new prospects, being involved in escalations like negotiating special terms, and doing after-the-sale check-ins to validate delivery of commitments.

On key performance indicators

• Identify metrics that can capture performance throughout your entire sales process – from lead to close.
• Open communication is imperative.  There is no bad news if you keep communication open – visibility is key!  The last thing CEOs want is a surprise.
• Honesty and transparency are a must.  No exceptions.
• Sales leaders should not hesitate to update the CEO when an opportunity’s status turns negative.
• Quarterly business reviews where you share KPIs and plan the next quarter are important.
• Sales leaders need to be straightforward with their forecasts.  If they know we will miss a number, communicate it immediately.
• Investors will never tell a CEO, “That forecast seems high,” but they will be sure to hold you to account if you don’t hit your projections.
• VPs of Sales should present the numbers to the board so the board knows the CEO and VP Sales are in lockstep.

On top performers

• The best sales reps “dig in.”  They watch for organizational changes (i.e., a senior executive leaving can stall a deal) and they understand the macroeconomic issues that may impact the sale.
• Customer intelligence wins deals.  One CEO related a story in which they learned where a key decision maker lived, his monthly mortgage payment, and about his proactive involvement in church.  Discovering that the prospect was very conservative, they dressed accordingly and carefully addressed risk factors.

On selling to CEOs

• CEOs take calls from salespeople who are educated about the specifics of their situation.  One CEO referenced the phrase, “Show me ya know me.”
• It is best to ask a CEO who the right person is to speak with about your product or service.

On sales compensation

• The best information on compensation comes via the recruiting process.
• One CEO was recently surprised to see the increase in compensation expectations of inside sales professionals.
• Keep compensation plans simple.  Compensating on margins can be complicated and should be avoided.
• There are many compensation strategies; the key is to use compensation as the reward for the behavior you want to drive.

On sales plans

• Sales planning should be both top-down and bottom-up.  Revenue growth and profit targets are relatively easy to determine, the hard part is knowing where to spend your money.
• Expect quarterly adjustments to sales plans.

On being a CEO

• One CEO said that when he became a CEO he was surprised how much people wanted him to be happy.  He said business is not a beauty contest, tell it like it is.

The techniques we outlined in the Improve Forecast Accuracy with Five Key Pipeline Metrics post are an excellent starting point for leveraging the data contained in your CRM system to project future performance.  We concluded by asserting that forecasting is an historical science – the more you look to the past, the better you will become at predicting the future.

In order to best use historical data to improve forecast accuracy, we must first establish baselines that average each metric over some extended time period – typically a year or two.  You can do this by asking questions such as:

• What has been the conversion rate, by stage, over the past two years?
• What has been the time-in-stage for a typical opportunity?
• What has been the average deal size?
• How well have opportunities adhered to our top-tier prospect definition?

Establishing baselines for each of the five metrics allows you to understand the fundamentals of your particular pipeline.  For example, knowing the lead-to-close conversion rate will allow you to determine how many leads you need flowing into your pipeline in order to produce a given sales result.  Similarly, knowing how quickly opportunities flow through the pipeline will help you gauge how quickly you can expect to see sales results from a lead generation campaign.

For the two metrics we said needed to be tracked by stage, conversion rate and velocity, a baseline for each stage will allow you to see where your sales process may require some fine-tuning.  For example, if you are seeing a low conversion rate during early stages (i.e., the number of opportunities drop off sharply), it may be an indication that opportunities are being poorly qualified by marketing.  If opportunities are spending too much time in later stages, it may indicate that the quoting and contract negotiation processes are too onerous and may require streamlining.

Finally, establishing baselines allows you to compare yourself to industry benchmarks.  Knowing how your metrics compare to your competitors (thanks to industry analysts, you’d be amazed how much of this information is available over the Internet) will help you assess your competitive position and know where you may need to make improvements.

Once you have established your baselines, you will also need to understand the trend for each metric.  Questions here should include:

• How has the conversion rate changed over the last 8 quarters?
• How has the time-in-stage changed?
• How has the average deal size changed?
• Has our top-tier prospect definition changed and have we incorporated that into our CRM data entry practices (particularly as it relates to what qualified an opportunity to be in a given stage)?

Understanding how your metrics are trending over time, particularly in comparison to industry benchmarks, will give you insight into whether your sales process is improving or in need of need of additional refinement.  Knowing how they are trending by stage will help you understand where to focus your fine-tuning efforts and gauge the success of your sales process improvement initiatives.  To use our earlier example, improved conversion rates during early stages are a good indication that your lead qualification practices are improving.  Reducing the time-in-stage near the end of the sales process will indicate that you’ve successfully streamlined your closing processes.

Trend data can also be used to assess the impact of external events and inform where you might need to make some changes – either to your sales process or your forecasting model.  For example, if your conversion rates drop during an economic downturn, you may want to ask marketing to increase lead generation activities and get more opportunities into the pipeline.  Similarly, if your time-in-stage goes up during the quoting process, you may want to partner with marketing to develop a strong ROI story that increases prospect urgency by clearly articulating how your product/service will save them money.

Another common use of trend data is to track the seasonality of your business.  By looking a how each pipeline metric varies on a quarterly basis, you can vary your forecast formula to accommodate seasonal fluctuations in the business and produce a more accurate forecast.  Alternatively, you can use it to build a seasonal spiff/promotion strategy that might smooth out the ups and downs of your business.

As we noted in our previous post, it is important to view the development of your forecasting model as a process and not an event.  By establishing clear baselines and then tracking how your pipeline metrics trend over time, this process can move you on a continuous path toward improved forecast accuracy – truly, one of the holy grails of sales management and operations.

“My forecasts are always 100% accurate. Unfortunately, my customers don’t always buy when they are supposed to.”

— Anonymous Salesperson

While customers don’t always do what we expect of them, sales pipelines do behave in a logical manner — as long as you know what to look for.

If your company’s sales process involves multiple stages where salespeople interact with numerous decision makers, knowing which data to extract from your CRM system to build a forecast can be difficult — particularly when many CRM systems don’t automatically track what’s most valuable.  Using these five pipeline metrics, you can significantly improve your forecast accuracy:

Turning our attention to how each of these metrics will enter our forecast model, Opportunity Number and Opportunity Size are fairly straightforward.  Multiply the former by the latter (assuming the latter is expressed as the average deal size), and you have the overall value of your pipeline if everything closes (don’t we wish!).  This will act as the baseline upon which the rest of our calculations will be based.

The next metric, Conversion Rate, will be used to peel off the value of those opportunities in each stage that, based on historical analysis, will not close.  If you’ve done your homework and understand the conversion rates for each stage, you can determine how much revenue you can anticipate coming out of each stage by multiplying the value of opportunities in each stage by the conversion rate for that stage and by the conversion rates for all subsequent stages.  An example will help illustrate the math required here…

• Suppose we have four sales stages with the following conversion rates:
• Between stage one and two: 25%
• Between stage two and three: 35%
• Between stage three and four: 50%
• Between stage four and close: 65%
• To figure out the value of your pipeline qualified by conversion rate, you would add together the following values:
• (The value of opportunities in stage one) * .25 * .35 * .50 * .65
• (The value of opportunities in stage two) * .35 * .50 * .65
• (The value of opportunities in stage three) * .50 * .65
• (The value of opportunities in stage four) * .65

Velocity enters into our model to allow for sales cycles that are longer than the desired forecast period.  If, using historical data, we know the average time-in-stage for each stage, we can calculate a forecast for a given time period by taking into account the velocity of our pipeline.  Here’s how: if our above example has a one year sales cycle that’s perfectly uniform (i.e., opportunities are in each stage for three months), a quarterly forecast would simply be the value of opportunities in stage 4 multiplied by the corresponding conversion rate of .65.

The last variable to consider is Deal Quality.  This is tricky because how well an opportunity adheres to our definition of a top-tier prospect is subjective.  As such, deal quality is usually represented by a weighting factor applied to each opportunity.  For example, “hot” opportunities (i.e., those that match our top-tier prospect definition perfectly) may have a weighting factor of 1.0 – meaning that 100% of their value is passed along to the formula we’ve developed above.  Prospects that are only “warm” (i.e., those that loosely match our top-tier prospect definition) may have a weighting factor of .65 – meaning that only 65% of their value will be used in our calculations.  While they introduce a little “slop” into our math, these weighting factors give your salespeople a badly needed means to qualify opportunities in their individual pipelines.  This can go a long way toward neutralizing an accurate forecast’s worst enemy: sandbagging.  What’s important is to have a clear top-tier prospect definition that everybody agrees upon and a clear understanding of the weighting factors associated with the deal quality labels you allow your salespeople to use (e.g., hot/warm/cold).

While this process can be refined in a variety of ways, it is an excellent starting point that you can use to develop your own forecasting model.  What’s critical is to view the development of your forecasting model as a process and not an event.  Conversion rates and velocities will vary with the ups and downs of the economy, the season, and the competitive landscape.  As such, you will need to constantly refine your forecasting formula based on how these and other variables impact your key pipeline metrics over time.  In this regard, accurate forecasting is an historical science – the more you look to the past, the better you will become at predicting the future.

Update:  In a continuation of this discussion, we have a new blog post that describes the use of baselines and trends to developing sales forecasts. Entitled “Using Baselines and Trends to Refine your Forecasting Process,” this post discusses how to use historical data to improve forecast accuracy.

If, as a sales operations professional, you are involved in your company’s recruitment process, you are then faced with the task of figuring out how best to attract the right sales talent.  A good place to begin your search is to take a look at your recruitment advertisements.  Put yourself in the position of a top producing salesperson who is considering moving on to your next career opportunity, then read your ads and ask yourself these questions:

• Does your advertisement tell you why this is a good opportunity?
• Does it answer the question, “Why would I want to work at this company?”
• In short, does it pass the “What’s in it for me?” test?

If your answer is “yes” to all of these questions, you can stop reading; if your answer is “no,” you might want to read on.

It’s worthwhile to think of your recruitment ad as you would a billboard on the side of the highway.  A billboard needs to attract drivers’ attention while they are simultaneously driving at 65 miles per hour concentrating on traffic and their driving.  Similarly, your ad needs to get the attention of top-producing sales professionals who are scanning for the best jobs.

Try this.  Randomly select five ads for sales positions posted on your favorite job board and put them to the test we outlined above.  Here are the opening lines of five ads I selected at random:

1. “We are looking for an experienced sales representative with a successful record of achievement to develop and to build relationships with key educational, Federal and State accounts and agencies.”
2. “Establish, maintain, enhance, and update ABC Company sales environments and their associated data and configurations.”
3. “ABC Company, the leading presentation agency, is searching for a bright Inside Sales Representative to work as an important member of the sales team by identifying leads, qualifying them, and scheduling meetings between decision-makers and our Account Executives.”
4. “Purpose: To develop and maintain strong business relationships with assigned accounts, recruit new accounts, and educate consumers.”
5. “A field sales representative with ABC Company is responsible for the sale of electronic components and custom solutions to original equipment manufacturers (OEM’s)”

Notice that none of these openings pass the “What’s in it for me?” test.  It’s not surprising that neither did the rest of the copy.

What each of these ads fails to do is sell the benefits of working at the hiring company.  Consider the intended audience:  top-tier sales professionals (why would you want to hire any other kind?).  These people know they are valuable and only want to work at a company that’s going to make it possible for them to be successful.  Even in a soft economy, good sales professionals are in demand and need to be attracted by compelling ads.

Below are two examples of recruitment ads that pass the test by grabbing the attention of potential candidates.  Using a section called “Why this is a Great Opportunity,” these ads each give a clear set of reasons to apply.

Example A

Why this is a Great Opportunity:

• Unique and valuable product offering with clear competitive advantages
• Growing, profitable company with opportunities for career advancement
• Management appreciates and recognizes sales team members’ accomplishments
• A lead generation engine that delivers well-qualified sales leads
• Excellent, experienced sales support staff
• Product management team that is attuned to the needs of the market and delivers what it wants

Example B

Why This is a Great Opportunity:

• You will be handed quality leads on day one
• You will represent a leading edge offering that can solve a wide variety of business problems
• The company has extraordinarily strong partner relationships and the highest-level certifications with Microsoft and IBM
• Company sales leaders have an unparalleled track record of success; they know how to build top-producing sales organizations
• Leading edge sales support and automation will give you the tools you need to succeed
• Strong customer referral network

To make this strategy relevant for your company’s recruitment ads, simply ask your first line sales managers, “Why would a top producing sales professional want to work at our company?”  Then, ask your front-line sales personnel why they enjoy working there.  Record their answers and start incorporating them into your recruitment ads.

Refine your recruitment ads to pass the “What’s in it for me?” test and be sure to clearly articulate the value of working at your company.  Do this and you’ll soon find the quality of your candidates improving.  Once you’ve started attracting top candidates, you’ll have taken an important first step toward building a winning sales team.

For a more in-depth discussion of building a winning sales team, we invite you to download a Sales Productivity Blueprint on the topic at the Sales Productivity Architects web site.