better data, better decisions - cfoadvertising.cfo.com/wp-content/uploads/sites/13/... · better...

Better Data, Better DecisionsHow Finance Can Fuel Sales Force EffectivenessUSING INFORMATION AS A COMPETITIVE WEAPON IN A FIERCE ECONOMY

CFOresearch

A report prepared by CFO Research in collaboration with IBM Business Analytics

BETTER DATA, BETTER DECISIONS

How Finance Can Fuel Sales Force Effectiveness

1 JUNE 2013 CFO PUBLISHING LLC

About this Report 2

Making the Grade in Sales Force Effectiveness 3

The Power of Data-Driven Insights 6

Is Finance Sold on the Idea of Supporting Sales? 8

Translating Data into Action 10

A Stretch for Finance Teams 11

Data Quality: Finance’s Top Priority 13

Sponsor’s Perspective 15

Contents




this report is based on survey responses from 163 senior finance executives in the United States employed at companies with annual revenue of $500 million or more. The survey was conducted in March-April 2013, and included a broad cross-sec-tion of company segments, as follows:

Annual Revenue

US$500 million-US$1 billion 20%US$1 billion-US$5 billion 42%US$5 billion-US$10 billion 12%US$10 billion or more 27%

Title

Director of finance 28%Chief financial officer 21%VP of finance 18%Controller 15%EVP or SVP of finance 4%CEO, president, or managing director 1%Other finance title 9%Other 3%

Industry

Financial services/Real estate/Insurance 21%Auto/Industrial/Manufacturing 17%Food/Beverages/Consumer packaged goods 9%Wholesale/Retail trade 9%Chemical/Energy/Utilities 7%Telecommunications 5%Media/Entertainment/Travel/Leisure 5%Health care 5%Hardware/Software/Networking 5%Transportation/Warehousing 4%Business/Professional services 4%Pharmaceuticals/Biotechnology/Life sciences 3%Aerospace/Defense 3%Public sector/Nonprofit 3%Construction 1%Other 1%

About this Report




if the pundits had their way, your company’s sales force would exist only as a quaint memory by now.

Not long ago, business gurus were predicting that the Internet would spell the end of the road for most salespeople. But while technology hasn’t supplanted salespeople, it has clearly transformed their role. In a slow-growing economy, companies can only increase sales by swiping market share from their competitors. Faced with that challenge, it’s no longer sufficient to attempt to capture a prospect by recit-ing from memory a list of technical specifications. Customers come equipped with more information than ever—by some estimates, customers have already finished 70% of the buying cycle before they even talk to a salesperson—and to succeed, sales-people will have to keep up.

These days, the difference between success and failure more than ever lies in the quality of the data that finance funnels to the company’s salespeople. The availability of more and more data—spilling out of internal CRM systems or migrating from social networks and blogs—has enabled salespeople to add value by guiding their customers through the thicket of information they have collected on their own. By obtaining the most relevant information from their peers in finance, salespeople can de-commoditize the selling process, not only nurturing new bonds with customers, but making sure they are nurturing the right customers.

To assess the value, and the usefulness, of the data driving sales force effectiveness, CFO Research, in collaboration with IBM Business Analytics, fielded an online survey to senior finance executives at large U.S. companies (revenues of $500 million and up)

in March and April 2013. Our conclusions are based on 163 complete survey responses, as well as six in-depth interviews with senior finance executives in the U.S. These 2013 findings on sales force effec-tiveness complement a similar study focusing on sales incentive compensation management that CFO Research and IBM Business Analytics (as Varicent, previously) conducted together in 2010.

The 2013 research reveals a shift in priorities as companies turn their gaze back to growth. During the recession, the need to slash costs simply over-rode any longer-term investment plans. In the 2010 survey, executives’ top concerns centered around keeping the lid on sales costs—typically a major component of any company’s expense line.

So, for example, 2010 respondents reported most frequently that their companies had reorganized reporting relationships, changed leadership, and reduced headcount in sales functions as they strug-gled to cope with the economic downturn. Investing in technology to manage sales performance dropped to the bottom of the priority list during the eco-nomic crunch, despite half of the 2010 respondents (52%) believing that technology needed to play an important, if not critical, role in improving sales performance.

The tide has begun to turn in 2013, with the number of finance executives saying their companies are plan-ning on beefing up sales resources (38%) outstripping the number who believe sales resources will continue to be constrained (27%). But the need to improve technology support for growing sales staffs has not lessened; in 2013, a mere handful of respondents (7%) say that their companies excel at taking advantage of technology to support sales force effectiveness. At a

THESE DAYS, THE DIFFERENCE BETWEEN SUCCESS AND FAILURE MORE THAN EVER LIES IN THE QUALITY OF THE DATA THAT FINANCE FUNNELS TO THE COMPANY’S SALESPEOPLE.

Making the Grade in Sales Force Effectiveness




time when “good enough” probably isn’t good enough, a majority of finance executives (54%) believe their companies only make adequate use of technology, and an unusually large number (38%) say outright that they are doing a bad job at it.

Progress has not been as rapid as finance executives would like. In the 2010 survey, half of the respon-dents (50%) saw room for improvement in the way their companies gathered and used sales activity data in their planning, budgeting, and forecasting. This year, when asked to assign a letter grade to the quality of sales information (including such dimen-sions as timeliness, accuracy, transparency, and completeness) underlying their companies’ ability to forecast top-line revenue, respondents again split evenly between those who give their companies’ data higher grades (49% assigned an A or B) and those who give their companies’ data quality lower grades (51% marked them down to C, D, or F). (See Figure 1.)

But the 2013 results clearly show that the perceived quality of sales data can have a significant impact on its usefulness and on a company’s ability to plan. This year, respondents who give themselves higher grades also tend to rate their companies higher in their ability to analyze their sales information and, importantly, put it to good use. The level of confi-dence that a company has in the quality of its data affects how much it uses that data—and how well. Respondents who assign “A-Excellent “or “B-Good” to the quality of sales information are much more likely than those who give out lower grades to say that their companies make the best use of analyti-cal and modeling techniques to manage sales force effectiveness.

The frequency with which the two factors correlate is important. In our 2010 study, respondents saw the greatest room for improvement (59% of respon-dents) in using tools and analytics to improve sales performance. The 2013 research links better use of

FIGURE 1:

What letter grade would you assign to the quality of sales information (i.e., timeliness, accuracy, transparency, completeness) underlying your company’s ability to forecast top-line revenue?

AEXCELLENT

BGOOD

CNEEDS

IMPROVEMENT

DPOOR

FFAILING

Finance executives are split fairly evenly between giving their sales information high grades... ...and low grades.

45% 44%

7%

4%

1%

AN UNUSUALLY LARGE NUMBER OF FINANCE EXECUTIVES (38%) SAY THAT THEIR COMPANIES ARE DOING A BAD JOB AT USING SALES TECHNOLOGY.




tools and analytics more strongly with better sales information. When asked to agree or disagree with the statement that “my company makes good use of analytical and modeling techniques to manage sales force effectiveness,” 61% of respondents giving themselves high grades (A or B) for sales data quality also say that they make good use of analyt-ical and modeling techniques. By comparison, only 27% of respondents at companies with lower-quality information (below the grade of B) agree that they use analytical tools effectively. (See Figure 2.)

High-quality information can’t just stay cooped up in the boardroom—nor does it, as the study found. Respondents who say they have access to high-quality data for revenue forecasts also report, with more frequency (70% versus 52%) than their less-well-equipped counterparts, that their com-panies are effective in matching sales resources to changing opportunities and business objectives. Salespeople need to use high-quality data to go into the deal-making process prepared for what

their prospects likely want, having figured it out by gathering and synthesizing timely information about the company and its industry. Armed with quality information, salespeople can use it to gain insights into changes in customer behavior, and a smartly sculpted pitch can shorten the sales cycle or even open up new opportunities.

Data that reliably detects useful selling processes and practices—as well as patterns in customers’ buying habits—are effective tools for optimizing sales force effectiveness. Not that data-grounded salespeople can just follow any playbook; they still must be able to innovate in terms of their processes, taking advantage of customer feedback and on-the-spot analysis. But backed by solid data points, they can refer to them—and rearrange their priorities—to fully understand and empathize with their custom-ers’ objectives. The skillfulness with which they do that could make the difference when it comes to keeping demanding customers from the clutches of aggressive competitors.

FIGURE 2:

“My company makes good use of analytical and modeling techniques to manage sales force effectiveness.” 61%

AGREE at companies

rating their sales information A or B

27%AGREE at companies

rating their sales information

C, D, or F

COMPANIES WITH HIGH-QUALITY DATA FOR REVENUE FORECASTS TEND TO BE ESPECIALLY EFFECTIVE IN MATCHING SALES RESOURCES TO CHANGING OPPORTUNITIES AND BUSINESS OBJECTIVES.




there’s no denying the pressure that top management feels to improve the effectiveness of their sales forces as quickly as possible. In the 2010 survey, 61% of respondents picked out “improving existing sales methods, processes, and/or staffing” as contributing most to their companies’ growth, and virtually the same number (59%) said that their companies needed to improve in their use of more sophisticated selling behaviors, such as cross-sell-ing and focusing on sales profitability. If anything, that focus has intensified since the previous study; in 2013, 90% of respondents agree overall, and 51% agree strongly, that it’s important for their compa-nies to employ sophisticated selling behaviors, such as selling based on profitability or customer satisfac-tion targets, cross-selling and bundled selling, and targeted discounting.

Companies are depending on their salespeople to act as catalysts for growth and profitability, moving away from transactional approaches and toward more “consultative” models. For salespeople to successfully fulfill that role, they need the data and analysis that’s the bread and butter of their col-leagues in finance.

It’s not enough for the finance team to slip the num-bers over a transom, however. Finance needs to help educate salespeople so that they are able to fully absorb the data, constantly bouncing what they’ve learned against what they witness in the market-place. As the CFO of a distribution company with revenues of more than $4 billion puts it: “The days of the CFO telling their sales manager how much their sales were and what they need to do are behind us. Our sales management and sales folks are very sophisticated and very comfortable reading sales information. In the old days, finance talked down to

sales, but now it’s not like that and it shouldn’t be like that. It’s ‘What can we do to help you?’ Finance doesn’t bring in any money, but sales does—and finance is there to help.”

James B. Arnold, SVP and CFO of the container ship-ping company CMA CGM (America) LLC, is also a strong advocate for a heftier role for his finance team. “We believe people should have the informa-tion [they need],” he says. “Whether it’s a sales staff person, a sales manager, a sales director, or sales VP, if they contact us with a need for information, we provide the information.” To have a direct impact on the success of the sales staff, he notes, finance must “be able to provide them more cuts of the informa-tion, so they can be better informed when they go in front of a customer.”

Senior finance executives, our research shows, are well-aware of how crucial it has become for them to build this kind of partnership with sales. In our 2013 survey, we asked finance executives to choose which sales-function improvements they thought it would be important for their companies to make within the next two years. The top choice—“Improve collabo-ration among finance, operations management, sales, and/or HR”—was selected by an overwhelming 82% of participants. (See Figure 3, next page.) This is more than double the percentage (38%) from the 2010 survey who thought that improved collabora-tion was most likely to help their companies reach near-term goals.

Finance and sales functions have traditionally shared an interest in keeping track of sales information—closed deals, payment terms, collections issues—for the sake of making sure that sales commissions had been calculated correctly. For example, in the 2010

The Power of Data-Driven Insights

“THE DAYS OF THE CFO TELLING THEIR SALES MANAGER HOW MUCH THEIR SALES WERE AND WHAT THEY NEED TO DO ARE BEHIND US. OUR SALES FOLKS ARE VERY COMFORTABLE READING SALES INFORMATION.”

—CFO, DISTRIBUTION COMPANY




survey, nearly half of the respondents (47%) noted that finance played either a leading or a key contrib-uting role in designing sales incentive compensa-tion plans. In 2013, the same proportion of finance executives (47%) say that they play a significant role in designing sales compensation plans.

But as guardians of the company’s financial data, the finance function is in a position to supply salespeo-ple with the information they need to take a more strategic and data-driven approach to winning over customers. With quicker and better information, not to mention the improved accuracy of forecasts and targets, salespeople can both make better decisions about which customers to target, and bring more knowledge to bear on their interactions with those customers. “Typically, there is no dearth of infor-mation in any company, and that’s certainly true in our company,” says Dallas Clement, EVP and CFO of AutoTrader.com, an online marketplace for car buyers and sellers. “What everyone needs is more insights, more analysis, and more recommendations. That’s where we’re focused.”

FIGURE 3:

Do you believe it will be important for your company to make any of the following improvements in its sales function within the next two years?

82% “Yes”

77%

75%

74%

66%

60%

59%

46%

40%

34%

34%

32%

Improve collaboration among finance, operations management, sales, and/or HR

Improve management’s ability to use sales reporting tools, such as dashboards

Leverage sales channels more effectively

Improve reporting on sales performance

Provide additional training for sales representatives

Invest in new or upgraded information systems for sales

Overcome organizational resistanceamong sales staff to changes

Simplify sales incentive compensation plans

Redesign sales quotas

Reduce turnover withinour sales function

Standardize sales incentive compensationacross the company

Better balancesales territories




the fact that finance executives see themselves as willing collaborators represents a shift. In their own eyes, they are no longer isolated number crunchers who quietly process transactions and print out reports. While they might not be the extroverted go-getters who tend to populate sales departments, they likely understand the important strengths they bring to such an internal alliance.

In open-text questions, survey respondents often mention the need to tear down departmental barri-ers. Replying to a question about the most important changes the company could make to improve the effectiveness of the sales force, the executive vice president of a business/professional services firm with revenues of less than $5 billion writes that his employer needed to “move the sales force away from products into propositions which will require better information and ability to collaborate.” The direc-tor of finance for a telecommunications firm with revenue of under $10 billion mentions the need for “better partnership and trust between departments. It’s good now, but it can always be better.”

What’s required “really is a partnership,” says George Montague, vice president of finance and strategy for the restorative therapies group at Medtronic, the medical-device giant. “Some of the best sales leaders I’ve seen are data-driven, which makes them optimal business partners for the finance personnel. Similarly, as finance people work with the sales force, they get a lot of respect for what it takes to succeed in the field.”

That kind of alliance feeds and grows off of the effective use of shared data, finance executives attest. They place nearly as much importance on the effective use of information—improving manage-

ment’s ability to use sales reporting tools such as dashboards, and improving reporting on sales per-formance—as they do on collaboration. (See Figure 3, previous page.)

When asked about which “challenges will be most important for your sales force to address over the next two years,” 64% of respondents in this year’s survey choose “price pressure (i.e., the widespread demand among customers for more value for the same or less money).” An almost equal proportion, 62%, choose “fierce competition in our markets.” The sales function clearly is facing many thorny choices—which customers to target, what value proposition to offer them, which sales process would both attract customers and create value for the company. To make the sales force more effective, as one respondent writes, the key is to “provide better information that is actionable to improve sales.”

Translation: Salespeople need high-quality data. In our survey, respondents who say that their com-panies collect high-quality data were four times as likely to agree that the finance functions are “very effective at ensuring that relevant sales information is accessible to the people who need to use it” than respondents who report that the data their compa-nies collect is of lower quality.

With ready access to the data, salespeople can apply it to making better decisions in key areas. A control-ler at a food/beverages/consumer packaged goods company with revenue of more than $10 billion says that “strategic pricing and a better understanding of the value we create for our customers relative to our competitors” would be important for improving the effectiveness of the sales force. The CFO of a con-struction firm with revenues of between $5 billion

Is Finance Sold on the Idea of Supporting Sales?

“SOME OF THE BEST SALES LEADERS I’VE SEEN ARE DATA-DRIVEN, WHICH MAKES THEM OPTIMAL BUSINESS PARTNERS FOR THE FINANCE PERSONNEL.”

—VP OF FINANCE AND STRATEGY, MEDICAL

TECHNOLOGY COMPANY




and $10 billion says that the sales function needs “to better understand the price competition and deter-mine early on if we are competitive with our pricing structure.”

If salespeople are lacking in high-quality data about their company’s costs, they can—and do—end up working in complete opposition to management’s goals. In the 2010 survey, nearly two-thirds of respondents (64%) found “striking the right bal-ance between increasing revenue and maintaining profitability” to be a “compelling reason” to involve finance with sales incentive compensation man-agement. Finance executives from the 2013 survey tend to agree as well: the treasurer at a company in the media/entertainment/travel segment says that the biggest challenge he faces is to “have the sales force sell the products that are targeted to grow our revenues, not products that are legacy sales prod-ucts that we no longer support.” Another executive writes that the sales force would be more effective if the company “increased pricing controls to ensure minimum levels of profitability while remaining sen-sitive to market competition.” Without knowing any better, salespeople could be focusing their efforts on closing deals that undercut the bottom line.

Which is exactly what management needs to avoid, especially at a time when fierce competition is already hammering away at profit margins. The VP of finance at an auto/industrial/manufacturing busi-ness with sales of more than $10 billion says that the company’s biggest challenge is easy to see, but hard to sustain: “Find more profitable customers” and “avoid negative margin deals.”

THE SALES FUNCTION NEEDS “TO BETTER UNDERSTAND THE PRICE COMPETITION AND DETERMINE EARLY ON IF WE ARE COMPETITIVE WITH OUR PRICING STRUCTURE.”

—CFO, CONSTRUCTION COMPANY




the finance executives who participated in our survey offer a range of ideas about how their companies could improve the effectiveness of their sales forces: “invest in better technology tools,” “upgrade of personnel,” “better hiring,” “better train-ing,” and “better sales management.”

Several respondents suggest that their companies need to redesign the sales compensation plan, echo-ing their colleagues from 2010 (37%) who thought that their sales incentive compensation plans were likely to become even more complex over the fol-lowing two years. In the 2013 study, the director of finance at a hardware/software/networking business says the company needs “better linkage of rewards with the salesperson’s achievements.”

But for many, data quality—and the ability to under-stand which are the best data—is key. The audit manager at a $10-billion company in the financial services/insurance/real estate category suggests that the company needs to “use better data analytics to find out what changes would bring the best improve-ments in outcomes.” Respondents who say that their companies collect high-quality sales information for top-line revenue forecasting are three times more likely to agree that their finance functions “are very effective at providing data and analysis that improves sales management decision making” than respondents who say their companies collect lower-quality information.

Companies whose finance functions do more-or-less continuous forecasting, and can split data apart in whatever ways are most meaningful (region, product, margin, etc.), are enabling their salespeople to perform better. “There’s a a variety of analysis necessary for determining where there is low-hang-

ing fruit, where there is more work to be done, what are the weak points and what are the strong points,” says Mr. Clement at AutoTrader.com. “The finance function helps to understand what’s driving the busi-ness, and makes recommendations so that people are aligned with what drives the business forward.”

The finance function can also supply data that can shape salespeople’s incentives—making sure those, too, are aligned with the company’s larger aims. Indeed, deciding where to add resources to the sales organization—whether in people, training, technol-ogy, or strategy—is also a byproduct of knowing how to measure “high performance” in the context of the company’s overall goals, which might include acquiring new customers or learning additional sell-ing skills. “Since the finance function is essentially the scorekeeper across the whole organization, and sales drives a portion of the success of the organi-zation, there needs to be a mutual understanding of what success looks like,” says Mr. Clement. “We want to make sure we’re consistent in how we think about success, so that our incentives line up with how we’re measuring it.”

The finance function’s flexibility in working with the information is paramount. Which data are useful may vary from one division to the next; the information needs of a global unit, for instance, are likely to differ markedly from what a locally focused unit requires. “We don’t try to put in one size fits all,” says the CFO of the privately-held distribution company. “The tool has to match what the manager needs, as opposed to making the manager use the tool that the whole company uses.”

Translating Data into Action

“WE WANT TO MAKE SURE WE’RE CONSISTENT IN HOW WE THINK ABOUT SUCCESS, SO THAT OUR INCENTIVES LINE UP WITH HOW WE’RE MEASURING IT.”

—EVP AND CFO, ONLINE MARKETPLACE




the finance function’s role represents a stretch from the more passive view that has tradi-tionally clung to the number crunchers, one in which their main job is gathering and processing information based on completed transactions. And finance execu-tives recognize that their transition to horizon-gazing visionaries is not yet as successful as it needs to be, survey results suggest. Only 24% of respondents judge their finance departments as “very effective” in sup-plying data that improves decision making, with 70% pronouncing finance as either “somewhat effective” (54%) or “not very effective” (16%)—suggesting they see much room for improvement. (See Figure 4.)

In almost the same proportions, respondents assign themselves similarly weak grades—a resounding “somewhat” in measuring the level of effectiveness—when it comes to ensuring that relevant sales information is easily available to those who need to use it. Fewer than one in five respondents believe they are “very effective” at putting sales information to good use across the organization. (See Figure 5.)

Here, again, collaboration between the two depart-ments is essential. The distribution company CFO interviewed says that, at his company, the finance

A Stretch for Finance Teams

FIGURE 4:

How effective is the finance function at your company at providing data and analysis that improve sales management decision making?

FIGURE 5:

How effective is the finance function at your company at ensuring that relevant sales information is put to good use?

Finance is notvery effective

16%

Finance is notvery effective

22%

Finance is not involved

4%

Finance is not involved

6%

I’m not sure

1%I’m not sure

1%

Finance is very effective

24%

Finance is very effective

18%

Finance is somewhat effective

54%

Finance is somewhat effective

53%

ONLY 24% OF RESPONDENTS JUDGE THEIR FINANCE DEPARTMENTS AS “VERY EFFECTIVE” IN SUPPLYING DATA THAT IMPROVES DECISION MAKING.




and sales departments got together to put different systems and reporting structures in place. “What finance did was to come out with some key sales-people who we knew would be the right ones to sit with,” he says. “They developed reporting to meet the sales force’s needs. And on an ongoing basis, there’s feedback. Finance keeps the salespeople informed in terms of what information is out there that they need.”

What the salespeople need, mostly, is information of a quality that helps them in “understanding what the various cost components are that go into what we do, what can be influenced and what can’t,” the distribution company CFO says. “For example, they understand that for each order, someone has to go pick it off the shelf, pack it, and so on, and that all creates expenses. Then they can understand that instead of having a customer put in an order every day, they should maybe do it once a week. If they can get the customer to do that, the order instantly becomes more profitable.”

But, the CFO points out, that information may also be used to attract and hold on to a valuable cus-tomer: “With a particular customer we may say, ‘Do business with us, not with a competitor, because we will ship to you every day.’ Sometimes that informa-tion is about relating to customers and getting some topline business from them.”

SALESPEOPLE NEED INFORMATION THAT TELLS THEM “WHAT THE VARIOUS COST COMPONENTS ARE THAT GO INTO WHAT WE DO—WHAT CAN BE INFLUENCED AND WHAT CAN’T.”

—CFO, DISTRIBUTION COMPANY




the sales team’s successful use of data to decipher and decode customers—and, ultimately, help the com-pany grow—depends, first and foremost, on the quality of that data. As carefully as the sales department may plan and execute its strategy, it won’t produce better leads, attract more customers, and generate higher profits if the data isn’t used dynamically by finance.

Responding to a survey question about how the company’s finance function could most contribute to improving sales force effectiveness, the VP of finance at a health-care company with more than $10 billion in revenues reveals just how elemental

the need for the right data has become. “I can’t even begin to answer that question,” writes the respon-dent, “until I get enough consistent data to deter-mine the key roadblocks to effectiveness.”

That statement suggests at least one existing road-block: a paucity of tools for making sure that the right kinds of analysis are placed in the right hands. An unusually high number of respondents—about half—disagree with the statement that “my company makes good use of analytical and modeling tech-niques to manage sales force effectiveness.” (See Figure 6.)

Data Quality: Finance’s Top Priority

FIGURE 6:

“My company makes good use of analytical and modeling techniques to manage sales force effectiveness.”

AGREE STRONGLY

AGREE SOMEWHAT

DISAGREE SOMEWHAT

DISAGREE STRONGLY

I’M NOT SURE

An unusually high percentage of finance executives (51%) admit that their companies do not make good use of analytical and modeling techniques for sales

37%

35%

16%

8%

6%




Asked about the ways in which finance could most contribute to improving sales effectiveness, respon-dents zero in on the data. “Better and more timely analytical data,” writes the VP of finance at a finan-cial services/insurance/real estate firm with sales of more than $1 billion. The executive vice president of a business and professional services firm echoes that sentiment, saying that finance could boost its contribution by “ensuring timeliness of sales and sales-activity reporting” and “responding quickly to changing business situations with relevant reports and analytics.”

What’s holding finance back? In some cases, the constraints are obvious. One VP of finance at a hardware/software/networking company expresses a wish that finance start “being more proactive with the data.” But he tempers his vision with a dose of reality: “This is, however, constrained by the lack of systematic solutions.” Answering another question, a minuscule 7% of respondents say that their compa-nies take advantage of technology to support sales force effectiveness “extremely well.” While slightly more than half (54%) characterize their use of tech-nology as “adequate,” a sizeable chunk (38%) own up to working for a company that does so “poorly.”

Finance might have the skills required, but without the right tools there’s little opportunity to exercise them. The finance team might have both, but, as one survey respondent notes, it may be lacking when it comes to having input into the overall cost structure or compensation system.

If finance gets a stronger voice, respondents know what they need to say. Several mention offering a “forward-looking synopsis with different scenarios,” as one finance chief puts it, or “meaningful analytics to predict where the market is heading,” as another CFO says. More than projecting into the future, finance could use the information in the present to “improve market and competitor insights and build better selling tools,” says the CFO of an auto/indus-trial/manufacturing company with revenues of more than $5 billion.

With the right data, salespeople will have the answer they need when they need it—whether it’s selling more to existing accounts (through cross-selling) or using leads to tap new markets. They’ll know at what price it’s no longer worth making the sale; they’ll understand the financial impact of every sale in real time. And their incentive plans will reward them for acting on that understanding, the one that gives them a persuasive edge over the competition.

Improving sales force performance, Medtronic’s Mr. Montague adds, is “most effective when the sales leader and the finance leader are really joined at the hip, partnering to project, and then deliver, the sales.”

Which is why salespeople won’t disappear anytime soon, no matter what the pundits say. Paired up with members of the finance team—and guided by high-quality data—they will become even more of an invaluable resource.

IMPROVING SALES FORCE PERFORMANCE IS “MOST EFFECTIVE WHEN THE SALES LEADER AND THE FINANCE LEADER ARE REALLY JOINED AT THE HIP.”

—VP OF FINANCE AND STRATEGY, MEDICAL

TECHNOLOGY COMPANY



15 JUNE 2013

finance drives sales force effectiveness. not everyone agrees with that statement. It’s true that the relationship between sales and finance varies across companies. The sales function commonly lacks data to help align sales incentives, overcome price pressure, and be a fierce competitor in their market. At a minimum, finance plays a critical role in delivering the information used to maximize sales productivity. As the guardians of the company’s financial information, finance manages data critical for understanding customer behaviors, identifing territories that are performing, and driving sales behaviors that align with the company’s objectives.

IBM Business Analytics partnered with CFO Research on this study to better understand the relationship between finance and sales effectiveness, and how it is evolving. More specifically, we wanted to learn:

n how finance views their role in building an effective sales strategy, and whether that role is changing

n what role data plays in sales effectiveness, and how it is being used

n which investments have the biggest impact on sales force effectiveness, and

n how evolution of sales performance management software has improved the sales/finance partner-ship.

The responses to the survey were revealing. While several priorities have evolved since we conducted a similar survey in 2010, finance leaders have suggested that many of the same problems and challenges persist.

The survey respondents reiterated the need to tear down the barriers between departments. An over-whelming 82% of the finance executives surveyed believe that improved collaboration among finance, operations management, sales, and/or HR would help improve sales effectiveness. The demands for quicker and better information in support of this collaboration continue to increase, and it’s essential that finance and sales create a symbiotic partnership.

With access to the right data, salespeople can make better pricing decisions and improve their under-

standing of the value proposition that their company has over its competitors. Sales managers can better allocate their time, deploy resources, and improve the performance of their teams. However, data is just noise without the tools to use it effectively; 54% of finance executives believe their companies only make ade-quate use of technology, and another 38% say outright that they are doing a bad job at it.

Amid all the advances in finance technology, one area commonly overlooked is the management of variable compensation and commissions. Incentive compensa-tion management (ICM) is related to the efficiency and accuracy of variable pay programs. But effective ICM processes and tools also improve the insight, decision making, and agility associated with the sales perfor-mance management process.

In response to requirements for improved sales pro-ductivity, IBM offers Cognos Sales Performance Man-agement solutions. IBM’s Cognos Sales Performance Management helps companies improve commission accounting, deploy new compensation structures, support the management of complex territories, set more-accurate quotas, and better align sales priorities.

About IBM Business AnalyticsIBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance man-agement, and risk management.

Business Analytics solutions enable companies to iden-tify and visualize trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns, and work to meet regulatory requirements. By making analytics widely available, organizations can align tactical and strategic deci-sion-making to achieve business goals.

To learn more about IBM Cognos Sales Performance Management, visit ibm.com/business-analytics/spm

Sponsor’s Perspective

http://ibm.com/business-analytics/spm

Better Data, Better Decisions: How Finance Can Fuel Sales Force Effectiveness is published by CFO Publishing LLC, 51 Sleeper Street, Boston, MA 02210. Please direct inquiries to Linda Klockner at 617-790-3248 or [email protected].

CFO Research and IBM Business Analytics developed the hypotheses for this research jointly. IBM Business Analytics funded the research and publication of our findings.

At CFO Research, Matt Surka and David Owens directed the research, and Josh Hyatt wrote the report, with contributions from Ian Mount.

CFO Research is the sponsored research group within CFO Publishing LLC, which produces CFO magazine.

June 2013

Copyright © 2013 CFO Publishing LLC, which is solely responsible for its content. All rights reserved. No part of this report may be reproduced, stored in a retrieval system, or transmitted in any form, by any means, without written permission.

better data, better decisions - cfoadvertising.cfo.com/wp-content/uploads/sites/13/... · better...

Documents