sales efectiveness - pathway to productivity.pdf

Sales Effectiveness Pathways to Productivity

Alex Jefferies & Peter Ostrow

September 2008

http://www.aberdeen.com/common/send_to_friend.asp?cid=5307


Sales Effectiveness: Pathways to Productivity

© 2008 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897

Executive Summary As the challenges associated with lengthening sales cycles and low sales productivity continue to mount, organizations are searching for the perfect mix of organizational processes and sales automation solutions to combat the decline in sales effectiveness. In August 2008, Aberdeen surveyed 225 companies to understand how top performing companies are positively affecting top-line revenue growth through improved sales performance. This report examines how top performers (the Best-in-Class companies) put their sales representatives in a position to succeed through a focus on overall sales structure and compensation management, lead management, and sales force automation and integration.

Best-in-Class Performance Aberdeen used four key performance criteria to distinguish Best-in-Class companies.

• Year-over-year performance in quota achievement

• Year-over-year performance in sales cycle time

• Year-over-year performance in bid-to-win ratio

• Year-over-year performance in the percentage of time sales representatives spend on administrative tasks

Competitive Maturity Assessment Survey results show that the firms enjoying Best-in-Class performance shared several common characteristics, including:

• Formal and documented sales processes (84%)

• Defined performance metrics to measure sales effectiveness (76%)

• Executive-level support for sales productivity tools (67%)

• Formalized sales training program (55%)

Required Actions In addition to the specific recommendations in Chapter Three of this report, to achieve Best-in-Class performance, companies must:

• Focus on lead management. As a way of ensuring that high quality leads enter the pipeline, Best-in-Class companies have instilled an organizational focus on lead management and lead management solutions. Currently, 41% of Best-in-Class companies, compared to 26% of Laggards, integrate a lead management solution with an existing CRM. Fifty-five percent (55%) of Best-in-Class companies indicated that they decreased the amount of time between pipeline stages, compared to 10% of the Industry Average

Research Benchmark

Aberdeen’s Research Benchmarks provide an in-depth and comprehensive look into process, procedure, methodologies, and technologies with best practice identification and actionable recommendations

“I would tell anyone thinking about CRM one key thing: the

most important advice I can give is to lock down the

business processes first! If this mean revising or rethinking

them, then so be it. They must be clear to the organization

before you even try to get your CRM up and running.”

~ Rebecca DeLaRosa

Functional Information Officer The TriZetto Group



and 4% of Laggards. By reducing the amount of time it takes for a lead to receive the necessary sales attention, Best-in-Class companies are better able than their counterparts to quickly target and contact prospects.

• Dedicate the necessary operations resources to sales effectiveness. Once an organization has obtained executive-level support for the use of sales productivity tools, the next step is to ensure that the proper resources are allocated to spur improvements in sales performance. Currently, 58% of Best-in-Class companies, compared to 46% of the Industry Average, have dedicated operations resources for sales in place. An additional 26% of Best-in-Class companies plan to implement this key organizational capability. Improvements in sales effectiveness often require more than an organizational willingness to change; the appropriate resources must be in place to ensure success.





Table of Contents Executive Summary....................................................................................................... 2

Best-in-Class Performance..................................................................................... 2 Competitive Maturity Assessment....................................................................... 2 Required Actions...................................................................................................... 2

Chapter One: Benchmarking the Best-in-Class ..................................................... 5 Business Context ..................................................................................................... 5 Top Pressures to Sales Effectiveness................................................................... 5 The Maturity Class Framework............................................................................ 6 The Best-in-Class PACE Model ............................................................................ 8 Best-in-Class Strategies........................................................................................... 9

Chapter Two: Benchmarking Requirements for Success ..................................11 Competitive Assessment......................................................................................12 Capabilities and Enablers......................................................................................14 Sales Structure and Compensation Management ...........................................18

Chapter Three: Required Actions .........................................................................20 Laggard Steps to Success......................................................................................20 Industry Average Steps to Success ....................................................................21 Best-in-Class Steps to Success ............................................................................22

Appendix A: Research Methodology.....................................................................24 Appendix B: Related Aberdeen Research............................................................26

Figures Figure 1: Top Pressures for Improving Sales Effectiveness ................................. 6 Figure 2: Year-over-Year Performance Change in Key Metrics ........................ 8 Figure 3: Top Strategic Actions ................................................................................. 9 Figure 4: Lead Management Solutions ....................................................................10 Figure 5: Top Benefits to CRM Solution (All Respondents) ............................16 Figure 6: CRM Customization Features by Best-in-Class..................................17 Figure 7: CRM Integration Trends ..........................................................................18 Figure 8: Measure Sales Productivity to Manage It..............................................19

Tables Table 1: Top Performers Earn Best-in-Class Status.............................................. 7 Table 2: The Best-in-Class PACE Framework ....................................................... 8 Table 3: The Competitive Framework...................................................................13 Table 4: The PACE Framework Key ......................................................................25 Table 5: The Competitive Framework Key ..........................................................25 Table 6: The Relationship Between PACE and the Competitive Framework.........................................................................................................................................25



Chapter One: Benchmarking the Best-in-Class

Business Context As the advent of new customer-facing technologies (such as social media platforms) change the way consumers gather information about a particular company's products or services, sales representatives are challenged to sell to a customer base that better understands the competitive landscape. As a result, companies realize that they must enable their sales force to work smarter, not harder, to acquire and retain customers. Organizations are forced to not only provide a 360-degree view of the customer to siloed department heads within the organization, but businesses are also challenged to automate how sales information is entered, accessed, and shared by sales representatives. The result is more time for representatives to compete for a greater share of the customer's wallet, while at the same time identifying and closing new sales opportunities.

To properly assess the best practices resulting in improved sales effectiveness, the issue of sales and marketing alignment must be addressed. According to the March 2007 benchmark report, Automating Leads to Sales, 56% of Best-in-Class companies and 62% of Laggards indicated that sales and marketing alignment was a target for improvement. Furthermore, sales and marketing alignment is also a significant influence on technology implementation. According to the July 2007 Benchmark Report, Success Strategies in Marketing Automation, nearly two-thirds of respondents (63%) ranked sales and marketing alignment as a top two challenge to deploying marketing automation solutions. While the on-going struggle between sales and marketing departments concerning the quality and quantity of leads is not a battle that will easily be decided, prior Aberdeen research reveals that 80% of the Best-in-Class realize the importance of integrating lead qualification and measurement efforts between the two departments for the overall growth of the business.

Top Pressures to Sales Effectiveness Increased revenue goals (67%) and the need to acquire profitable customers (35%) were identified by survey respondents as the top two pressures causing organizations to focus resources on sales effectiveness (Figure 1). As a result of these universal business drivers affecting an organization’s sales productivity, three consistent themes emerge among top performing companies: the organizational structure and composition of a sales force and its compensation plans, the managing of leads passed from marketing to sales, and customization and integration of sales productivity solutions. The various sections of this report will examine the relationship between these three themes and will provide a roadmap to Best-in-Class performance.

Fast Facts

√ Best-in-Class companies are 1.7 times more likely than Laggards to measure sales effectiveness on a real-time or daily basis

√ 85% of Best-in-Class companies consider themselves ‘effective’ at understanding their customers’ and prospects’ business challenges, compared to 61% of Laggards

√ Best-in-Class companies are 123% more likely than Laggards to retain top sales talent

http://www.aberdeen.com/summary/report/benchmark/3956_RA_VS_Leads2Sales.asp

http://www.aberdeen.com/summary/report/benchmark/4133-RA-marketing-automation.asp

http://www.aberdeen.com/summary/report/benchmark/4133-RA-marketing-automation.asp



Figure 1: Top Pressures for Improving Sales Effectiveness

19%

27%

35%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Reduce cost of sales

Need to differentiatecompany in a competitive

business landscape

Need to acquire profitablecustomers

Increased revenue goals

Source: Aberdeen Group, August 2008

The Maturity Class Framework Aberdeen used four key performance criteria to distinguish the Best-in-Class from Industry Average and Laggard organizations:

• Year-over-year increase / decrease in quota performance (percentage of sales representatives achieving quota)

• Year-over-year increase / decrease in sales cycle time (average length of time it takes to close a deal, from initial outreach to signed contract)

• Year-over-year increase / decrease in bid-to-win ratio (ratio of deals won compared to the number of deals bid on)

• Year-over-year increase / decrease in administrative time (percentage of time sales representatives spend on non-selling tasks)

Table 1 displays the mean class performance of companies as they pertain to these four Key Performance Indicators (KPIs). Taken together, these metrics reveal how Best-in-Class firms utilize strategies, capabilities, and technology enablers to affect sales performance.

All Respondents



Table 1: Top Performers Earn Best-in-Class Status

Definition of Maturity Class Mean Class Performance

Best-in-Class: Top 20% of aggregate performance scorers

84% improved year-over-year performance in quota achievement; the average performance improvement was 8%. 69% reduced the length of sales cycles on a year-over-year basis; the average performance improvement was 6%. 80% improved year-over-year performance in bid-to-win ratio; the average performance improvement was 8%. 55% reduced the amount of time reps spend on administrative tasks; the average performance improvement was 4%.

Industry Average: Middle 50% of aggregate

performance scorers

15% improved year-over-year performance in quota achievement; the average performance improvement was 1%. 6% reduced the length of sales cycles on a year-over-year basis; on average, there was 0% annual improvement. 12% improved year-over-year performance in bid-to-win ratio; the average performance improvement was 1% 20% reduced the amount of time reps spend on administrative tasks; the average performance improvement was 1%.

Laggard: Bottom 30% of aggregate

performance scorers

0% improved year-over-year performance in quota achievement; the average performance decrease was 6%. 0% reduced the length of sales cycles on a year-over-year basis; the average performance decrease was 6%. 6% improved year-over-year performance in bid-to-win ratio; on average, annual performance decreased by 1% 7% reduced the amount of time reps spend on administrative tasks; on average, annual performance decreased by 3%.

Source: Aberdeen Group, September 2008

Measurable Improvements in Other Key Sales Metrics Best-in-Class organizations also demonstrate superior year-over-year performance in other key sales metrics (not used to define the maturity classes), including time-to-quota (the average amount of time it takes for



new sales representatives to achieve quota), revenue per account, and sales contribution margin (Figure 2).

Figure 2: Year-over-Year Performance Change in Key Metrics*

55% 58% 61%

78%

16%

40%

13%19%

11%

27%

11%18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Time to Quota Revenue per Account Sales ContributionMargin

Customer Acquisition

Best-in-Class Industry Average Laggards


The Best-in-Class PACE Model Citing increased revenue goals and the need to acquire profitable customers as top pressures, Best-in-Class companies are focused on increasing the quality (39%) and quantity (26%) of lead entering the sales pipeline. According to Aberdeen research for the Sales and Marketing Alignment: United They Stand, Divided They Fall Research Brief, 80% of Best-in-Class companies will integrate lead qualification and measurement efforts between sales and marketing, compared to 55% of Laggards.

Table 2: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers Increased revenue goals

Increase the quality of leads in the sales pipeline Increase the quantity of leads in the sales pipeline

Formal and documented sales processes Defined performance metrics to measure sales effectiveness Centralized repository of sales and product marketing materials Formalized sales training program

SalesForce Automation (SFA) Email marketing solution Forecast management solution Order / quote generation Sales analytics solution Enterprise incentive compensation Sales knowledge management solution Document collaboration solution Internal-facing social media applications


*Percentages represent the percent of companies reporting improved performance

http://www.aberdeen.com/summary/report/research_briefs/4691-RB-sales-n-mkt-alignment.asp

http://www.aberdeen.com/summary/report/research_briefs/4691-RB-sales-n-mkt-alignment.asp



Best-in-Class Strategies According to Aberdeen’s June 2007 benchmark, Sales Effectiveness: Getting Sales Back to Selling, Best-in-Class companies deployed a number of different strategies to improve sales effectiveness. However, top performing companies generally focused on a two-pronged approach: 1) increasing sales representatives’ use of information by improving knowledge of products and customers (26%), and 2) deploying sales processes to help sales representatives leverage that information, such as increasing the quality of leads (33%) and sales win rates (30%).

An August 2008 survey revealed that while 34% of Laggards believe that improving knowledge sharing within the organization is a top strategy to affect sales effectiveness, Best-in-Class and Industry Average companies are seemingly more focused on the issues of leads and lead management. In addition to increasing the quality (39%) and quantity (26%) of leads in the sales pipeline, 21% of Best-in-Class companies also cited lead scoring and prioritization as top strategies.

Figure 3: Top Strategic Actions

26%

15%

34%

23%

28%

19%

22%

24%

25%

26%

21%

21%

21%

26%

39%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Provide training sessionsthat highlight best

practices

Score and/or prioritizesales leads

Improve knowledge sharingwithin the sales force

Increase the quantity ofleads in the sales pipeline

Increase the quality ofleads in the sales pipeline

Best-in-ClassIndustry AverageLaggards


Aberdeen Insights — Lead Management Strategies

The issues of lead quality and lead quantity are front of mind for Best-in-Class and Industry Average organizations, while Laggards are focused on knowledge sharing with the sales force. Forty-four percent (44%) of Best-in-Class companies indicated that marketing is effective when it comes to maintaining a “healthy” pipeline, compared to 24% of Laggards.

continued

“To increase sales productivity, you must assure that all

functional area goals are aligned to revenue goals and sales.

Differing goals create customer confusion and lower

ROI.”

~ Tracy Walton Best Practices Manager

Phone Works, LLC

http://www.aberdeen.com/summary/report/benchmark/4115-RA-sales-effectiveness.asp

http://www.aberdeen.com/summary/report/benchmark/4115-RA-sales-effectiveness.asp



Aberdeen Insights — Lead Management Strategies

As a way to derive the most value from the leads that marketing passes to sales, Best-in-Class companies utilize various lead management solutions to supplement the quality of leads and track their progress through the sales pipeline (Figure 4).

Figure 4: Lead Management Solutions

30%

20%

22%

39%

41%

44%

0% 10% 20% 30% 40% 50%

Automated LeadManagement

Solution

Lead Quality Tools

Lead AnalyticsSolution

Best-in-Class

All Others


While the adoption of automated lead management solutions is relatively similar between Best-in-Class and all other companies (39% versus 30% respectively), Best-in-Class companies indicate a higher propensity to leverage lead analytics solutions and lead quality tools (Figure 4). As a result, the Best-in-Class experience demonstrable benefits. For example, 66% of Best-in-Class companies currently using lead quality tools improve year-over-year performance in lead conversion rates. Eighty percent (80%) of Best-in-Class companies currently using lead analytics solutions decrease the amount of time between pipeline stages; while 93% improved year-over-year performance in the percentage of sales representatives achieving quota.

In the next chapter, we will see what the top performers are doing to achieve these gains.

“Remember, not all customers are good for your business.

You must decide what business you are in and focus on that.”

~ Dave Lehmann Ph.D., P.E., CIRM

WTRI



Chapter Two: Benchmarking Requirements for Success

The research demonstrates that the Best-in-Class are far more likely to combine organizational processes with technology implementation to achieve superior sales performance.

Case Study — TriZetto Group

The TriZetto Group, headquartered in Newport Beach, California, provides a portfolio of healthcare products and services that are used its customers to service more than 100 million health plan members, or approximately 40% of the insured population of the United States. With a strong focus on saving it customers millions annually from the efficiencies of its solutions, it stands to reason that TriZetto would strive for the same efficiency within its sales organization. “Typically, I coordinate our sales representative’s needs from a tool and application perspective. Work to supply them with the best product information that we have along with best practices in terms of CRM and mobile tools to meet their needs,” explained Rebecca DeLaRosa, Functional Information Officer for the Sales and Marketing departments at Trizetto. “When sales representatives have a need, I am able to supply for that need to ensure that our representatives, and organization as a whole for that matter, are not bogged down with administrative tasks.” In order to achieve this level of sales effectiveness, TriZetto was forced in late 2000 to examine its use of CRM as a way of providing a higher level of internal visibility to several departments, as well as a few new company acquisitions.

“When we acquired a few companies in 2000, we quickly found that groups of users were on separate sales tools,” begins DeLaRosa. “As part of a long-term, company-wide integration initiative, a project was launched called YOUnify, in helping us to become a more unified organization, both internally and customer facing.” A large part of the project was getting the entire company on one CRM platform. TriZetto evaluated several CRM providers before eventually settling on their current solution. “We conduct business from a business unit product line perspective. For our customers, it’s a package of products and services,” explains DeLaRosa. “So, it meant that we needed a CRM solution that was versatile enough to track by business unit and product line, such as a pipeline forecasting feature.” The CRM solution used by Trizetto was one that was able to be customized to match the company’s unique business process, which, as DeLaRosa emphasizes, is a key point to consider before a company even toys with the idea of implementing a CRM solution.

continued

Fast Facts

√ 66% of Best-in-Class companies currently retain more than 76% of their customers, compared to 49% of the Industry Average and 43% of Laggards with similar retention rates

√ Best-in-Class companies are two-times more likely than Laggards to make a first customer contact attempt within one to three days of receiving a lead

√ Best-in-Class companies are 1.9-times more likely to experience year-over-year improvements in customer satisfaction compared to Laggards

√ 55% of Best-in-Class companies improved year-over-year market share, compared to 29% of Laggards



Case Study — TriZetto Group

“I would tell anyone thinking about CRM one key thing: the most important advice I can give is to lock down the business processes first! If this mean revising or rethinking them, then so be it. They must be clear to the organization before you even try to get your CRM up and running,” explain DeLaRosa. It is this clear focus on sales processes that made the necessary CRM customization initiatives painless. Often it is the knee-jerk reaction for companies to decree “we need a new CRM!” when the results of the last implementation aren’t demonstrable. Rather than switching CRM solutions or matching business processes to the existing CRM, DeLaRosa suggests taking the time to lay the proper foundation. “Ask yourself ‘what pain are you feeling?’ It’s usually process-related. Take the time to identify the problem first. The CRM can be tweaked easily enough. Just don’t do it the other way around.”

Finally, the alignment between sales and marketing that a properly implemented CRM solution provides is a key benefit. Trizetto relies on their CRM not only to provide internal visibility to multiple departments, such as customer support, but also to help strategically align their sales and marketing efforts. “Marketing uses the ‘list manager’ tool in the CRM to promote webinars or do targeted mailings,” concluded DeLaRosa. “When they get a response, they can push it right back to sales through the CRM.” This type of strategic outreach between sales and marketing allows TriZetto to improve the overall productivity of its sales team. “I look around at our sales team and they are always busy selling,” adds DeLaRosa. Naturally, it’s that type of activity that all companies strive to achieve.

Competitive Assessment Aberdeen Group analyzed the aggregated metrics of surveyed companies to determine whether their performance ranked as Best-in-Class, Industry Average, or Laggard. In addition to having common performance levels, each class also shared characteristics in five key categories: (1) process (the approaches they take to execute their daily operations); (2) organization (corporate focus and collaboration among stakeholders); (3) knowledge management (contextualizing data and exposing it to key stakeholders); (4) technology (the selection of appropriate tools and effective deployment of those tools); and (5) performance management (the ability of the organization to measure their results to improve their business). These characteristics (identified in Table 3) serve as a guideline for best practices, and correlate directly with Best-in-Class performance across the key metrics.



Table 3: The Competitive Framework

Best-in-Class Average Laggards

Formal and documented sales processes Process

84% 55% 51%

Executive-level support for sales productivity tools Organization

67% 60% 38%

Formalized sales training program

55% 48% 33%

Centralized repository of sales and product marketing materials

Knowledge

68% 60% 61%

Sales productivity solutions in use

Technology

78% Sales Force Automation (SFA) 65% Email marketing solution 63% Forecast management solution 57% Order / quote generation 49% Enterprise incentive compensation 50% Sales knowledge management solution 46% Internal-facing social media solutions (i.e., wikis, discussion forums, etc.)



Defined performance metrics to measure sales effectiveness Performance

76% 45% 43%




Capabilities and Enablers Based on the findings of the Competitive Framework and interviews with end users, Aberdeen’s analysis of the Best-in-Class reveals that these companies predominantly rely on best practices in process, organization, and technology to achieve superior performance.

Process Before an organization can realistically expect to reap the benefits of any technology adoption, care must be taken to ensure that the proper organizational processes are in place to supplement technology implementation. This is particularly true as SaaS-based solutions allow companies to get up and running in so quick a manner that the proper planning at the organizational level is often sacrificed during implementation. Currently, 84% of Best-in-Class companies, compared to 55% of the Industry Average and 51% of Laggards, have formalized and documented sales processes. By ensuring that the appropriate system of “checks and balances” exists, so to speak, Best-in-Class companies can maximize the effectiveness of sales automation solutions.

Organization The support of senior management is not only crucial for receiving the necessary resources to fund a technology implementation, but it also goes a long way to determining the organizational philosophy for a project. A lukewarm reception to an idea on the part of management inevitably means that other employees will prioritize other items above it. Therefore, an executive-level champion is required to influence the mindset of the organization around any change that is to be implemented. Best-in-Class companies are more likely to realize this than Laggards. Currently, 67% of Best-in-Class companies, compared to 38% of Laggards, have executive-level support for sales productivity tools. An organization hoping to convince its employees of the benefits of a sales automation solution must have the support of management to enact change.

Knowledge Management Eighty-one percent (81%) of Best-in-Class companies indicate that their organization is effective when it comes to mapping their products or services to the business challenges their customers or prospects face, compared to 65% of Laggards. Eighty-six percent (86%) of Best-in-Class companies also indicated that their sales representatives effectively demonstrate product knowledge during the sales process, compared to 66% of Laggards. This discrepancy on the part of Best-in-Class and Laggard sales representatives to not only understand the business challenges of prospects, but also to explain the key points of competitive differentiation during the sales process, speaks to the need for a formalized sales training program to positively affect sales effectiveness. Only a third (33%) of Laggards currently have such a program in place, compared to over half of the Best-in-Class (55%). While an additional 35% of Laggards plan to implement this key

“We essentially decided to do something like a wikipedia site for our sales representatives, where we could create competitor pages to present what’s new with our competitors and any related collateral we may want to share.”

~VP of Marketing and Strategy, Large Business Process Outsourcing Company



capability in the future, the eventual adoption rate of 68% of Laggards still trails the 92% of Best-in-Class companies who either have, or plan to have, this capability. Such a capability would help the 43% of Laggards who rated themselves as “ineffective” when it comes to onboarding and training new sales talent.

Technology Sixty-eight percent (68%) of Best-in-Class companies currently utilize an organizational-wide Customer Relationship Management (CRM) solution, compared to 60% of all other respondents. Best-in-Class companies are not only more likely than all others to provide internal visibility to the entire enterprise, but they are also more likely to leverage a departmental customer management tool for sales as well. Seventy-eight percent (78%) of Best-in-Class companies, compared to 51% of the Industry Average and 36% of Laggards, utilize a Sales Force Automation (SFA) solution to manage customer and prospect information within sales. While the phrase “CRM,” in the traditional sense, is used to reference tools designed to manage all aspects of the customer’s interaction with a company, such as purchase history, account data, and contact information, the customization and integration capabilities of modern solutions allows companies to utilize the CRM system as multi-module tool for housing all sorts of disparate information (see Aberdeen Insight to follow). SFA solutions, which typically refer to solutions that capture and track the data that affect sales operations on a daily basis, are part of a CRM solution, but not necessarily the other way around.

Currently, 61% of Best-in-Class companies, compared to 47% of all others, utilize a team-based collaborative selling approach. As a result of this organizational philosophy towards selling, an increasing number of Best-in-Class companies are leveraging internal-facing social media solutions, such as wikis or discussion forums, for the purposes of account collaboration or to connect sales representatives to subject matter experts within the enterprise. Currently, 46% of Best-in-Class companies, compared to 11% of Laggards, utilize enterprise social media tools for increased collaboration.

Performance Management The pressures associated with increased revenue goals often times means that executive-level support will only be directed at those things that have a tangible impact on revenue growth. The resulting need for organization’s to track the performance in sales effectiveness could be the difference between obtaining the necessary resources for sales automation solutions and training or not. Currently, 76% of Best-in-Class companies, compared to 45% of the Industry Average and 43% of Laggards, have defined performance metrics to measure sales effectiveness. Not coincidentally, Best-in-Class companies are more likely to have executive-level support for sales productivity tools. The ability to track performance and allocate resources based on findings is a crucial capability for companies striving to understand where they’ve been, as well as where they may be going.



Aberdeen Insights — Technology

According to research conducted for the upcoming Aberdeen report, Sales 2.0: Getting Social About Selling, 63% of survey respondents indicated that SaaS / on-demand was the preferred delivery method for the CRM solution. Of those companies that currently do not leverage a CRM solution but plan to do so in the future, 65% indicated that they would be likely to consider a SaaS/ on-demand solution over an on-premise one. With the initial concerns companies had with the security of SaaS solutions seemingly a non-issue, companies are drawn to the flexibility and ease of implementation that a SaaS solution offers.

Figure 5: Top Benefits to CRM Solution (All Respondents) *

20%

25%

27%

34%

36%

47%

72%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Customizable to match unique businessprocesses

Integrate data from disparate sources

Easily manage daily tasks and calendar

Improved communications amongst salesrepresentatives

Outlet for strengthening customer relationships

CRM provides internal visibility to all parties withinenterprise (i.e., dashboards)

Contact Management


Figure 5 displays what survey respondents consider the top benefits to a CRM solution. In addition to providing a necessary outlet for contact management (72%), 47% of respondents believe that a CRM solution provides internal visibility to all parties within the enterprise. While only a quarter of all respondents (25%) cited the ability to integrate from disparate data sources and a fifth (20%) cited customizable solutions to match unique business processes, Best-in-Class companies show an added propensity to integrate various solutions into an existing CRM.

continued

*Respondents were asked to pick top three (3) benefits




Figure 6 displays the top customization features Best-in-Class companies expect from a CRM solution. The top two customization features deal with the unique processes and preferences of a company and its users, as well as the ability to purchase add-ons to expand the functionality of the CRM solution, such as an analytics application or content management solution.

Figure 6: CRM Customization Features by Best-in-Class

38%

49%

49%

54%

73%

84%

84%

0% 30% 60% 90%

Ability to purchase CRM tailored for specific industryverticals

Ability to build, share or purchase custom applications

Ability to create custom applications

Flexible user interface for mobile access (handheld,kiosk, phone, etc.)

Customizable user interface

Plug-ins or add-ons to expand CRM functionality (e.g.analytics, content management)

Customizable process and workflow


Best-in-Class companies are far more likely than all others to integrate disparate solutions into the existing CRM solution to provide a heightened level of internal visibility, as well as align sales and marketing efforts (Figure 6). Lead management solutions (41%), content management solutions (42%), and business intelligence solutions (36%) are the top three solutions Best-in-Class companies integrate into the CRM solution to expand its functionality (Figure 7).

continued




Figure 7: CRM Integration Trends

11%11%

10%

29%

20%

25%

28%

31%

33%

36%

42%

41%

0%

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0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

CompensationManagement solution

Social Media Technologies

Workflow Automation

ERP system (inclusive)

Product Configurationsolution

Business Intelligencesolution

Content Managementsolution

Lead Management solution



Sales Structure and Compensation Management The vast majority of survey respondents (75%) indicated that their current sales force is comprised of either a 100% direct sales force, or predominantly a direct sales force with some channel or reseller sales support. Despite the fact the three-fourths of respondents operate with a predominantly (or totally) direct sales force, a number of companies still fail to track sales performance in a timely manner (Figure 8).

Twenty-six percent (26%) of Best-in-Class companies measure sales productivity in either a real-time or daily basis, compared to 15% of all others. This increased visibility into the day-to-day sales operations allows Best-in-Class companies to not only understand their performance, but also to better manage compensation incentives.

Currently, 49% of Best-in-Class companies, compared to 39% of Laggards, leverage enterprise incentive compensation solutions. Twenty-five percent (25%) of Best-in-Class companies, compared to both 11% of the Industry Average and Laggards, fully integrate a compensation management solution into an existing CRM solution to manage sales performance.

continued




Figure 8: Measure Sales Productivity to Manage It

15%

13%

34%

13%

2%

9%

22%

10%

5%

16%

26%

18%

8%

6%

17%

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13%

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8%

0%

16%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Do Not Monitor SalesProductivity

Quarterly or Yearly

Monthly

Weekly

Daily

Real-time (or close toreal-time)

Ad-Hoc/As Needed



Best-in-Class companies are 1.8 times more likely than Laggards to have defined performance metrics to measure sales effectiveness. According to Figure 8, Best-in-Class companies are also more likely than Industry Average and Laggard companies to measure performance in real-time or daily. No Best-in-Class company indicated that they currently fail to measure sales performance, compared to 13% of the Industry Average and 15% of Laggards. The structure of a sales organization and lead management are crucial components of sales effectiveness; however, the true results of these organizational capabilities may be veiled if a company is unable to track their sales progress, or lack thereof.



Chapter Three: Required Actions

Whether a company is trying to move its performance in sales effectiveness from Laggard to Industry Average, or Industry Average to Best-in-Class, the following actions will help spur the necessary performance improvements:

Laggard Steps to Success • Formalize and document sales processes. While technology

solutions designed to improve sales performance can have a tangible impact on a company’s bottom line, the overall success of such tools hinges upon the organizational capabilities and processes in place. Currently, just over half (51%) of Laggards have formal and documented sales processes in place, compared to 84% of the Best-in-Class and 55% of the Industry Average. An additional 28% of Laggards indicated that they have no plans to implement such processes in the future. Companies must ensure that the structure of the sales department and its inherent processes are well-aligned with the organization’s sales methodology and overall revenue goals. Only after the “house is in order” should companies consider leveraging technology solutions designed to improve sales performance.

• Solicit executive-level support for sales productivity tools. The fear of a looming recession and the impact it could have on company’s revenue goals means senior management is careful to consider where it allocates resources. However, organizations hoping to boost sales performance in a challenging business climate must have executive-level support for the benefits of sales productivity tools. This support of senior management ultimately affects the selling culture within a company. As more selling processes are automated, sales representatives are able to reduce the amount of time spent on administrative tasks and are able to focus on selling. Thirty-eight percent (38%) of Laggards currently have executive-level support for sales productivity tools, compared to 67% of the Best-in-Class and 60% of the Industry Average. The additional 31% of Laggards that plan to have executive support for sales productivity solutions must work quickly to first ensure that the structure and processes within the sales department are aligned before making the case to management about the benefits of sales solutions.

• Implement a formalized sales training program. As the advent of social media tools and other technology solutions widens the generational gap that exists in most sales departments, companies must work hard to ensure that all representatives are familiar with the processes, expectations, and solutions they encounter on a daily basis. Currently, only a third (33%) of Laggards,

Fast Facts

√ 53% of Best-in-Class companies, compared to 33% of Laggards, plan to improve sales effectiveness in the next 12 to 24 months through an increased focus on data integration

√ Best-in-Class companies are 1.8-times more likely than Laggards to credit marketing’s efforts for maintaining a healthy sales pipeline

√ Best-in-Class companies are 2-times more likely than the Industry Average and 4-times more likely than Laggards to convert 50% or more of leads in the sales pipeline

√ Best-in-Class companies are 266% more likely than Laggards to have new sales representatives achieve quota in less than two months

√ 82% of Best-in-Class companies consider themselves ‘effective’ at demonstrating how their products and services ‘stack up’ against the competition, compared to 66% of the Industry Average and 51% of Laggards



compared to over half (55%) of the Best-in-Class, have a formalized sales training program in place. The use of technology solutions focused on collaboration and knowledge sharing within the organization are breaking down some of the communication barriers within the enterprise and making it easier for sales representatives to connect with subject matter experts to have their questions answered. However, the effective use of these solutions, as well as other sales productivity tools (such as CRM) is predicated on a representative’s knowledge of the company’s sales processes and automation solutions. The 35% of Laggards that plan to implement a formalized sales training program should accelerate their adoption plans to ensure that they are arming their sales staff with the knowledge and tools to be successful.

Industry Average Steps to Success • Create a centralized repository of customer, account, and

prospect information. The proliferation of customer touch points and the disparate data silos housing customer information have made it necessary for companies to centralize customer and prospect information in one location for the purposes of account management and targeted selling. While two-thirds (66%) of the Industry Average currently have this capability, these companies still trail the three-fourths (78%) of Best-in-Class companies with such a repository. Modern CRM solutions are able to integrate customer and prospect data from various sources, thereby serving as an organizational tool for customer management, not solely a departmental one. Despite this fact, only 56% of the Industry Average, compared to 68% of the Best-in-Class, have a CRM solution in place. The 23% of the Industry Average that plan to implement a centralized repository for such information should accelerate the process if they truly hope provide the enterprise with the elusive “360-degree view” of the customer.

• Define performance metrics to measure sales effectiveness. As the old saying goes, “you can’t manage what you don’t measure.” Currently, only 45% of the Industry Average companies have defined performance metrics in place designed to measure the effectiveness of the sales department, compared to 76% of the Best-in-Class. In order to garner the support of senior management and receive the proper resources, companies must demonstrate the benefits, or lack thereof, that defined sales processes and technology implementation have on the company’s bottom line. Nearly a quarter (24%) of the Industry Average companies that do measure sales performance do so on a monthly basis only. Only 15% of the Industry Average measure sales performance in real-time or on a daily basis, compared to 26% of the Best-in-Class that track sales performance over the same time period. The pathway to sales productivity can only be successfully navigated once businesses understand where the roadblocks lie.

“I think what has helped us up to now is our clear vision of what we want to do. It wasn’t this ‘pie in the sky’ notion. It was more of a specific idea: we wanted to create a resource for our own collective competitive intelligence.”

~VP of Marketing and Strategy, Large Business Process Outsourcing Company



• Focus on team-based collaborative selling. It is essential for companies to address the structure of their sales department before making any investment in technology. By organizing the sales hierarchy and creating teams, companies are able to positively affect sales performance through collaborative selling. Currently, 53% of the Industry Average, compared to 61% of the Best-in-Class, utilize team-based collaborative selling strategies. If it is true that “no man is an island,” then organizations must consider providing various degrees of support, such as subject matter inquiries or visibility into other reps’ prospects and contacts, in the form of a team-based collaborative environment. The additional 28% of Industry Average companies that plan to implement such an organizational capability must do so before the focus shifts heavily to technology implementation.

Best-in-Class Steps to Success • Conduct win / loss analysis on every deal in a timely

manner. As companies work to improve sales training programs and dissolve the communication barriers that exist between an increasingly mobile and global sales force, it is important that the best practices (or common pitfalls) be documented. Currently, only 37% of Best-in-Class companies indicate that they conduct a win / loss analysis on every deal in a timely manner, compared to 37% of the Industry Average and 28% of Laggards. While the eventual adoption rate of 90% among Best-in-Class companies outpaces the 70% of Industry Average and 65% of Laggards that currently are, or will be in the future, conducting win / loss analysis on closed deals, Best-in-Class companies must consider adding this key process to the sales cycle sooner rather than later.

• Focus on data quality. Before a company can start to integrate data from various customer-facing channels into a sales solution, (such as CRM) care must be taken to ensure the quality of the data. Customer data should be “scrubbed” to identify incomplete contact information or multiple entries for the same contact, for example. Currently, just over a quarter of Best-in-Class companies (26%) leverage data quality solutions. An additional 38% of Best-in-Class companies plan to leverage such solutions in the future. An early focus on customer data quality translates into more useable information when an enterprise is ready to integrate disparate data silos.

• Integrate data from disparate silos. Once an organization takes the necessary steps to ensure the quality of its customer data, the next step should be to integrate the data from various data silos into a centralized repository that is accessible by all departments within the organization. Forty percent (40%) of Best-in-Class companies currently utilize data integration solutions, compared to 28% of Laggards. Despite the fact that nearly half of Best-in-Class

“Ask yourself ‘what pain are you feeling?’ It’s usually

process-related. Take the time to identify the problem first.

The CRM can be tweaked easily enough. Just don’t do it

the other way around.”

~ Rebecca DeLaRosa Functional Information Officer

The TriZetto Group



companies currently use data integration solutions, 37% of Best-in-Class companies surveyed indicated that they plan to increase the focus on data integration in the next 12 to 24 months. Best-in-Class companies looking to provide sales representatives with a unified view of customers and prospects must take the steps to ensure the representatives have access to information that exists throughout the enterprise.

Aberdeen Insights — Summary

In order for a company to truly impact sales effectiveness, there must be an organizational focus on sales structure and compensation management, lead management, and the use of sales automation solutions. By achieving harmony between these three things, Best-in-Class companies are able to improve key sales metrics. For example, nearly two-thirds (61%) of Best-in-Class companies experience year-over-year improvement in sales contribution margin, compared to 11% of Laggards. As a new age of customers become increasingly adept at accessing company information and better understanding the competitive landscape, businesses are forced to equip their sales forces with the tools that enable them to work smarter, not harder. By integrating customer data from disparate data silos, as well as providing the necessary organizational support, Best-in-Class companies are nearing that elusive 360-degree view of the customer.





Appendix A: Research Methodology

Between August and September 2008, Aberdeen examined the use, the experiences, and the intentions of more than 225 enterprises to better understand the organizational capabilities and technology enablers that affect sales productivity.

Aberdeen supplemented this online survey effort with interviews with select survey respondents, gathering additional information on sales automation strategies, experiences, and results.

Responding enterprises included the following:

• Job title / function: The research sample included respondents with the following job titles: manager (19%), director (19%), CEO / President / Chairman (18%), EVP / SVP / Vice President (17%), and Other (27%).

• Industry: The research sample included respondents from the following industries: Software / hardware supplier (20%), IT / consulting services (11%), high technology / software (8%), financial services (6%), and various others (55%), including transportation, consumer packaged goods, manufacturing, etc.

• Geography: The majority of respondents (67%) were from North America. Remaining respondents were from Europe (20%), Asia / Pacific (9%), South / Central America and the Caribbean (2%) and Middle East/Africa (2%).

• Company size: Twenty-one percent (21%) of respondents were from large enterprises (annual revenues above US $1 billion); 28% were from midsize enterprises (annual revenues between $50 million and $1 billion); and 51% of respondents were from small businesses (annual revenues of $50 million or less).

• Headcount: Forty-two percent (42%) of respondents were from small enterprises (headcount between 1 and 99 employees); 27% were from midsize enterprises (headcount between 100 and 999 employees); and 31% of respondents were from large businesses (headcount greater than 1,000 employees).

Solution providers recognized as sponsors were solicited after the fact and had no substantive influence on the direction of this report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.

Study Focus

Respondents completed an online survey that included questions designed to determine the following:

√ The current or planned initiatives surrounding sales automation

√ The structure and effectiveness of current sales forces

√ Current and planned use of sales automation tools, such as CRM solutions

√ The benefits, if any, that have been derived from an organizational focus on sales productivity initiatives and supporting capabilities.



Table 4: The PACE Framework Key

Overview Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows: Pressures — external forces that impact an organization’s market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive) Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial strategy, go-to-market, and sales strategy) Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products / services, ecosystem partners, financing) Enablers — the key functionality of technology solutions required to support the organization’s enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management)


Table 5: The Competitive Framework Key

Overview The Aberdeen Competitive Framework defines enterprises as falling into one of the following three levels of practices and performance: Best-in-Class (20%) — Practices that are the best currently being employed and are significantly superior to the Industry Average, and result in the top industry performance. Industry Average (50%) — Practices that represent the average or norm, and result in average industry performance. Laggards (30%) — Practices that are significantly behind the average of the industry, and result in below average performance.

In the following categories: Process — What is the scope of process standardization? What is the efficiency and effectiveness of this process? Organization — How is your company currently organized to manage and optimize this particular process? Knowledge — What visibility do you have into key data and intelligence required to manage this process? Technology — What level of automation have you used to support this process? How is this automation integrated and aligned? Performance — What do you measure? How frequently? What’s your actual performance?


Table 6: The Relationship Between PACE and the Competitive Framework

PACE and the Competitive Framework – How They Interact Aberdeen research indicates that companies that identify the most influential pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute those decisions.




Appendix B: Related Aberdeen Research

Related Aberdeen research that forms a companion or reference to this report includes:

• Tiering and Scoring Leads: Key Insights from a Lead Scoring Study August 2008

• Users of Sales and Marketing Solutions Display a Significant Lack of KPI Awareness August 2008

• Best-in-Class Enterprises Promote and Achieve Successful CRM Adoption August 2008

• Sales Analytics: Hitting the Forecast Bulls-Eye July 2008

• Sales Analytics Update: Salesforce.com Users Out-Perform Others Via On-Demand Forecasting; See Room for Improvement in Forecast Accuracy July 2008

• Sales Analytics Update: How do Direct and Indirect Sales Forces Deploy and Succeed with Sales Forecasting Solutions? July 2008

• Sales Analytics: Forecasting Success Through Improved Data Visibility June 2008

• Tailor-Made CRM: Best Practices in Customization, Configuration, and Integration May 2008

• Lead Scoring and Prioritization: The Path to Higher Conversion May 2008

Information on these and any other Aberdeen publications can be found at www.aberdeen.com.

Authors: Alex Jefferies, Senior Research Associate, Customer Management, [email protected]

Peter Ostrow, VP and Group Director, Customer Management, [email protected]

Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

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