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Sales can’t thrive on CRM tools alone

Sales teams need dynamic processes as much as CRM tools to boost win rates. A recent survey from CSO Insights offers intriguing benchmarking data.

Sales people knocked themselves out last year with a record number of representatives hitting their quotas, according to the just-released annual Sales Performance Optimization and Sales Management Optimization reports from CSO Insights.

But that is still not good enough.

CSO Insights research shows that while individual reps did better, companies’ overall win rates -- the actual sales wins from forecasted deals -- were flat in 2010, compared with the previous year. In fact, the 2010 win rate of 44.8% of all forecasted deals is the lowest percentage CSO Insights has seen since it began surveying sales managers 17 years ago, said managing partner Barry Trailer.

“More reps were making their quota, but it’s been done by sheer will,’’ Trailer said.

The sales consultancy, based jointly in Denver and San Francisco, surveyed more than 850 companies this year, up from the 625 companies that participated in last year’s survey.

The data shows that while reps may be working harder, sales teams are not necessarily working smarter. Companies continue to deploy new CRM tools, but they often do not have the processes in place to maximize the benefits of this software, according to the report.

The most popular CRM tool cited in the survey continues to be sales collaboration software, with 62.9% of companies surveyed currently using this software and another 9.4% reporting plans to install it in 2011. The CSO Insights research shows that both direct and inside sales groups are increasingly using these tools to connect with customers and conduct virtual selling. Meanwhile, the data shows that while companies are deploying analytical tools, such deployments still trail collaboration tools. For example, 11% of the survey base said they had deployed sales analytics or forecasting tools with another 3.3% saying they planned to do so this year.

CRM tools no panacea

Yet sales managers still need to reckon with the decline in win rates. A company’s sales forecast and win rates are the result of managers and reps working together to determine which deals are viable. If the forecasts are not accurate, but reps are meeting quotas, then the problem sits primarily in the process, Trailer said. Without formal processes that are supported by the right CRM tools, companies will be hard-pressed to get those win rates up.

Beyond the lower win rate in 2010, there was an increase in the number of deals tagged as “no decision,’’ meaning more targeted deals were left languishing when compared with previous years.

Trailer said that if companies look to their sales processes, they might not like what they see. More than half of the companies surveyed had loosely defined processes or no formal processes at all. CSO Insights research shows that 40% of companies report having an “informal’’ process when it comes to sales, meaning there may be a process but no one is monitoring or enforcing it.

About 16% consider their process “random,’’ meaning reps can craft their own methods. Nearly one-fourth of the respondents said they have a formal process with which they must comply. In this scenario the process is periodically assessed. Finally, about 20% report working with a dynamic process, which is really the ultimate goal. In a dynamic environment, salespeople are required to follow a formal process that is continually monitored and modified as needed.

Trailer noted that without formal and dynamic processes, even the best software tools and analytics will deliver limited results. Something as basic as different usage of sales terminology can mess up forecasting. For example, sales and marketing people may have different views on what makes a “qualified lead.’’ If the data going into forecasting tools isn’t consistent, then sales teams will not realize the intended benefits.

For managers, it is a tall order to get formal and dynamic processes in place, and chances are they will have even less time to do so. Sales managers can expect to feel additional pressures in 2011. CSO Insights data shows managers, on average, will have an additional .5 rep added to their teams this year as the manager-to-sales rep ratio increases from 6 to 1 to 6.44 to 1. Additionally, the report shows reps are working from increasingly far-flung geographic network, taxing a manager’s ability to mentor and coach his staff.

What’s more, sales managers, while expected to mentor and train their growing and dispersed teams, are actually getting less mentoring and training for themselves. In 2009, about 40% of companies surveyed said their management training programs needed improvement. Last year, that percentage jumped to 49.1%.

The CSO Insights survey also revealed some interesting benchmarking points around social CRM. They include:

  • Among respondents 11% have determined social media is “mission critical’’ to their operations while another 20% consider it “very important.’’
  • More business-to-consumer operations have reported concrete successes with social CRM than their peers in the business-to-business space.

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