Sales people knocked themselves out last year with a record number of representatives hitting their quotas, but that is still not good enough. The 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 percent of all forecasted deals is the lowest percentage. 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.
The most popular CRM tool cited in the survey continues to be sales collaboration software, with 62.9 percent of companies surveyed currently using this software and another 9.4 percent reporting plans to install it in 2011. The Field 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 percent of the survey base said they had deployed sales analytics or forecasting tools with another 3.3 percent 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. 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. 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. Field research shows that 40 percent 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 percent 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 percent 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.
Without formal and dynamic processes, even the best CRM 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. The findings 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 percent of companies surveyed said their management training programs needed improvement. Last year, that percentage jumped to 49.1 percent.
The findings also revealed some interesting benchmarking points around social CRM. They include:
-Among respondents 11 percent have determined social media is “mission critical’’ to their operations while another 20 percent 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.
From buying a car or choosing where to sit in a movie theatre to deciding on a vacation destination, decision making is everywhere. The consumer today has wide variety of choices and if companies do not have strong processes or processes that don’t go well with the CRM would definitely bring down the value of a CRM Tool. As the title reads CRM is not a magic portion yet it can do miracles if you have right portion of processes, people and technology in place. If you can dream it, You can do It.