Tag: metrics

Analysts don’t analyze the economic realities of sales enablement solutions

In ‘Is Sales Enablement just Lipstick on a Knowledge Management Pig?’ Gerhard Gschwandtner (@gerhard20) asked “What Exactly Are Sales Enablement Vendors Selling?”. Please make sure you see all the comments on the original post (from 29-Jul-2009) as a lot of the parties mentioned in the post responded. To address some of the gaps Gerhard identified in the text quoted below, Jeanne Hellman has written a case study of “implementing Sales Enablement in a complex, global company”. Contact her if you would like to get a copy.

“The noble purpose of Sales Enablement companies is to help sales organizations save time finding relevant information, create and organize sales content and create quick access to all experts across the enterprise.

It makes total sense. Salespeople can win more deals if they are better prepared. To back up this theory, IDC research shows that 33% of unsuccessful deals could have been won if the salesperson had been better informed or acted more client-oriented.

An even more important issue is the growing amount of time that salespeople spend searching for information to answer customer questions. What if a program could give salespeople exactly what they need to know so that they can transform information-chasing time into customer-chasing time? It all makes sense. I can picture the sales-enablement software programmers being obsessed with sales efficiency and sales effectiveness. But let’s take a look how the sales enablement vendors are selling their solution to you, the sales leader.

Vendor Pitches or Marketing Glitches?

Savo promises, “Never sell alone!” Does that hit a hot button for you? I don’t know many lonely salespeople. On another part of the SAVO site I read, “Clone top performers.” Excuse me! Why not promise, “Clone your Swiss bank account”?

Kadient’s Website isn’t shy about pitching the exact same theme on their home page: “What if all of your salespeople could sell like your top performers?” The promise continues, “With Kadient’s on-demand sales enablement application, you arm your sales team with the knowledge, messages and strategies they need to win at every stage of the customer’s buying cycle.” If they found the key to winning at every stage, how come Kadient isn’t a hugely successful company?

iCentera bills itself as a sales enablement company. Their pitch is a model of modesty: “Sales Enablement maximizes your sales organization’s ability to communicate through a central messaging vehicle.” The key benefit: “Close more business through more knowledgeable sales people.”

Ntara.com created a special sales enablement site with this teaser copy: “Ever feel like your salespeople don’t get it?” Here is the pitch: “N-tara’s sales enablement solutions equip your sales force with engaging, customer-ready content that is timely, relevant and in context to your customer’s needs.” The best part of their site is a “Guide to Enlightened Conversations”. It is engaging, interactive and it makes a lot of sense.

BizSphere is a European sales enablement vendor located in Wiesbaden, Germany, with offices in Toronto. The pitch: “Do you want your sellers to minimize preparation time and maximize quality time with your clients?” The key benefits: close more deals, increase average deal size, shorten your sales cycle. It is a clear and concise pitch.

Another vendor in the space is Salesforce.com which offers a competing solution to their AppExchange partners Kadient and SAVO.

Other vendors include Avitage.com (marketing automation and sales enablement) Streetsmarts.com (channel sales), Groupswim.com (team collaboration) and Salesforce.com

What Do The Industry Analysts Say About Sales Enablement?

Technology vendors often seek out the help of industry analysts, who lend a helping hand (for a small fee) with objective research that can help sales leaders choose among the competing solutions. When you go to the Websites of sales enablement vendors, you’ll see the same references to IDC and Forrester Research. On November 13th, 2008, Forrester conducted a teleconference entitled, Strategic Sales Enablement. For a $250 fee you could listen to their insights. The analysts defined sales enablement as

“a strategic, ongoing process that equips all client-facing employees with the ability to consistently and systematically have a valuable conversation with the right set of customer stakeholders at each stage of the customer’s problem-solving life cycle.”

If you want to decide for yourself if the paying attendees got their money’s worth, download the ppt at no charge (you need to sign in though).

Not to be outdone, IDC created a very insightful presentation in January of this year. Their definition of sales enablement:

“The delivery of the right information to the right person at the right time and in the right place, to assist moving a specific sales opportunity forward.”

IDC is a bit more generous with their Sales Enablement wisdom. They posted their ppt on Slideshare.com. They scored more than 1,600 views to date.

Gartner defines sales enablement as

“[providing] the sales force with communications programs and tools to drive activity and enhanced productivity.”

On one side we have vendor hype, on the other side we have analyst reasoning. What does this add up to so far? The vendors write the music, the analysts sing the theme song: Here is the category, here are the vendors, here is who is cool, and here is who made it to the magic quadrant.

Here Is What’s Missing:

Analysts don’t tell you that reality is always a step or two ahead of their definitions.

Analysts don’t analyze the economic realities of a sales enablement solution. There are no ROI studies nor objective research that compares the effectiveness of SAVO vs. Kadient vs. iCentera.

Analysts don’t create user studies that tell you more about the information infrastructure, the flaws with the search functions, the project abandon rate by vendor, the average user acceptance, the obsolescence factor of the data, the amount of information that’s missing just because nobody knows where all the useful data is located, the amount of time it takes to train (and retrain) salespeople, or the enduser satisfaction level with the graphical interface (some of the designs are an insult to the eye).

The vendors want you to believe that their sales enablement tools allow you to harness the collective intelligence of your sales organization. It sounds great, but who in the world can define and measure what that means? How do we know what best practices can positively influence sales productivity? Who decides what not to make available (due to security issues)? Most salespeople can’t write coherently, and most of the top salespeople can’t articulate what makes them successful. So how do we really capture sales intelligence?

What’s the real cost of running a sales enablement solution? Is there a need for editorial staff to help create and edit content, to set up template standards and apply them?

How much of a company’s “best practices” and sales intelligence is reusable? If I am a salesrep, getting ready for a presentation to Boeing in Seattle, and I download a presentation that one of my peers created for Airbus, how much data can I reuse, and how much do I have to create from scratch?

Sales enablement companies are NOT too savvy when it comes to social media. Search for Kadient on Twitter – zero results. iCentera has 43 followers, SAVO has 391, BizSphere is the leader with 441 followers. [Post was written on 07/29/2009]

The point is this: Social media tools allow people to connect with lightning speed. If Jill in Jackson wants a ppt presentation on jackhammers, I can tweet and send her a link in seconds.

Here is my biggest concern:
Sales enablement companies seem stuck in the “delay economy,” while Twitter is moving information management into the real-time economy.

How Future-Proof Is Sales Enablement?

“What sales incentives are best for salespeople age 20-30?” Someone in England, who said, “Technology, like iPods.”

Please read the comments and leave your own comment on the original post.

The importance of video in Sales 2.0

Chad Levitt wrote the great blog post ‘Next Generation Sales Reps Use Video To Win’, on February 7th, 2009. Mike Meisner commented:

“[…] I don’t see many […] posts out there about the importance of video in web/sales 2.0. People would rather casually watch a demo/video than have to attend a scheduled presentation or even a webinar […]. It’s the ultimate in providing accessible information. […]”

From Chad’s post:

“[…] The next generation of sales reps are using technology to grab mindshare through surrounding their prospects with helpful content. They do this without being intrusive and let the customer engage at their own pace. The content you can surround your prospect with is endless.

Video Presentations are the easiest way to surround your customer

[…] sites like YouTube, Vimeo and Viddler allow you to store and share your videos easily.  […] Once your video presentations are created you can begin to e-mail your customers links to your presentations and create many types of interesting campaigns. […] By using video, you give your presentation more reach and increase the chances of it being watched again. Your prospect can review the parts that were important to them on their own time in their comfort zone. And prospects make the buying decision in their comfort zone first and then tell you about it later. […]

Video presentations are less intrusive than standing in front of your customer delivering a live presentation. The world is moving towards less intrusive ways of connecting with people and you can get ahead of the pack by developing videos of your sales presentations. Your video presentation will also help reinforce the message you delivered in your live presentation and increase the chances of you making the sale. […]”

Obviously the text above has been written from a sales perspective. If you are in marketing you should google the term ‘social media release’ as a video should be a part of every social media press release. The nice thing about having your video uploaded to a public site is that everyone can email the link to others and once in a while even in a b2b settings things go viral.

Those of you who have posted videos on YouTube might know this already; the ‘Insights’ part where the owner of a video can track metrics around it has been improved by Google. The following is a screen shot for a video I posted during my studies and for me it is interesting to observe who is embedding it / where it gets how many views from and which audiences I reach:

video insights

When it comes to Sales Enablement, it goes without saying how important it is to not only provide sales people with streaming versions of videos but to also provide downloadable versions of these videos in the Sales Enablement application/site. That ensures that the sales people can screen high quality video in front of the customer even in situations without access to the intranet or internet.

Metrics to measure around a deal

The blog post ‘Sales people do not like to be tracked, measured or accounted for against anything other than quota’ started the longest discussion in the comments this blog as seen so far. Whilst you should check out all the comments, I would like to highlight the one from Bryan Karp (@midnitecoder). He also posted it to his own blog www.bryankarp.com. I agree with him that the following metrics are important but I am sure sales people would not like to be tracked against all of them:

“Yes, Sales people must be measured by much more than just their quota. I run the Pre-Sales and Analytics department where I work and engage with multiple internal sales people and our external channel partners. I spend a good percentage of my time reviewing and analyzing metrics for various aspects of the business and metrics are critical, hence my view “Unless you can measure something, your attempts at managing it, and maintaining or improving its performance, will be unscientific at best.” by Lord Kelvin.  So, yes sales must be tracked and measured on each aspect of the business, and while quota is certainly an important aspect in what sales people need to be measured by it can by no means be the only measure.

I’ll walk through each of the points, but sales people should also be measured by the

  • ROI of the deal
  • Lead to close time
  • Customer satisfaction after the deal is closed
  • Accurate population of data within the CRM
  • Forecast-to-actual sales
  • % Penetration within account
  • % Conversion rate by lead type (hot/cold)
  • Time per sales stage
  • Attrition rate per sales stage
  • Average deal size
  • Ramp time

Metric: ROI of the deal – It does no good for a deal to be sold if the return is going to take years, or there will never be a return because the contract ends before a return can be recognized. Far too many times I have seen in companies where the sales rep pushes for a deal to meet their quota without regard for the level-of-effort required by services, or support after the deal is closed. This then kills any margin left.

Metric: Lead to close time – While not a metric to hold a rep 100% accountable for it is a key metric. Imagine if you knew for all your deals the typical lead to close time from when it entered the queue from BusDev and/or marketing to when it was closed. This can enhance your visibility and forecasting capability. Additionally it can help highlight individuals how might need additional training and who might be able to help them.

Metric: Customer satisfaction after deal closing – This ties back to ROI and later in the account when you try to get a reference. If you have a true ‘Cassius the closer – character from Selling the Wheel’ they worry about getting the deal closed, not always what is required afterwards. This can lead a bad taste in the client’s mouth and put the deployment team in a precarious situation.

Metric: Accurate and complete data population within the CRM – A no brainer! I have heard the reasons why it isn’t done from various sales people and it ceases to amaze me.

Metric: Actual-to-Forecasted sales per time period – this does tie to quota, but really it ties closer to how well the rep does at forecasting. Additionally if you track this over time companies can increase their visibility in corporate forecasting, and also detect problems earlier. If you detect a sales person is historically off by 10% you can adjust in your corporate forecasts and help them with training to improve. If you see a one-time drop you can keep an eye on them for the next time period vs. trying to guess what happened last reporting period. Seems like a no-brainer, but as I’ve talked to people it seems this metric is never reported on or tracked.

Metric: % Penetration within account – In most sales engagements there are specific roles that need to be identified. Where deals can go bad pre or post deal closing can be attributed to not having fully penetrated the account to find all the key players.

Metric: % Conversion rate by lead type (hot/cold) – Simple measurement by resource to determine what % of leads they are given convert.

Metric: Time per sales stage – Quickly highlights for management and sales person if displayed properly deals that need attention. These would be the deals where it is taking significantly longer in the current deal stage vs. the average. Additionally it helps to identify problem spots if it is tracked. We measured every stage in one of pre-sales efforts and were able to quickly identify key areas for improvement, and develop a longer-term plan. By doing this we reduced our step within the sales stage thereby helping the sales person move the deal faster. My point is…IF you track the time per stage by deal you can quickly find areas that need improvement and focus a team to improve the methodology.

Metric: Attrition rate per sales stage – Where are deals falling out of the sales process and of equal importance is why?

Metric: Average deal size – Easy metric to measure, but if you measure properly you can get a good feel for the number of deals you’ll need to close when doing next year’s budget.

Metric: Ramp time – Sales people just like everyone else need to be measured on how long it takes them to be self-sufficient. While most have the sales background every company has a unique value proposition, methodology and of course product / service. If a particular rep is taking longer than average you can work with them to close the gap with training or determine if you need to make a change.

I’m sure there are other metrics that can and should be measured, but the list above are my thoughts. Again let me know if you think I’m off base, or just plain missed some key metrics.

Thanks,
Bryan”

The metric ‘ROI of the deal’ could probably even be split in ‘Expenses necessary to close this deal / deal size’ and ‘% price was discounted by’.

business case data for sales enablement solutions

This work in progress blog post collects data that Sales Enablement Solutions vendors use to make business cases.

This work in progress blog post collects data that Sales Enablement Solutions vendors use to make business cases.

The first one is from Lee Levitt (former Director, Sales Advisory Practice; IDC) in response to the question “Which percentage of what marketing teams make available ends up being used by sales?”:

November 22, 2010: “In researching this question two years ago at IDC, we found that between 50 and 90% of all marketing provided collateral goes unused. Sales people can’t find the right stuff, it’s too inwardly focused, it’s not tailored to client’s specific needs, sales people got a copy of something a buddy used that worked…

Good sales and marketing alignment can substantially reduce this vast wastage and help sales people to be more productive. It requires that sales and marketing executives together identify target markets, specific business issues, goals, etc., and jointly develop the plan to address the opportunity. The deliverables should then support that plan.”

Lee Levitt also wrote the following comment on July 29, 2009:

“[…] Companies are reporting results with sales enablement. American Express, for instance, indicated that Time-to-Revenue for new reps dropped from months to weeks after they implemented a leading SE environment. They reported this at an IDC Sales and Marketing summit in 2008.

For another large IDC client, we identified a 15% increase in sales productivity after the company implemented some basic sales enablement processes, a small subset of the possibilities in that multibillion dollar organization.

While it’s still early in the sales enablement game, virtually every midsize or larger company today does something in the area of sales enablement, typically based on internal processes and maybe some intranet or SharePoint support.

A very small handful of companies, maybe a thousand in total, have taken a focused approach at moving their sales enablement activities to what IDC refers to as the third generation of sales enablement.

In these early markets, innovators and early adopters don’t care about ROI. That’s for the late majority to worry about. They’re looking for competitive advantage…and they’re finding it. When companies seek to address specific business challenges (new rep support, competitive response, customer intelligence, campaign support, etc), they find substantial improvements in sales productivity and customer satisfaction.

We’ve only scratched the surface with sales enablement. We believe that the potential for sales productivity improvement is on the order of 30-50%, or more, particularly if employed with the other four levers of sales productivity and properly measured.

And the net savings to the organization may be substantial. The typical technology firm spends more $12,000 per rep per year in marketing collateral development, with the vast majority of that expense going to waste. Firms that take an outside-in approach in sales asset development will find this cost dropping by an order of magnitude.

There’s ROI for you – higher sales productivity and lower costs.”

This one is from Bruce A. Brien’s blog post “The core problem with sales enablement”, from July 9, 2009:

“[…] sample company does $10 million in annual revenue with a 40% close ratio and an average deal size of $100k on a 90 day sales cycle.

  • That means that the 5 sales reps are each closing 20 deals per year while working 50.  They are focused on 12-15 deals at a time.
  • If our sales enablement capabilities cause a 3% drop in our overall effectiveness, our sales people will only be working on 48 deals [each] and closing only 18 of them for an average price of just $97k. [18 * $97k * 5 sales people] The result is a revenue picture of $8.7 million or a drop of about 13%.
  • Assuming you have fixed costs in the 25% range and an operating profit of 15%, profits would drop by a whopping 47%.  The compounding effect can be devastating.  A 3% drop in sales effectiveness can easily result in the loss of half of your profits.
  • You could re-coup your lost revenues by hiring another sales rep at a cost of $150k and be faced with the same problem next year when your efficiencies drop further or you could address the core of the problem and shore up each part of your sales enablement platform for similar monies while building a solid foundation for future growth.”

Many Sales Enablement and Sales 2.0 start-ups are citing Forrester’s Scott Santucci’s ‘Uncovering The Hidden Costs Of Sales Support’ from April 13, 2009 to make a business case for their services:

“Technology vendors are spending, on average, 19% of their selling, general, and administrative (SG&A) costs or $135,262 per quota-carrying salesperson in support-related activities. Few are aware of this enormous amount because the costs are hidden — tucked away in many different budgets dispersed throughout the organization. Corralling these random acts of sales support presents a golden opportunity. By creating a strategic sales enablement program, marketers can drive significant cost savings in the short term, while improving their companies’ competitiveness to thrive in the new growth cycle.”

On July 7, 2009 Michael Gerard (VP, Research for IDC’s Executive Advisory Group) posted on his blog:

“[…] IDC research shows that over 40% of all marketing assets handed over to sales are not in use today (IDC’s Best Practices in Sales Enablement – Content and Marketing (to be published end of July)). This includes assets that have been developed for sales, channels, prospects and current customers. IDC estimates that at least 30% of companies’ marketing investment, including program and people spend, is dedicated to creating content and marketing assets. Clearly, marketers can leverage cost reduction opportunities if they take the time to improve their content management process and technologies.

– “Our content is all over the place…a more formalized content portal is being created to get our sales team the most relevant materials when they need them.”
– “…marketing is funding an improved marketing asset management system and we are hoping to achieve 3% – 5% reduction/reallocation of spend on annual asset development and improved production efficiencies.” (improvements in production efficiency, reduced program time-to-market, and reduced re-work).

In the next several weeks, IDC will be publishing a sales enablement report highlighting best practices in marketing content management from a lifecycle management, technology, and measurement perspective. Detailed company case studies will be also be included. […]”

In 2004 it was IDC’s ‘The Cost of Information Tasks to the Enterprise’:

Whitepaper IDC Hidden Costs 0405

In its February 2010 issue CRM magazine looked at Sales Enablement Tools:

“[…] THE NUMBERS

  • $135,262 is spent, on average, in support costs per year for each salesperson.
  • 7 hours per week is what the average salesperson spends looking for relevant information to prepare for sales calls.
  • 50 percent of the information is pushed through email.
  • 10 percent is “made available in a useful format.”

Source: Forrester Research & IDC Sales Advisory Service“

I have not double checked the following numbers I found in the post ‘Sales people who research cost you big time!’:

“[…] So, what is the actual hourly value for a B2B salesperson? We’ve developed an excel calculator to help do the math. Let’s use a typical experienced B2B enterprise salesperson at a software company and apply these sample figures:

  • Annual compensation (at plan, or meeting quota): $200,000
  • Benefits Paid (20% of a 70K salary): $14,000
  • Annual Quota: $2 million
  • Include 2 weeks vacation and holidays

This salesperson’s true “hourly value” is $1,198!

For companies with higher quotas (I’ve seen annual quota’s as high as $14 million), this figure is even higher!

If you’d like to figure out your own salespeople’s hourly value, send me an email at silvia@industrygems.com and I will email you the calculator.

The next time you see your salespeople doing research, take interest. Using salespeople for anything other than selling, negatively affects your bottom-line. Find ways to remove those activities from their daily to-do list. It could be costing you over $1,000 an hour! Your sales people must focus on the thing they do best… selling!”

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