Rise of the Sales Operations Function

Michael Gerard

7/27/10

Sales costs are outpacing revenue growth, sales organizations are increasing in complexity, and IT buyers continue to indicate that sales reps are out of touch with their needs. What actions should sales executives take in response to this difficult environment? One of your first steps should be to expand the roles and responsibilities of your sales operations (SO) team. This team’s responsibilities should no longer be limited to the more tactical roles of sales IT maintenance, order management and sales administration. If you’re striving to create a best-in-class sales organization, then your SO team must be in a position to drive productivity changes across your key process areas, taking on a more strategic role.

Some starting points for enabling the rise of your sales operations team include addressing the following questions:

• What should sales operations be responsible for?

IDC defines the sales operations function as follows: Global and local sales staff responsible for developing and orchestrating the processes and systems required to enable an efficient and effective sales organization: strategic planning, financial management, sales performance measurement, sales infrastructure, marketing and sales alignment, and overall sales excellence. The sales operations function encompasses: Sales strategy and planning, sales forecasting, sales analytics, sales compensation, sales enablement, quote-to-order sales operations and sales automation infrastructure

• How big should my sales operations team be? IDC resource allocation guidance is for total SO staff to represent approximately 10-15% of total sales staff, with centralized SO staff representing approximately 1/4 to 1/3 of total SO staff.
• How do I determine where to start in transitioning my current SO team? Assess your team’s current gaps and weaknesses, which will provide valuable information toward developing the subsequent strategy for improvement. Clients of IDC’s Sales Advisory Service can leverage IDC’s Sales Operations Maturity Matrix to aid this process, as well as the following figure.
• What’s the ideal organizational structure for a global SO team? My typical consultative answer would be, ‘it depends’; but let’s get a bit more prescriptive than that. The success of the next-generation SO team will depend upon establishing a center of excellence organizational structure. A few key facets of this team include establishing a global VP of sales operations reporting to the global sales executive, a global SO team driving consistent process and technology changes across the organization, and alignment with SO teams and other internal groups across the world collaborating on improved sales productivity.
• Does my current SO team have the skill-sets and competencies to be more strategic? The SO team skill sets and competencies must be improved to enable the transition to more of a strategic than a tactical role. In addition to developing the ability to improve key processes, the SO team must also be in a position to spearhead next-generation technologies that will be key enablers of improved sales productivity (e.g., automation of sales enablement and customer intelligence for sales).
• How do I measure the impact of my sales operations team on sales productivity? Establish a clear set of objectives and quantitative and qualitative metrics to assess your SO team’s impact on the sales organization. Leverage benchmarks data from IDC’s Sales Productivity study to aid this process. (Contact me at mgerard@idc.com to complete our 2010 survey and get access to industry-level productivity benchmarks data)

The sales operations team must be the key driver and catalyst for increased productivity across the sales organization, setting the vision for its future and maintaining the path toward this vision. However, significant organizational and structural changes are required with sales operations teams to achieve this goal. With the right strategy and individuals in place, sales operations teams have the potential to be the catalyst for establishing a best-in-class, agile sales organization.

You’re Spending Too Much Time in Front of Prospects

Michael Gerard

6/23/10

What? How can we ever spend too much time in front of our buyers? Well, if your reps aren’t well-prepared, then the point of diminishing returns for prospect interactions will certainly be hit quickly. And this is what IT buyers are saying about their vendors based upon IDC’s 2010 Buyer Experience Study:

• Over 50% of sales reps are insufficiently prepared for customer meetings
• 47% of buyers are dissatisfied with the quality and value of information from IT vendors
• Sales reps are unable to put aside the generic sales pitch to have deeper conversations with their prospects/customers
• Sales reps don’t know when to bring the right people to the table (i.e., from their organization) at the right time

And what are sales organizations plans for customer interactions in the next 6 to 12 months?

• “We need to get our sales reps to spend more time in front of prospects.”
• Sales organizations want to increase the time reps spend directly interacting with customers by 20%. [IDC's 2010 Sales Barometer study]

Sounds like we’re forgetting about the age old saying “work smarter, not harder”, not to mention an inability to listen to the voice of the customer.

Part of working smarter is investing more time and resources into helping sales reps better prepare for customer interactions. IDC research indicates that only 17% of rep time is spent on activities related to ‘preparing for customer interaction’. We can argue about the value of data that comes from time motion studies that are the source of this type of data or even how much time a rep should really spend here, however, the main point is that the quality of time spent preparing for customer interaction is poor. This provides an ideal opportunity to improve sales productivity.

Where to start? Talent management and sales methodology are certainly two areas to evaluate. Other areas of opportunity and investment that have historically been neglected include sales enablement and customer intelligence. Although we have a long way to go, much progress has been made in the past 12-18 months in the area of sales enablement. Customer intelligence (CI), on the other hand, has yet to leave the starting blocks.

Some questions to ask regarding your CI capabilities include:

• Who is accountable for CI in your organization? The importance of CI to the sales organization requires sales operations to take a leading role in ensuring that this productivity lever receives the attention that it deserves.
• Is there one source of truth for sales reps to access customer purchase and relationship history?
• How easy is it for sales reps to leverage CI information as part of their standard sales process – both internally developed and externally sourced information? (e.g., CI embedded within your SFA of record)
• Are you leveraging more sophisticated CI analysis? (e.g., share-of-wallet information, up-sell tools)

Certainly more to come from IDC’s Sales Advisory Service in these areas as we complete our annual benchmarks study and other sales operations research. Contact me to participate in our research. 

Does it Feel Like a Media Renaissance?

I was recently at breakfast, a sort of meeting of the minds involving a media company, technology companies, market experts, and CEOs of start ups, arranged by a venture capital firm. Someone commented (and yes I wish it had been my statement) “do you think Leonardo knew he was part of the Renaissance at the time?”

That single question pretty much redirected the entire conversation as the table began to talk excitedly about the recent and likely coming developments in the technology and media spaces.

So if history is truly a guide to the future then I thought it made sense to look back so I could do a better job of looking ahead.

The term “Renaissance” means “new birth” and referred to the revival of art and learning that occurred in Europe between the 14th and 17th centuries. This period was characterized by the prolific and fabulous works of art by Da Vinci, Michelaneglo, and Raphael to name but a few. A few factors spurred this new interest in art and learning: the black death wiped out most of the peasantry in western Europe giving rise to a new middle class and in 1454 The Gutenberg Bible was published.

So did Leonardo Da Vinci, Michelangelo, and Raphael believe that they were in The Renaissance at the time? I don’t think so, but some of the parallels to today are fascinating.

Back to Gutenberg, the printing press revolutionized learning and the flow of information. The Renaissance press could print 3600 pages a day compared to 40 by hand printing and a few pages when copied by hand. By 1500 there were 20 million printed volumes in circulation and that number jumped in the 16th century to between 150-200 million volumes. It was not until the 1700’s that the first newspapers arrived and then 1815-1820 when The Times of London became the first paper to print on both sides of a page, producing a cheaper product that more people could afford. In 1830 the first penny press newspaper arrived that cost 1/6th the price of other newspapers.

Does any of this sound familiar to today’s media and technology worlds? So maybe the black death is a bit extreme, but the publishing industry generally has been hit over the head again and again: first the Internet, then the rise of search and Google, and finally, a devastating recession. This leaves many of those in media wondering when will it get at least a little bit better. Everybody should know that it is never to going to be as it once was in the golden days of print with organized information dissemination tied to a steady stream of profits. But how many of us feel like we are in a period of Renaissance?

It took almost 400 years from the arrival of the printing press to the production of newspapers that the masses could afford. For context it took radio 38 years to hit 50 million listeners, TV 13 years, Internet four years, the iPod three years, and Facebook added 100 million users in nine months. We are living in a period of unheralded change and transformation. People now access content in real time all the time whether on the Internet, the mobile Internet or via an application.

It was only three years ago that the iPhone arrived and turned the smartphone and mobile Internet experience on its head: suddenly content looked great on a phone. Then came the applications that provide rich user experiences and now some 200 thousand apps exist on the Apple platform alone. Recently, Apple introduced another revolutionary computing and communication device with the iPad. It’s a game changer.

Every major media company is excited by this development and the slew of tablet devices from the Nook to the expected competing devices from PC makers. Mobile changes the user experience with content that supplements the wired web.

All of these rapid fire developments revolve around content and users who are connected almost ubiquitously to infinte streams of information and rich multimedia. It took 400 years for information to be democratized during the Renaissance. In less than 20 years since the advent of the Internet media and technology have combined to create a world of democratized media, learning, and creativity.

Content in this new world is once again King, but the delivery mechanisms keep changing. The King is dead, long live the King.

Despite all of the challenges of the past two decades, will we look back and reference this period as a media Renaissance?

Minsider columnist Matthew Yorke is president, IDG Strategic Marketing Services.

1-800-Flowers Social Ads See Phenomenal CTR Lift

Last month, SocialMedia.com created an engaging social ad unit for 1-800-Flowers. Kevin Ranford, Director of Web Marketing at 1-800-Flowers.com explained:

“You need to get folks engaged. We have had some significant wins with our social media programs, so how do you get that type and level of interaction in our various ad buys? When SocialMedia.com approached us, we thought it was a great way to achieve this.”

SocialMedia.com’s custom social ad combined the performance power of Social Overlay with the branding power of a Twitter stream. The Social Overlay displayed a dynamic and targeted social message relevant to each user, and the Twitter stream showed real messages about 1-800-Flowers, from real users on Twitter. Users could navigate between the two screens in the ad unit. Results show significant CTR lift when comparing the original ad unit to the Overlay ad unit and the Overlay+Twitter ad unit.

Results:

InternetRetailer.com wrote more about this successful campaign in a May article which can be downloaded here (pdf).

Performing Loss Reviews: A Look in the Mirror

Michael Gerard

5/18/10

Many companies take the time to reflect back on their key sales wins; however, few companies have a consistent process in place to learn from their losses. That is, achieving a true understanding of why recent deals were lost, what were the root causes for these losses, and what actions can be taken from a strategic and tactical perspective to minimize these types of losses in the future. Based upon IDC’s recent Buyer Experience Study, it was found that over 2/3 of IT buyers switch vendors due to a poor relationship with the sales teams or due to a better relationship with another vendor. This type of information is important to gather to not only understand what went wrong, but to also ensure that losses like these do not happen again. Within IDC’s Sales Advisory Practice, we recently spoke to a handful of large IT companies to understand what they’re doing regarding loss reviews. Here are just a few of the responses we received:

Loss reviews conducted directly by the sales organization:

•  All lost opportunities over $100k get looked at on a weekly basis through their standard CRM. Specifically, management picks 2 wins and 2 losses weekly directly from the CRM. Management then goes in to extract and populate header data from the CRM and sends a questionnaire directly to the sales reps to fill out. Some of the questions on the questionnaire include: 1) What were the reasons for the win/loss? 2) What were our competitor’s top advantages/disadvantages for selling against us? 3) What can we improve upon in the future? On a weekly basis, this data is then provided to the CEO. The challenge, as with most data collected directly from the sales teams, is to interpret what are in many cases very biased responses. (Source: Multi-Billion Dollar Telecommunications Company)
• When a loss occurs, the rep marks an opportunity as lost in the CRM system. They are also forced to specify a reason. Each week, there is a report that is published outlining significant deals that were lost that goes up to the VP of Sales Ops. The VP of Sales Ops relies on Sales Managers to inspect the information for accuracy. Once a quarter, the VP of Sales Ops has a meeting with the sales leaders to go over the larger losses in detail. By utilizing the sales leaders, the VP of Sales Ops can decrease the subjectivity of the responses. (Source: Billion Dollar IT Services Company)
•  Loss reviews are performed formally in an internal quarterly business review (QBR). Each rep prepares a slide to discuss a key loss in the previous/current quarter. This allows for open dialogue between participants in the QBR. Participants may include Sales Managers/Directors, Technical Personnel, and other sales team members. (Source: Multi-Billion Dollar HW Company)

Leveraging an independent group (i.e., outside of sales) for loss review of large opportunities:

• Internal Group: The Competitor Analysis Group at one company we spoke to has several responsibilities, including understanding what the market is all about, how effective internal products/services are in the market, benchmarking themselves against their competition, as well as understanding the customer decision making process. This internal group is responsible for getting on the phone and talking to customers about recent losses. All output is documented and goes into a report that is produced monthly. (Source: Multi-Billion Dollar Telecommunications Company)
• External Group: A best practice would be to perform loss reviews by not only gathering data from the sales teams, but also having an independent third party interview customers regarding recent losses. This would help reduce the challenge of trying to interpret sales’ biased input (e.g., no budget, no real need, wrong timing, etc), and thereby help the company with identification of root causes and development of a better improvement plan.

We were pleased to see that the companies we spoke to have a strategy in place to review key sales losses. While the losses may be unfortunate, learning from these losses can help prevent their recurrence in the future and improve the sales teams’ overall productivity. [Michael Gerard and Irina Zvagelsky]

MIT Sloan’s 2010 Sales Conference Highlights

Michael Gerard

I recently attended MIT Sloan’s annual Sales Conference. A good BtoB sales event overall, with something for the value-based sales folks, the volume-based sales folks and managers and entrepreneurs just starting to think about their sales strategy. Here are just a few of my take-aways from the sessions that I attended:

• Polly Sumner, Chief Adoption Officer, Salesforce.com: Polly provided a good overview of key success factors for today’s sales organizations:
  • “Our sales people that we hire, in fact, all of our employees must be evangelists.”
  • “You must focus on stories about your customers’ experiences with your products” [Customer intelligence and sales enablement are certainly key ingredients to equipping your sales force with this type of information.]
  • As Salesforce.com tracks revenue, pipeline metrics and other metrics across their sales teams, they’ve identified “breakpoints” to identify when they should shift resources. (e.g., If inventory within the earlier stages of their pipeline are low, they will evaluate the need for greater investment in lead generation)
  • Track competitive win rates (e.g., “top 10 competitive wins”) (MG. . . she didn’t mention loss reviews (e.g., review losses at your sales review meetings, have your CI team conduct loss reviews))
  • “We have success seminars for our sales people in order to present and discuss the results of recent Salesforce.com wins. This helps to motivate the sales teams as well as providing reps with the opportunity to learn from their peers.” (MG. . . think tribal knowledge)

• Bill Aulet, MIT Entrepreneurship Center, moderated a panel on how the largest and best organizations optimize their sales organizations (panelists: Cisco, Microsoft, Oracle, IBM)
  • “The importance of the incentive compensation strategy cannot be underestimated.” (MG. . . especially in a complex organization with many overlay teams and multiple products that can address similar solutions)
  • What if you have multiple products in an organization that can solve the same business need? (i.e., competition within your organization)
    • Oracle: The key account manager manages the strategy, minimizing risk to the customer and maximizing account success and value provided to the customer
    • Microsoft: Give the customer the options and collaborate with them to identify what’s best for their business economically and what best aligns with their business. (avoid impact of Microsoft’s internal politics on the customer)
    • Cisco: Similar to Oracle, the account manager controls the strategy-“one throat to choke”.
  • What do you do for on-board training of new hires
    • Cisco: No sales school or set training for on-boarding new hires.
    • Microsoft: New hire readiness strategy includes 1 to 2 months online program – ~30 hours total; 20% of training from mentor, 70% OTJ training; 10% classroom (new hire)
    • Oracle: 1 week new hire training in-person (“tribal knowledge is critical for us, therefore, that first week is in-person”); many tools provided to reps that allow self-service training;

• Connecting with Leads – Craig Valentine, Motivational Speaker and Speech Coach
  • Craig had some great tips to share regarding how to better connect with leads by using storytelling. Here are just a few of the words of wisdom from Craig:
    • Craig had a good storytelling model – click here for details
    • “Always sell the belief before the relief”
    • “Never sell a product, always sell a result”
    • “Too many speakers try to get across too much info. in too short amount of time”
    • And a great tip for working with customers, managing your subordinates or working with your peers… “When you make others visible, they make you valuable”

My Next Marketing Career

Rich Vancil

The future belongs to marketing specialists, not generalists.

If I were starting my B2B marketing career today I would think about becoming a specialist in one of two areas. These are areas of marketing execution and measurement that may seem narrow, but will be deep enough to be the foundation for a specialized career. Narrow and deep is the key to success. Be the one person at your company that really knows how to provide:

1) “Forensics”. Be the specialist in how to data-mine the activity inside a B2B sales force automation system. Become your company’s expert in turning those data into analysis, and then turn the analysis into actions on how to change the marketing activity that impacts all phases of that sales pipeline.

OR (not AND !)

2) “Measurement Agility”. The traditional execution of a marketing program or campaign follows a long arc of time from concept to content to production to media execution to response and to results. Digital and social media are dramatically shortening that arc and this brings a world of opportunity for more agile measurement and response. Become your company’s specialist on rapid-time, real-time measurement and adaptation.

Nielsen/Facebook Study: Social Ads Perform Better

April 20, 2010 by Katie Smillie

Nielsen and Facebook just released a collaborative study: Understanding the Value of a Social Media Impression. The study surveyed over 800,000 Facebook users and results show an increase in ad recall, brand awareness, and purchase intent when users see friends who have become fans of the brand in the ad. This is compelling data that backs up the main principle upon which SocialMedia.com was founded, which is: social ads perform better because they are a more personal, useful, and trusted form of advertising.

The research also revealed the high impact of campaigns that leverage a combination of paid media and earned media (i.e. ads drive users to become Facebook fans, and in turn users who become fans drive their friends to become fans). This type of social ad strategy is great because the positive effects of the campaign can be felt months after the campaign is over.

SocialMedia.com’s own experience and research has shown what the Nielsen study also demonstrates. A 2009 SocialMedia.com/ Dynamic Logic study on social advertising reveals significant attitudinal lift across very similar categories. In particular we saw increases in brand awareness, brand favorability, and purchase intent among groups shown a social ad versus a non-social ad.

So yes, the study suggests that advertisers should consider social ads on Facebook, but advertisers should also be aware that social ads and their benefits don’t have to be limited to social networking sites. SocialMedia.com lets brands reap the benefits of social advertising beyond Facebook in 3 majors ways:

1. For every action that a user can take on a social network (share, like, rate, comment, consume, etc) we enable users to take the same action in social ads, creating a more engaging social experience. People want to share, because the more you share the more credibility you gain in the social sphere.
2. Similar to Facebook ads, users’ actions in our ads get pushed out into their social networks expanding a brand’s reach and creating real, organic messages about brands that appear in users’ news feeds, twitter streams, check-ins, etc.
3. Our technology discovers actions users take (not just in the ad unit, but also organically on social networks) and transforms those actions and messages into authentic sponsored content, feeding social data back into the ad. Because we gather and organize third party social data (Twitter, Facebook, Yelp, Foursquare, etc) into a single technology engine, we offer the most complete social advertising solution that can’t be found anywhere else, even on Facebook.

And as I said in my comment on AdAge’s article on the study, “As long as we keep seeing impressive results and more studies like this one, we’ll keep repeating our mantra: In the future, ALL ads will be social.”

IDC’s 2010 Sales Barometer Study: Guidance for Sales and Sales Operations Executives

Michael Gerard

The past 12 months have been, without a doubt, very difficult on technology sales organizations. As part of our annual benchmarks research, we went out to the field and surveyed leading hardware, software, and services sales executives to see just how bad of a year it’s been, and more importantly, what leading organizations plan to do in 2010 to improve their organization.

The bad news?. . . . ½ of all sales reps in 2009 didn’t hit their quota and buyers remain dissatisfied with the quality of interaction with their vendors’ sales reps.

The good news?. . . . There is significant opportunity for improvement.

So where to start? Well, it’s all about improving sales productivity. Easy, right? Well, certainly not.

Let’s start with why improving sales productivity should be one of your top objectives for 2010, as it is for many of our study’s respondents? Here are 3 reasons:

1. The rise in sales costs is outpacing revenue growth: Sales investment is forecast to increase by 4.7% in 2010, outpacing the 3.2% growth in IT global revenue. (refer to the chart below)
2. More leads are needed to close a deal now than ever before. (2/3rds of companies experienced an increase in leads needed to close a deal during the past 6 months)
3. 72% of companies have seen an increase in buying cycles during the past 12 months; and IT buyers confirm this trend based upon IDC’s recent customer experience study. (click here to attend our upcoming telebriefing re: this IT Buyer Experience study)

In prior posts I’ve spoken about IDC’s sales productivity framework, which includes five key levers: Talent Management, Sales Management, Sales Methodology, Customer Intelligence and Sales Enablement. All of these levers are critical in driving sales productivity in organizations. More specifically, here are some things that sales and sales operations executives should do in 2010:

• Maintain the momentum for sales productivity improvement efforts. The downturn in 2009 convinced many sales executives to prioritize productivity improvement initiatives. These initiatives are at risk in 2010 as revenue growth, albeit low, returns to the IT sector.
• Empower sales operations as the driving force for productivity improvements. Sales operations must be considered a strategic driver of process improvements across the sales organization in addition to its more tactical support function. Key areas of focus from a people, process, and technology perspective include sales enablement, customer intelligence, account planning, and pipeline health.
• Optimize sales’ time. Yes, reduce sales’ administrative time which is about 20% of the average sales person’s work week; however, focus more on improving the quality of the time invested by sales reps in preparing for customer interactions. (Sales reps spend approximately 17% of their time today on preparing for customer interactions) Customer intelligence and sales enablement are key levers to increase the quality of this time spent. This strategy is in alignment with feedback from IT buyers, indicating that over 50% of sales reps are insufficiently prepared for customer meetings.
• Improve sales enablement. Sales reps continue to find it difficult to leverage internal resources (e.g., marketing assets, subject matter experts, process training tools) to help them optimize customer interactions. Sales operations must play a pivotal role in establishing, executing, and governing sales enablement initiatives across the sales organization. Alignment with marketing will facilitate this process as they are responsible for the marketing content and asset life cycle.
• Better leverage sales automation. The successful deployment of a sales force automation (SFA) system is a foundational element for a productive sales organization. This system must be consistently deployed and adopted, including maintenance of high-quality data in the system, and leveraged throughout sales’ processes. Embed newer sales automation technologies within your SFA to increase productivity, including solutions to customer intelligence, content and asset management, and internal social media applications to better leverage tribal knowledge. (yes, that would be Sales 2.0 applications)

I invite you to comment on this topic as well as share what you’re seeing “in the field” by joining the discussion!

Sharing is Sexy

April 15, 2010 by Katie Smillie

Is social media marketing and social advertising an intrusion to people’s privacy?

“Less and less so” is the answer given by Seth Goldstein, Co-Founder & Chairman of SocialMedia.com. And the reason is that people want to share more and more. Seth explains that, “sharing is the new currency of one’s personality”, the more you share the more credibility you gain in the social sphere.

People who don’t want to share aren’t using social media. Seth argues that is “in the attention economy where influence is king, sharing information is outweighing [users'] concern’s about privacy.”

Check it out:

SocialMedia.com considers the protection of privacy to be of the utmost importance and only uses public content in ads or content that a user has opted-in to share.