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THE THREE THINGS YOU NEED TO KNOW ABOUT YOUR SALES PIPELINE BUT CRM CANT TELL YOU
Written by: Darren CunninghamArticle Overview: Why do only 1 in 5 companies state that they are seeing revenue increases after implementing a CRM application ? Why are they not seeing the sales productivity gains they expected? And why do they still get surprised at the end of the quarter? Why is it that they still don’t know what they don’t know when it comes to the health of their sales pipeline and forecast? The main reason is that though you may think you’ve implemented a full CRM solution, you’ve really only implemented half of a total solution.
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THE THREE THINGS YOU NEED TO KNOW ABOUT YOUR SALES PIPELINE BUT CRM CANT TELL YOU
Congratulations. You’ve invested in a customer relationship management (CRM) system and though you may have a few adoption challenges, you’re getting benefits in two important areas. First, you’re capturing some critical information about what’s going on with your leads, your opportunities, and your sales people, and it’s all in one centralized place. That’s good. Second, you’ve helped standardize and automate your sales process, making it easier for your sales reps to follow the specific steps in your sales cycle and track their prospects’ progress through that cycle. That’s also good.
But, if you’re like most companies, the two main reasons you bought a CRM application were to increase revenues and increase sales effectiveness and productivity, not just capture critical information and automate your sales process.
So, why do only 1 in 5 companies state that they are seeing revenue increases after implementing a CRM application ? Why are they not seeing the sales productivity gains they expected? And why do they still get surprised at the end of the quarter? Why is it that they still don’t know what they don’t know when it comes to the health of their sales pipeline and forecast? The main reason is that though you may think you’ve implemented a full CRM solution, you’ve really only implemented half of a total solution.
Most CRM applications give you the ability to run reports to generate lists of your current opportunities and accounts, show you your current forecast, and show you how your sales reps are performing and what they’re doing. The focus is on the current state of your pipeline. That is, you have the ability to see what’s happening today and how you’re doing against your targets.
But, transactional CRM applications don’t help you figure out which deals you should be focusing on closing, or how much of your pipeline is really at risk. They don’t help you figure out whether a deal should be included or excluded from a forecast, or help you find ways to increase your forecast predictability. And they don’t help you figure out specific skill set strengths and weaknesses of your sales reps beyond just simple quota attainment.
Transactional CRM applications don’t track the historical information and related data you need so you can uncover important trends and really understand why things are happening. Without that visibility and understanding, the best you can do is make guesses about how to improve sales.
Essentially, your CRM application is only half of what you need. While it’s important to see metrics regarding what your pipeline looks like today and how your sales team is performing, it’s even more important to see how those metrics have changed since last week, since the beginning of the month, since the beginning of the quarter, or since last year. In addition, you need to be able to look at both the current state and the historical trends of your sales metrics by quarter, by region, by product line, by sales rep, etc.
This is what an analytical solution is designed to do. It tracks both current and historical information, it can pull in data from other data sources as needed, it calculates critical metrics automatically, and it lets you see relevant information from multiple perspectives such as by region, by quarter, by rep, or by product line.
Therefore, a full CRM solution requires both a transactional CRM application to capture information and standardize/automate your sales process, plus a sales analysis application to pull the information back out and let you easily analyze it to not just automate, but to improve your sales process and sales productivity. So, unless you’ve put both a CRM application and a sales analysis application in place, you’ve really only implemented half of a complete CRM solution. And that’s not enough to get the results you need.
Sales analysis is the only way to reliably determine which decisions should be made and know which actions must be taken when and where it matters most to dramatically improve your sales results. In their most recent CRM Market Sizing Report , AMR Research noted that: “[Analytics is]increasing in importance as many buyers recognize that actionable information is the elusive but greatest value they gain from customer management tools and technologies.”
In other words, sales analytics is the critical 2nd half of a complete CRM solution, helping you go from transactional sales process management to the much greater value of increased sales performance and results, both from sales reps and sales managers.
Research has shown that sales organizations that manage with metrics instead of relying on anecdotes and gut feel exceed expectations. The chart below shows the number of companies who report that they exceed expectations in the various areas listed. Note the dramatic differences between organizations that have the key metrics they need versus those organizations that don’t.
Whether it’s the ability to identify which deals you have the best chance of winning, uncovering which portions of your pipeline are at risk, forecasting more accurately, or knowing when sales reps need coaching, sales analytics is critical to the shift to “Sales 2.0.” Sales 2.0 is about transforming sales from something that has historically been mostly an art to something that combines that art with science and technology as high-growth companies are now “Competing on Analytics.” In fact, in the book by the same name, Thomas Davenport and Jeanne Harris define an “analytical competitor” as: “... an organization that uses analytics extensively and systematically to out-think and out-execute the competition.”
So how do you become an analytical competitor in sales? The best place to start is by answering the three most important questions about your pipeline:
• Which deals in my pipeline should I focus on?
• Which portions of my pipeline are at risk?
• Based on my pipeline, what should I be forecasting?
CRM applications can show you what deals you have in your pipeline, but they don’t help you prioritize the deals or identify which ones are at risk. The CRM application can track your forecast, but it doesn’t really help you accurately come up with the forecast in the first place.
This is where sales analytics comes in. The right approach to sales analytics will allow you to answer these three critical questions:
1) WHICH DEALS IN MY PIPELINE SHOULD I FOCUS ON?
2) WHICH PORTIONS OF MY PIPELINE ARE AT RISK?
3) BASED ON MY PIPELINE, WHAT SHOULD I BE FORECASTING?
Fortunately, now there’s a fast and easy way to get valuable sales analytics that avoids the complexity of traditional analytic solutions, and incorporates best practice metrics for sales analytics focused on answering the three critical pipeline questions. SaaS analytic applications are designed to not only be simple to set up and use, but you can quickly get started through by having an assessment done of the strengths and weaknesses of your company’s pipeline, sales people, and sales process. There's nothing you need to do except provide access to your sales data, and the results of the assessment are ready for sales management in days.
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About the Author: Darren Cunningham RSS for Darren's articles - Visit Darren's website Darren Cunningham is the Sr. Director of Marketing at LucidEra. Prior to joining LucidEra he was the Category Director for salesforce.com AppExchange Analytics and Data Management. Before joining the on-demand world, he spent over 7 years at Business Objects. Click here to visit Darren's website THE THREE THINGS YOU NEED TO KNOW ABOUT YOUR SALES PIPELINE BUT CRM CANT TELL YOU |
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