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All lines of business are under pressure to meet targets and deliver expected results, but none is under more pressure than Sales. Like other organizations it must use information to derive insights about progress and problems and to decide what changes to make. Today businesses collect and analyze data from more data sources in more forms than ever before. To understand it they need effective analytics, and again none need it more than Sales.
Analytics applied to sales data can deliver significant value. It can help sales organizations reach quotas, forecast more accurately and make better decisions about activities and strategy. However, selecting the right tools for analytics can be difficult. People charged with identifying those tools often don’t understand the specific needs of sales groups or the full scope of evaluation criteria required for successful deployment and use.
In the past, and often still today, many sales organizations did not invest directly in analytics, instead using desktop spreadsheets, cutting data and charts from applications and reports and pasting it into presentations. In addition organizations have tried to stretch applications designed for other purposes, such as sales force automation (SFA) and customer relationship management (CRM), to provide reports on accounts and opportunities, but these systems address only some sales activities and lack complete information about customers. They need more purpose-built tools to examine sales performance in core processes such as the sales pipeline, forecasts, configuration pricing and quoting, proposals, quotas, compensation and incentives, and coaching of personnel. Used properly analytics can provide insights on all of these. But to select tools that cover all these areas, prospective users of sales analytics must be able to understand the available options and identify the capabilities that will serve them best. Should they be simple or complex? One-time or continuously used? Historical or forward-looking? In addition the tools should be easy to use and able to make data readily available. Several of our benchmark research studies demonstrate the need for effective analytics in this critical business area of sales.
The expanding use of sales analytics stems from increased attention to performance across sales processes (particularly because of the importance of sales in revenue and financial planning to meet customer demand with products and services). In sales planning, the need for quick analysis and review of actuals vs. plan is the management capability most often important (for 73%) for organizations participating in our next-generation business planning benchmark research. Many sales initiatives have failed to live up to their potential because companies did not use the right analytics tools and approaches to plan and operate them. For example, measuring the wrong things, measuring the right things the wrong way or using only partial data to measure will have negative (and often unintended) consequences. That’s because sales decisions almost always must be made in a constrained environment, in which virtually every important decision requires trade-offs (such as price against volume). To be useful, analytics must recognize trade-offs and provide guidance to help decision-makers choose those that are aligned not only with the company’s overall objectives but also with its customer, financial and sales profitability goals. Sales analytics also can support new approaches such as sales contests and gamification that motivate employees to perform better.
Analytics also is a key tool for devising, tracking and revising measures and metrics for sales processes that enable managers to make better-informed decisions faster and more consistently. Sales operations managers and executives need advice on selecting the analytics most useful for them and choosing sales metrics and performance indicators. This applies to the various kinds of analytics that sales organizations need. For example, our research finds that analytics is a priority for sales compensation management, where it is the top technology trend in 84 percent of organizations, and for sales forecasting (in 79% of organizations).
At this level of complexity sales organizations cannot continue to make do with outmoded tools. While spreadsheets are comfortable and familiar, when used for collaborative enterprise tasks they fall short in many areas such as lacking control of calculations and introducing inconsistent or erroneous data. Our research in sales compensation management finds that those that use them universally for this purpose are not satisfied with their analytics tools more often (in more than two-thirds of organizations) than those that use more capable tools.
A new generation of technologies offers more powerful and flexible sales analytics. Big data systems for processing and storing data have evolved quickly, making it possible for sales organizations to extract insights from masses of data for practical purposes. For example, visual discovery can present data in quickly graspable forms, and simplifying the presentation of key sales indicators and metrics in dashboards can put necessary information at the fingertips of nontechnical executives and managers. Advances in mobile technology enable access to analytics from smartphones and tablets, helping users on the go decide what to do next. Making sales applications and data available through cloud computing also facilitates access to and use of sales analytics. In addition collaboration enables sales teams to communicate and coordinate operations and managers and sales reps to plan more effectively. And predictive analytics enables users to look forward to anticipate trends and plan ahead rather than merely react.
Analyzing these advances and their impacts on sales organizations now and in the near future, we have released new benchmark research on the next generation of sales analytics. It examines the use of and intentions for analytics and metrics involved in sales-related activities. It uses the Ventana Research Performance Index Model® to assess the productivity and performance of organizations by size and industry. A major aim of this research is to provide understanding of the need for and potential of advanced tools to help set a business case for investing in sales analytics. It assesses the impacts of these next-generation technologies in facilitating faster, easier and broader use of sales analytics. It follows up on previous research that shows that inconsistent execution and scattered information continue to motivate investment in about half of sales organizations and explores how advanced analytics can help remedy these issues.
Our mission in this new research is to uncover the best practices companies use in measuring the performance of sales-related activities, the challenges they face and how they intend to improve their situations in the coming years. Sales analytics is a required component for any successful use of SFA to applications and activities individually or as part of sales performance management. It examines in detail issues in collecting data from a diverse set of sources that are critical for creating and maintaining useful sales metrics and indicators. It explores how data sources are reconciled through data preparation and then analyzed to produce the information sales people require to support decisions that impact their bottom line, market share and other aspects of their strategic objectives. Increasing the accuracy, confidence and timeliness of sales analytics is critical to every activity in sales, and those without a dedicated approach designed to assist sales will find themselves at a disadvantage. Sales analytics is a key resource for sales organizations facing today’s unprecedented challenges, as I recently outlined in our Sales Research Agenda for 2015. If you are responsible for sales activities or systems and want to see where the present and the future lie, please consult our research on the next generation of sales analytics.
CEO and Chief Research Officer
Most people in business management admit that sales is more an art than a science. Organizations have long struggled to find the right mix to improve its effectiveness, and few get the most out of available technology. For many the default is still to use sales force automation (SFA) and spreadsheets to manage processes and try to increase the productivity of sales staff. In our view they should take a holistic approach to sales processes from contact to close and support everything from sales forecasting to pipeline management to compensation with applications designed for these purposes. Those in sales operations need to apply analytics to understand and fine-tune sales activities. Those in sales management need applications that can help recruit, engage and retain the best talent. Even more than elsewhere in business, in sales people matter, and the organizations that most empower their teams are likely to get the best results. Optimizing people and processes requires a balance of information and technology to support the various needs of the sales organization.
Our research in this critical area of business during 2015 will examine applications designed to provide effective execution in sales processes. These applications cover a strikingly wide range of areas including deal management, forecasting, quota and territory, compensation and commissions, product information management, planning and tracking, learning and competency, coaching and objectives, contract automation and configure-price-quote. All rely on information and thus on technology to help people learn from and act on it. In today’s digital world the consistency and quality of product information is more critical than ever and more complex as digital assets such as images and video can make the difference in proposing and closing a sale. Analytics software can increase insights to improve sales execution and outcomes. Sophisticated techniques such as predictive analytics and data discovery can exploit the ever growing volumes now classified as big data. This trend has driven us to engage in new benchmark research for 2015 on next-generation sales analytics to advance knowledge of best practices and methods being adopted by innovative organizations. It will investigate new methods for using analytics to advance modeling and planning that can help sales groups recognize and respond to fast-changing trends and realize their potential. The need for improvement is clear in our next-generation business planning research, in which fewer than half of organizations said they are satisfied with their sales and operations planning (43%) and sales forecasting (47%).
Our research in sales compensation management explores the motivation and impact of commissions and rewards on sales performance. Sales compensation is very important to almost three-quarters (73%) of organizations, but more than one-third have impediments that are motivating management to consider further investments in sales compensation. Leading the list are inconsistent execution in sales, cited by three out of five organizations, and lack of sales effectiveness in almost half of organizations. These and other issues can be addressed by adopting dedicated applications for sales compensation, especially to replace spreadsheets, which almost two-thirds that use them said make it difficult to manage sales commissions efficiently. Managing sales compensation effectively also requires commitment, as I have written, and investing in capable software should be part of that commitment. Used properly it can provide a return in terms of the resources and time saved and improvement in the sales process. Our research finds other benefits of a dedicated sales compensation approach, most often aligning the sales force to business strategy and goals and increasing confidence in achieving the forecast.
Our recent benchmark research on recurring revenue reveals advantages in automatically billing for subscriptions for products and services on a repeating basis. However, the recurring revenue model requires the ability to manage a variety of services that customers can change at short notice and be billed for correctly and promptly. Managing recurring revenue is easier with a dedicated application that links the complete order-to-cash process. These applications also support not just the transactions but the full cycle of interactions with customers, which is the largest challenge for 55 percent of organizations, according to this research.
There also are new tools to help sales professionals improve their own campaigns using demand generation techniques that previously were available only in marketing. They can target prospects, schedule interactions and provide information that matters to prospects. This directly empowers individual sales reps to develop leads for the sales pipeline to achieve their quotas, which in turn can improve the accuracy of the sales forecast. The tools also can be used by teams. Half (53%) of participants in our sales forecasting research said that the forecast is a collaborative and team effort; that even more (57%) said the forecasting process is unreliable shows the need for improvement.
Another technology that can make a difference for sales people and processes is mobile technology, which can facilitate completion of tasks through smartphones and tablets. These portable tools can provide information and updates to sales people on the go. Our research in sales finds adoption booming; for example, tablets are now being used in 43 percent of sales organizations, and almost another one-third (31%) plan to deploy more or plan to start using them. Improvement in mobile applications designed for sales should drive growth even faster.
Mobile technology also can boost another innovative technology – collaboration, which is a natural part of the sales process. New methods for social collaboration are going beyond mimicking consumer social media to relevance in sales. For instance, using collaboration for coaching or gamification for earning badges and awards can spur sales people to compete and improve; these methods are being evaluated or planned for use in one-third and one-quarter of organizations, respectively, according to our sales compensation research. In the end collaboration is about improving the relevance of actions and the quality of decision-making. Collaboration can help improve the execution of any sales activity.
The nature and means of sales are changing, and sales organizations must change with them or be left behind. In pursuit of innovation they must make investments in technology to help them adapt. Cloud computing makes it simpler and more affordable for sales groups to onboard and use applications rapidly. In 2015 Ventana Research will explore further the use of all these innovative technologies in the context of what Sales needs to be successful. In addition we will undertake new research on the next generation of product information management and how it can empower sales through digital commerce by providing complete, consistent product information at all interaction points.
Sales organizations must face the realization that old processes such as merely managing accounts, contacts and opportunities and general-purpose tools such as sales force automation are not sufficient to optimize the execution and efficiency of sales activities. Better tools and processes can shift the focus from manual chores to value-adding work. For example, contract automation can save significant time every week that can be devoted to pursuing more deals. Sales departments must find ways to elevate the level of customer engagement and satisfaction that in turn drive more sales. In 2015 all involved in sales, from the front lines to operations to executives, must step up their game. Analytics can help them measure sales performance in various ways, from quota and revenue attainment (important in almost two-thirds of organizations) to building processes for continuous and sustainable improvement. We should not forget that sales is a team sport that requires leadership and coaching as well as finding and motivating talent.
Our Sales Research Agenda for 2015 will span the areas that matter most to the in-person and digital selling of products and services. We will provide insights and best practices that can help organizations select technology investments and gain fast time to value from them. Please follow as we strive to bring you information and guidance that can make the difference in your sales efforts.
CEO and Chief Research Officer