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vr_SF12_07_impediments_in_sales_motivate_investmentIn an analyst perspective at the beginning of this year I wrote that sales organizations must step beyond conventional wisdom to generate the best outcomes. One such step is to invest in software that delivers immediate value to manage sales and be efficient in its operations. Our latest research on sales organizations finds that inconsistent execution (53%), scattered information (48%) and limited visibility (42%) are motivating investment to improve sales. At CompCloud, its annual conference, Xactly unveiled advances in its software to help improve the effectiveness and productivity of sales organizations. Spokespeople said the company’s sales compensation products have helped users manage US$10 billion in commissions in the past two years.

To make it easier to access critical information from its applications Xactly now supports the range of mobile devices running native Apple iOS, Android and HTML5 apps. The mobile capabilities enable users to view commission statements, track quota attainment and compare performance to team rankings. Xactly is right to advance its mobile efforts as account managers and management extensively use smartphones and tablets. Our latest research in sales finds that smartphones will be deployed to four out of five (81%) in sales and tablets to three-quarters by the end of 2015.

The company also announced the release of Xactly Quota to help management and analysts allocate quota assignments to teams. By automating the quota process and providing visibility into quota performance this application helps reduce manual effort and potential errors in those tasks. The quota management application can link with Xactly Incent to help users plan sales targets and link potential commissions to payments. They can collaborate in designing and agreeing on quotas, and the comments feature enables direct feedback. Our research finds that quota attainment is the top way to measure overall sales performance, so this feature is likely to please Xactly’s customers and increase sales. After aligning quotas and commissions, the next logical advance would be to help users manage sales forecasts to support progress toward quotas and ultimately commissions. Comparing quotas to forecasts is a top priority for sales teams, according to our research. Xactly’s products can integrate forecasts into its analytics, which is a key first step to assess to quota and potential commission. I have already written that dedicated technology enables successful forecasting.

At the conference I got to review demonstrations of its analytics and benchmarks in Xactly Insights that help provide performance metrics from all the data it collects from its customers. Such measures can be useful: Xactly released a report on performance and quotas showing that 79 percent of sales reps selling software as a service miss their quotas. These insights help provide a guideline to where a company can improve in the design of its quotas which Xactly released a new application but also where it compares in the market to others. Xactly has been able to take the aggregate of its own customers’ metrics in using their products to provide some insightful perspective on a range of compensation and time related sales metrics.

Xactly unveiled Xactly Objectives at its 2013 conference that I covered, and we named it the prestigious 2013 Technology VentanaResearch_TechInnovation_Award_Winner_2013Innovation Award winner for sales. Now the product is fully localized to support Spanish, French, German and other languages. It is easy for managers and sales reps to track progress toward their overall objectives. Having a system to identify overarching sales objectives and link them to sales compensation is important to motivate and guide personnel on a regular basis. The Xactly Objectives can be used anywhere in an organization too, which makes it appealing to any department.

Other improvements outlined at this year’s conference included more comprehensive incentive statements, analytics that can be displayed in any HTML5-compliant Web browser, flexibility in plan rules with lookup tablets and adaptations to credit allocations. Xactly continued focus on satisfying its customers through product improvements have provided it a very high customer retention rate.

Xactly continues to focus on inspiring sales management and operations to making sales more productive and generate higher level of sales. Its software is more appropriate for sales compensation and related processes than CRM or SFA applications and much better than using general-purpose spreadsheets. Our research finds that more than half of sales organizations still use spreadsheets for these purpose and that doing this undermines their ability to manage sales with accurate information. In today’s intensely competitive sales environment, Xactly is positioned to grow. Sales organizations that seek to improve these sales and compensation processes and provide the information that sales teams need both to perform well and be satisfied in their jobs should examine Xactly’s software.

Regards,

Mark Smith

CEO and Chief Research Officer

Sales forecasting is an essential process for most businesses. It helps guide the efforts not only of the sales function but also of finance, operations, manufacturing and customer service. Our recently released sales forecasting benchmark research reveals significant insights and best practices that can help companies optimize the effectiveness of this process. I recently wrote that most sales organizations need to make significant changes to the way they do sales forecasting. VentanaResearchBenchmark_SalesForecastingIn that analyst perspective, I examined aspects of technology that can make sales forecasting a much more efficient process than it is in most organizations that use software not designed for sales forecasting.

This research finds much indecision about making changes to improve the technology for sales forecasting. Half of organizations do not plan to change their vendor for sales forecasting in the next 12 to 18 months, and only 10 percent plan to change, although 8 percent will upgrade to the current vendor’s latest version. For organizations that are planning to change vendors, the most common reason is to speed up the forecasting process (54%); fully half of this group are not satisfied with their current product’s functionality. A substantial number of organizations are dissatisfied with their tools because data gets outdated quickly: One in four ranked this first. This discontent likely reflects the more rapid flow and greater volume of data organizations accumulate today and issues derived from the use of tools like spreadsheets into which people copy and paste data with no direct link to its sources. Yet the pace of business has accelerated along with the mass of data, and sales groups feel pressure to have timely forecasts; this challenge is another reason for improving the tools in use.

Organizations use desktop spreadsheets for many activities, and while they are easily accessible, spreadsheets are not designed for vr_SF12_03_sales_forecasting_technology_is_changingsales forecasting. Nevertheless the research shows that they are the most commonly used tool for sales forecasting (by 29%); sales force automation (SFA) ranked second, an increase from our past research. The third-most common tool used is analytics and business intelligence (BI, 10%). A range of planning and forecasting applications are used by 16 percent of organizations. Most of this technology was not designed to meet the specific needs of sales forecasting.

It is not surprising that fewer than one-quarter (24%) of the sales organizations primarily using spreadsheets for sales forecasting are satisfied with their process. Our analysis shows a correlation between spreadsheet use and lack of confidence in the information for sales forecasting: Fewer than one in three organizations relying primarily on spreadsheets (32%) are confident or very confident in the quality of their forecast. Moreover, more than half (59%) said that reliance on using spreadsheets makes it difficult to manage the sales forecast efficiently. Yet despite the evidence that spreadsheets have negative effects on sales forecasting, only 38 percent of heavy spreadsheet users are planning to change their forecasting process in the next 12 to 18 months, fewer than users of SFA (48%) and business intelligence tools (53%). When such an important process as the sales forecast is left to tools not designed for the process, risk increases that sales people will not have visibility into their information, let alone timely knowledge of progress and the source of issues that should be addressed.

On the other hand, the research finds that two in five (40%) organizations use dedicated tools for sales forecasting. Most that do are rather new to the technology; three in 10 have been using it for more than a year, and 10 percent more began in the last year. Currently dedicated sales forecasting software is deployed mostly to users on the front lines of sales: 42 percent of front-line sales managers and 41 percent of the front-line sales team have it available. Those that use dedicated sales forecasting technology find value in it: More than one-fifth (22%) of them said it has improved significantly the outcomes of sales activities and processes, and half (51%) indicated it has improved outcomes slightly. Larger organizations use such applications much more often than smaller ones: More than half (54%) of very large companies that use one have been doing so for more than a year, as have 46 percent of large companies. Another 29 percent of the very large started using a dedicated application in the last year, so nearly four out of five of this size of organization have dedicated software. But more than one-fifth of participants said they have no plans to deploy dedicated software. Asked why, most (58%) said they do not know, which indicates a lack of awareness of the technology and its advantages. One-fourth more (24%) said deploying it will not have a positive impact on business, which indicates a lack of understanding of its benefits. Dedicated applications can contribute to more accurate sales forecasts, but we find that many organizations aren’t prepared to implement them or do not understand why they should.

Our analysis finds good reasons for using dedicated technology. vr_SF12_11_teamwork_critical_for_sales_forecastingSales forecasting requires a team effort that involves account managers who track the sales pipeline, operations people and analysts who manage the process and sales managers who approve it and contribute information and metrics. According to our research the most important capabilities for the sales team in the process are to collaborate within the team to improve the sales forecast (selected by 53%), to compare quotas to the sales forecast (47%) and to perform account-level forecasting (40%). These activities make it possible for sales management to compare changes to the forecast, collaborate to address changes and determine actions, and take advantage of operating conditions in sales. The sales operations group processes the sales forecast, from preparing data through presenting the forecast to sales management, and we find that doing so takes a significant amount of time for this essential sales support team – time that could be spent better in applying a range of analytics to the forecast. Sales managers and management have their own priorities, which makes it important to profile the users of sales forecasting and align software capabilities to their roles and responsibilities. Making notations on why the forecast has changed and providing coaching based on the forecast are examples of tasks required to support the sales forecast process that are particularly difficult to do using a desktop spreadsheet.

vr_SF12_06_organizations_planning_to_change_forecastingOverall our research finds a developing movement to adopt more useful technology for supporting the sales forecasting process. For organizations planning to change, most (40%) are going to use software as a service (SaaS), which is convenient as this cloud-based approach has the lightest burden to install, configure and manage the technology. Nearly as many (35%) plan to use the on-premises approach, which could distract sales from its primary mission and the processes designed to support it. Being able to operate on mobile technology likely will spur adoption as more than half (59%) of participants indicated that mobile technology will help improve the accuracy and timeliness of sales forecasting. We urge organizations to use dedicated software for sales forecasting as a way to improve the outcomes of their sales efforts. Those that do not invest in such software will continue to face impediments in the sales process and risk not achieving the best possible outcomes.

Regards,

Mark Smith

CEO & Chief Research Officer

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