A CSO Insights report shows that revenue is up, but sales performance is not. That’s a business model that is not sustainable.
Sometimes, numbers do lie — or at least they don’t tell the full story.
CSO Insights, the research division of Miller Heiman Group, conducts an annual assessment of B2B sales to get a handle on where things are going, what sales organizations are doing differently, and what challenges are emerging.
At first blush, the results of the most recent survey are positive. Revenue attainment — making the number — is on an uptrend, moving from 88.9 percent to 93.9 percent in the last year, making this the third straight year of growth.
Dig deeper, however, and the signs are concerning:
- Quota attainment has increased only slightly from 2017, moving from 53.0 percent to 54.3 percent. This modest growth is not large enough nor consistent enough to be considered a trend. Rates are still below the 2014 rate of 63 percent.
- Win rates have stayed the same as the previous year at 47.3 percent. Sellers are still closing less than half of what they forecast to close.
- A review of 16 different activities undertaken by sellers (from needs analysis to cross-sell/upsell, prioritizing prospects and more) is troubling. Sales leaders considered their teams to be less effective at 15 of the 16 than they were five years ago.
“Sales leaders are finding a way to make the number, which is critical to survival. But they aren’t doing it by improving the productivity and effectiveness of their sellers and sales leaders,” states the CSO report, entitled “Selling in the Age of Ceaseless Change.” The silver lining: If leaders can get sales systems running more effectively, substantial gains can be made.
4 keys to unlocking sales growth
CSO Insights surveyed nearly 900 global sales leaders and keyed in on two critical elements of the sales process — the depth of relationships that organizations have with their customers and the extent to which the sales process is formalized and deployed. More of both are proven to improve sales team performance, yet the 2018 CSO Insights survey shows little movement in these areas from the previous two years.
Organizations are embracing “customer experience” as a broad concept, of which sales process and salespeople are just one piece. “Sales leaders have some decisions to make about where to focus their energies,” the report states. It identifies four primary approaches that sales leaders are taking to achieve their goals over the next 12 months.
1. Improve lead generation
The “inability to generate enough qualified leads” was cited as the second-most impactful barrier to achieving success (37.8 percent), right after difficult competitive differentiation (39.4 percent). Every sales leader is focused on generating “Glengarry-quality” leads, but most continue to struggle to answer questions such as:
- Where do leads actually come from?
- Which leads are best?
- Who should own them?
- How can technologies like marketing automation improve effectiveness?
While it is widely assumed that lead generation is primarily the responsibility of marketing, CSO Insights’ data shows that salespeople still generate the most leads. What’s more, alignment on the definition of a lead is getting worse. CSO Insights reports that more organizations had a formal lead definition in 2014 (49.7 percent) than in 2016 (42.6 percent) and in 2017 (29.5 percent).
2. Capture new accounts
When asked to share their top goals for the year, capturing new accounts was the priority cited most often. Continually adding new customers is a priority, but it’s also difficult. The maxim that it is easier to sell more to an existing customer than it is to sell to a new customer is true.
Effective prioritization of prospects is vital, as is aligning the sales process with the prospect’s buying path. Stronger opportunity planning, and increased use of artificial intelligence and big data can improve performance in closing pitches to new prospects.
3. Increase penetration into existing accounts
Across all the business models, geographies and industries that comprise the organizations in the CSO Insights study, revenue derived from existing customers accounted for 70.1 percent of total results.
In-depth customer knowledge helps sellers provide more relevant perspective, dealing an advantage over competitors. Further, sales cycles in existing accounts were half as long (7.2 months vs. 3.8 months) as capturing new accounts — a huge savings in cost of sales.
Yet, for all the existing business being renewed, there was not a strong ability to expand business in existing accounts with key gaps noted in penetrating new business units or cross-selling/upselling. Sales managers must get their reps to improve existing customer planning. The focus is not just on how to identify and close additional opportunities in an account, but also — and more importantly — on how to help the client solve business problems in a way that increases their loyalty.
4. Increase win rates
For the second year in a row, win rates of forecasted deals were 47.3 percent, continuing a trend of hovering below 50 percent for the last several years.
While both sales process and relationship have an impact on win rates, the impact that a strong relationship has is more profound. A key aspect of any sales methodology prevalent in Level 3 organizations is the ability to provide perspective and insights during the sales process. Yet, respondents to the most recent Sales Performance Study do not consider this an organizational strength, with 43.1 percent rating it as needing improvement and another 12.3 percent stating it needs major redesign.
Next steps
Most sales organizations are struggling to excel at the winning combination of sales process and deep customer relationships. Overcoming this challenge requires real changes to program processes, people, technologies and tools.
Don’t think linearly. “There is no one place to start (process, hiring profile, comp plan). Start where you can affect the most change with the least disruption to your customers and sellers,” the report states. It recommends thinking of transformation as an ongoing shift, not a one-year or even three-year project.
Above all else, align everything to the customer and how they wish to solve their business problems. “It may sound like a cliché, but as noted throughout the report, there is a very specific and detailed way to do it, and the results are tangible.”
The full CSO Insights report is available at www.csoinsights.com/2018-2019-sales-performance-study.
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