Unlocking Sales Data: Strategies for Connecting the Sales Funnel to the Rest of the Enterprise

Danny Smith

Sales professionals serve as your company’s ear to the ground. As your teams interact with customers and prospects, they gain invaluable insights into the dynamics of the marketplace: Where are new opportunities arising? What is the competitive landscape? How confident are they that the deal will close?

While the frontline salesperson is in a good position to determine what and when customers will buy, too often they are not fully involved in the enterprise’s formal planning process. “Let sales sell” is the typical mantra, followed by employing statisticians and/or other demand planners to predict what sales will occur. For some items and industries, statistics provide a good substitute. But for others, such as industries where history is not reflective of the future or big deals can cause ripples through the supply chain, directly tapping the sales team’s insights provides a better approach. To me, the frontline view is something I don’t want to leave behind, but leverage.

Why does this matter? Keep in mind, executives don’t get fired for a bad quarter; they get fired for a surprise bad quarter. Trouble ensues for companies that ignore signals from their primary interface with customers. Unless you can source, make and deliver product within your customers’ “expectation lead-time,” your company will be using your prediction of demand to make big bets with working capital.

The sales team is the start of your demand chain signal, and small changes at the start can lead to big consequences later (this is often called the “bullwhip effect,” where small motions by the hand lead to large movements at the tip of a whip.) A low forecast leads to product shortages, expediting and missed sales; a high forecast results in valuable capital tied up in excess and/or obsolete inventory.

A proven approach to improving and aligning the entire demand chain process – especially since the global downturn when easy credit disappeared – is sales and operations planning (S&OP), sometimes known as integrated business planning (IBP). S&OP is a business process that unifies all functions within a company so they are marching in the same direction; it translates strategic goals into what needs to happen on the ground. Since your customer is ultimately at the “end of the whip” and the sales forecast is the hand, your ability to understand and execute S&OP best practices is vital to success.

Making the Most of Sales Insights

Here are some thoughts on using S&OP to bridge the gap from the sales funnel to the rest of the enterprise:

Make it easy for sales to participate. “Let sales sell” is still the mantra, so don’t ask your frontline teams to give you super-detailed forecasts. Ask them for what they know. For example, they may not know what the unit forecast by item/location will be 18 months out, but they’ll nail the revenue volume at product family/region level. Let them communicate at that level, and let the S&OP process handle the translation to the mix for supply planning.

Create human and system collaboration. To make the collaborative process easy and automated, take advantage of both statistics and human knowledge. Your sales team will greatly appreciate useful knowledge to help them do their job more easily. Leverage available technology and provide them an analysis of items/territories to determine if statistics can help on a systematic basis. If yes, make statistics the start of the process by having system suggestions in place for your front line teams to review.

Facilitate collaboration by enabling sales teams to capture their knowledge with formal “workflow” as well as context-sensitive social media. Let all collaborators share their own view, and never overwrite an opinion. It’s also important to not require re-keying of data; if the team already records their views in a CRM system, for example, the S&OP process should pull from that. A well-designed process should be perceived by the field as an “account planning” project. This allows them to better manage their book of business, understand their customers’ trends, and answer simple customer-related questions like backlog, etc., while providing sales management and the rest of the organization with valuable insight into the forecast.  

Create a culture of accountability and transparency. First, accept that sales has to “own” its number – no more blindly throwing a forecast over the fence to operations without any ramifications if it’s wrong. I know of companies that make inventory levels a sales metric, with penalties for exceeding the targets. You don’t have to be that drastic, but remember that saying from business school: “if you don’t measure it, you can’t improve it.” Be sure your systems automatically measure the overall accuracy of all collaborators (statistical engine, salesperson, marketing, etc.) as well as bias (the tendency to be always over or always under the actual.)

Here is the hard part: publicize these accuracy numbers. Some things are “self-correcting” – if you post every salesperson’s bias metrics on the board, you’d be amazed at the improvements in bias. Sandbaggers beware!

Plan for risk. Sometimes the key to success is knowing the right question to ask. While it can be challenging for salespeople to answer detailed questions, they are good at providing accurate ranges (e.g. “I will sell between $100m and $125m in Q4 guaranteed”). S&OP is about mitigating risk, a fancy way of saying “protect us from bad guesses.” Ask “what if” questions and think in terms of alternate scenarios (e.g. give me your expected, worst case and best case.) Give them better data, like capacity. For example, one build-to-order company uses this process to check every “Monster Deal” versus real capacity and supply to ensure that their promises will be fulfilled. 

There’s no question that an S&OP process can dramatically improve performance all along your demand chain. When done right, and with the right inputs and collaboration from the front line sales team, S&OP can make your sales team more productive, your customers happier and ensure that everyone “hits their numbers!” Good selling – and planning!

Danny Smith, Steelwedge’s Vice President of Industries, helps companies leverage integrated business planning (IBP) and sales and operations planning (S&OP) processes to meet their strategic goals. He has a 20+year track record of using technology to solve real-world business problems, most recently as Oracle’s global solution champion for IBP.