Revenue Velocity: Dynamic Sales Management

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  • - Leadership to provide challenge & inspiration
    - Coaching to develop skills & talent
    - Management to provide a structure for execution
    - We’ll focus on Management today
  • - Widely adopted as the standard Management Cycle
    - Unfortunately, there aren’t many sales manager schools
    - Most got promoted from rep rank because they were good sales people
  • - Story about QBRs
    - Star model is widespread
  • - Jim will talk about this in more detail
    - We’re not getting anywhere the old way
  • - Sales 2.0 is about leveraging information & tools to become more effective
    - Why not apply these new principles to management
  • Leverage the data to make course correction early and often
    - You need a way to SEE the data
    - A way to INTERPRET the data
    - A way to decide on ACTION
  • - Framework brings order to the data
    - I’ve seen too many eye chart dashboards - does not work
    - Change and Variance are key, current status not enough to make a judgement
    - Asking the right questions, using the right data, you’ll get to the action
  • - Getting to the root cause of an issue, need to ask the right questions
  • The calculation is simple and powerful
    Need
    - Velocity
    - Variance
    - Change
  • - Eye test, send me an email if you want a copy
    - Go over the one example
  • How the Model Works - Talk about in this slide, then go into the “In-Action Part”



  • Based on the CSO Insights results, I’d say that he’s onto something. They found that the best in class Sales Managers who achieving higher than average results take a more proactive, “detect and correct” approach. They use Analytics to get an early read on their performance and see what’s changed from week to week so that they can proactively identify deals at risk and make course corrections.

    For example, they may discover that a rep is spending too much time on low quality deals because maybe they’re easier. That would result in a set of assignments geared toward closing the higher quality deals.

    Or if they see that a key deal was pushed out of the quarter – maybe more than once, they can have an honest conversation with the rep to find out if it’s a real deal. If not, then they should just lose it early. I know that from analyzing our own data, it takes us twice as long to lose a deal as to win it, which is precious time that could be spent working on higher quality deals. On the other hand, the rep might have a perfectly logical reason for deferring the deal, in which case, the assignments would be around driving closure.

    By doing this, Sales Managers can prevent the dreaded ‘end of quarter surprises’, which has a nice side benefit of a more accurate forecast. Also, if your reps are spending their time on higher quality deals, you’ll get an accelerated sales cycle and a higher conversion rate on winnable deals.
  • Since CRM systems are transactional, they can only tell you how a prior period looks today, which may be interesting, but doesn’t give you a frame of reference to use for gauging your current performance.

    With Analytics, you can compare your current performance to the same relative time for the prior period. Since you know how that period ended, you can use this information to evaluate the health of your current pipeline.

    Typically, our customers use this to look at Q/Q or Y/Y comparisons. For example, you might find that you have a healthy pipeline, but there are fewer committed deals than there were at the same time last quarter.

    In the example here, you can see that quota achievement is much lower than the prior period, which may point to an issue with getting deals over the finish line. If the pipeline coverage was healthy, then I might instruct my Sales Managers to focus their reps on closing the current deals instead of looking for new ones.
  • Getting visibility to change is one where the value of Analytics is particularly clear. Since it requires comparing two points in time, it requires historical data. As a result, it’s not information that your CRM system can provide.

    In this example, I’m looking at how the pipeline has changed since the last meeting. You can see that there’s a summary of the movement and I’ve highlighted the Moved Out Deals. If you’re trying to find these using your CRM system alone, you’d need to have a kept a copy of the prior period’s report and then do what we call “stare and compare” to notice that it’s gone. And, even if you did manage to find that needle, you still have no idea where it went. A good Analytics system saves you the time of trying to find these deals and then provides the specific details about the changes so that you can spend your time figuring out what to do next.

    In this example, I can see that although the deal amount increased, the stage went backwards and the close date was moved out a month. In this case, I’d have a conversation with the manager to get the full scoop so that he can coach the rep on next steps.
    By looking at what’s changed, you can get visibility to deals that have slipped out of the period.
    As an example, using this approach one of our customers discovered that 50% of their pipeline was being deferred each quarter and as a result have implemented new Sales Management processes supported by our solution to reduce this number.

  • Need to leave them with something suggestion for action - what can they do TODAY to get on this path (of course I needs to imply urgency for C9)
  • An example of putting the model into action - monthly forecast meeting, negative variance on velocity on a geo that missed their number, declining conversion rate, lengthening sales cycle, data says - stalling at stage 6 at a higher rate than usual (variance shows this).  So, do I have a skills, market or alignment issue?  No new competitors, no change in product, no change in the economy, no seasonality, no new reps, issue localized to a cluster of top performing reps (across different regions) - strange, must be related to alignment.  First place to check should be comp plans... after review comp plans with finance, managers and reps, turns out the new “quarterly plans” are providing a disincentive for over achievement in any given quarter because the multiplier does not make up for the fear of unknown (next quarter's quota).  Need to correct incentives before problem spreads.
  • I have a saying that “facts are our friends” and that is especially true when it comes to managing your pipeline. You might not like what the data tells you, but it’s better to find out bad news early so that you act on it and at least attempt to change the outcome as opposed to being surprised at the end of the quarter. In this case, ignorance is certainly not bliss.
    At a typical weekly meeting, there are 3 primary questions you need to answer.
    Where are we now and are we on track?
    Where are we going and do we have sufficient coverage to make the plan?
    What’s changed and how does our progress compare to prior periods?

    If you uncover any exceptions along the way, you need easy access to the details so that you can develop an immediate action plan.

    Next, I’m going to show you how specific examples of how Analytics can help you get the answers to these questions.
  • Performance

    To find out where you are and determine if you’re on track, you’d use Analytics to compare your current period performance to your quota and forecast. We recommend starting first at a summary level for the regions and then drilling down to the details for specific reps as appropriate.

    For groups that aren’t on track, you’d drill into the details to determine if there’s a problem. If you find one, you’d do more investigation to determine the root case and then work together to come up with an actionable remedy plan.

    Looking this screen shot, if I was the SVP in this meeting, I’d want to have a discussion with the Director of Direct Sales to find out why his quota coverage is so low and why he doesn’t have any Committed deals.

    Coverage

    Once you’re done looking at last week’s progress, you can focus on your open pipeline to see whether you’ve got enough coverage. If it’s late in the quarter, you might just focus on the committed deals, since those are the ones you’re most relying on to make your number. Instead of just looking at a summary coverage ratio and getting that warm and fuzzy feeling if it’s 3-5x your quota, it’s important to drill into the details to find any hidden issues – especially with your key deals. In this example, I might be concerned that the Tech Shows deal is 143 days old, has been sitting at a 90% probability that entire time and hasn’t been updated since March. That deal has obviously been deferred a bunch of times and I’d want to have a conversation with Mohsin’s boss to find out if he has any confidence that the deal will actually close in September – especially, since there’s no next steps defined.
  • Best in class companies use their 1:1 coaching sessions is to review performance, the status of the prior week’s assignments, identify risks and behavior gaps.

    Next, they provide specific assignments along with a clear set of deliverables for the coming week.

    One of the other items that Bob Sanders covered in his SMA presentation was the problem of measuring rep performance based solely on a Pipeline Coverage number. He made the point that for the most part, reps just want to be left alone and they’ll do whatever they need to do make that so.

    So, if you give them a goal of creating a pipeline that’s 3-5x of their quota, that’s exactly what you’ll get. Unfortunately, that goal doesn’t have any measures of quality or accuracy, so it doesn’t necessarily translate into bottom line revenue at the end of the quarter. Using Analytics, you can uncover this problem by looking at things like the pattern of deal deferrals and where the final amounts for deals you win come in at a significantly lower than what they were initially.

    There’s a story from one of our customers that drives home the point that your sales processes and compensation structure need to incent the right behavior. Like many of our customers, they had a policy that all deals needed to be entered into their CRM system in order for the reps to receive a commission. Within a few weeks of using our system, they discovered that 75% of their deals, comprising a whopping 40% of their revenue were entered after they were closed.

    From the rep’s perspective, they were following the letter of the law. Unfortunately, that behavior doesn’t help the Sales Management team get visibility to the current pipeline so that they can provide coaching on the deals and submit an accurate forecast to the Execs.

    This is probably one of the most frequent issues I encounter with our customers and is something that you can use Analytics to shine a light on. Looking at last quarter’s deals, you can easily tell which ones were entered late in the quarter and detect post-quarter cleanup activities. For the current quarter, you can get a weekly read on deal deferrals and find out which deals aren’t being managed.

    Armed with this information, Sales Managers can more effectively coach their reps on behavior changes.
  • Revenue Velocity: Dynamic Sales Management

    1. 1. 1Cloud9 2010 1 Dynamic Sales Management Tracey Kaufman Senior Director of Customer Experience October 2010 Increase Pipeline Velocity, Forecast Accuracy & Revenue
    2. 2. 2Cloud9 2010 The Sales Manager’s Job 2 Leadership, Management & Coaching
    3. 3. 3Cloud9 2010 Sales Management 3 1. Set Goals 2. Execute on the Business 3. Monitor for Exceptions 4. Analyze and Adjust the Goals A PROCESS for Team Success:
    4. 4. 4Cloud9 2010 Sales Management 4 - Hire, some training & they’re off! - Set up the carrots & sticks - Reward the super stars - Measure & punish quarterly How we’ve been doing it:
    5. 5. 5Cloud9 2010 It’s Not Working! 5 Only 44.8% of Forecasted Deals Are Won only 65% of Time Spent on Revenue GEN Selling w/ Reps Coaching Reps Internal Meeting & Management Tasks Other (Train / Travel) Pipe / Forecast MGMT 27.2% 15.8% 20.3% 21.6% 14.7% Won LostNo Decision 31.3%29.9% 44.8% Only 51.5% of Reps Are Making Quota Sales Teams Coming up 22% Short on Over-all Plan CSO Insights, 2010
    6. 6. 6Cloud9 2010 Now It’s a 2.0 World 6 Can’t manage in a Sales 2.0 world using 1.0 techniques - More data than ever, get the right metrics and put them to work - Use analytics to focus attention - Proactively uncover risks and opportunities - Make course corrections early and often
    7. 7. 7Cloud9 2010 Dynamic Sales Management 7 Sales Management 1.0 vs. Sales Management 2.0 If sales management 1.0 is art, 2.0 is art informed by science and better characterized by... DETECT & CORRECT Three questions: 1. What does the data say? 2. Should I be worried? 3. What should I do about it?
    8. 8. 8Cloud9 2010 Model for Detect & Correct 8 Dynamic PIPELINE MANAGEMENT Use pipeline velocity as a framework for organizing information to cut a path. Monitor VARIANCE & CHANGE Know what’s changed and how that deviates from expectation or plan. Take ACTION Ask questions that lead to action–skills problem? market? alignment?
    9. 9. 9Cloud9 2010 Take Action 9 Good Questions lead to the right action: Talent – are the right people in the right roles? Behavior - are people well aligned behind the goal with the right incentives? Skills - are there training, productivity, ramp issues? Market - has something happened in the market to change the value equation for our product?
    10. 10. Cloud9 2010 10 Deals x Conversion Rate x Deal Size Selling time Pipeline Velocity
    11. 11. Cloud9 2010 11 Pipeline Velocity Drivers Deals Maximum number of deals set to close in the period Conversion Rate Total Closed/Won deals in the period relative to Deals Deals Size Average value of Closed/Won deals in the period Selling Time Average duration for Closed/Won deals in the period - Marketing: Inbound, Outbound - Partner referrals - Uncovered territories, rep turnover - Sales originated deals - Undocumented deals - Expired deals (and quality issues) - Loss rate: stage-based, competitor - Win rate: stage-based conversions - Stalled deals by stage - Deferral rate, slippage - Rep ‘effective coverage’ saturation - Productivity, tenure, training, comp - Product pricing - Product mix - Discount levels, tendencies - Rep portfolio (SMB/Enterprise) - Declared market - Target customer profile - Stage duration, stage movement - Expired deals, data quality - Repeated deferrals - Late stage “new” deals showing up - Close dates improperly set - Rep training, tenure Effected by... Effected by... Effected by... Effected by...
    12. 12. 12Cloud9 2010 Pipeline Velocity Example 12 Deals x Conversion Rate x Deal Size Selling time How does the data vary from the benchmark and how has it changed over time?
    13. 13. 13Cloud9 2010 Dynamic Sales Management 13 2. ASK the Questions1. DETECT the Problem 3. CORRECT (solve) the Issue
    14. 14. 14Cloud9 2010 DETECT & CORRECT 14 • Determine which forecasted deals have changed and how • Determine which forecasted deals are slipping and why • Determine which reps need extra coaching/mentoring • Coach reps on how to prioritize which accounts to pursue • Assist reps in qualifying out low quality opportunities early Be PROACTIVE:
    15. 15. Cloud9 2010 15 Monitor VARIANCE Do Q/Q comparison, identify risk areas & make course corrections to refocus resources
    16. 16. Cloud9 2010 16 See WHAT’S CHANGED Review pipeline changes (won, lost, adjusted), uncover exceptions, identify risks and develop next steps
    17. 17. 17Cloud9 2010 The Results 17 Implementing a DYNAMIC Sales Management Process Together with strong leadership and effective coaching, moving to a more Dynamic approach for Sales Management will optimize resources, improve forecast accuracy and accelerate revenue growth.
    18. 18. 18Cloud9 2010 Cloud9 Enables Dynamic Sales Management 18 “Deploying Cloud9 to sales managers gave such an increase in CRM adoption, we've now rolled it out to the entire sales, operations and finance teams.” Daniel Fitzhugh, VP of Business Operations Myspace “We Increased Revenue by $1.6M/year by delivering Cloud9 to the management team.” Dave Fitzgerald, VP Sales Brainshark “Salesforce.com is perfect for managing accounts and opportunities. We use Cloud9 to manage our people.” Dan Solito, VP Global Sales Operations Avaya
    19. 19. 19Cloud9 2010 What You Can Do Today 19 Contact Cloud9, we can help 1. Measure the key pipeline velocity drivers for your business 2. Adjust your sales management processes to improve velocity drivers 3. Use Analytics to inform your weekly meetings and 1:1 coaching sessions
    20. 20. 20Cloud9 2010 20 Thank You!
    21. 21. Cloud9 2010 21 Detect & Correct in Action Deals Maximum number of deals set to close in the period Conversion Rate Total Closed/Won deals in the period relative to Deals Deals Size Average value of Closed/Won deals in the period Selling Time Average duration for Closed/Won deals in the period - Marketing: Inbound, Outbound - Partner referrals - Uncovered territories, rep turnover - Sales originated deals - Undocumented deals - Expired deals (and quality issues) - Loss rate: stage-based, competitor - Win rate: stage-based conversions - Stalled deals by stage - Deferral rate, slippage - Rep ‘effective coverage’ saturation - Productivity, tenure, training, comp - Product pricing - Product mix - Discount levels, tendencies - Rep portfolio (SMB/Enterprise) - Declared market - Target customer profile - Stage duration, stage movement - Expired deals, data quality - Repeated deferrals - Late stage “new” deals showing up - Close dates improperly set - Rep training, tenure Effected by... Effected by... Effected by... Effected by...
    22. 22. Cloud9 2010 22 Meetings Informed by Analytics • Where are we now–are we on track? • Where are we going–do we have sufficient coverage to make our number? • What’s changed–how does our progress compare to prior periods? Ask YOURSELF:
    23. 23. Cloud9 2010 23 Performance and Coverage Compare current performance against quota and forecast Drill into details
    24. 24. Cloud9 2010 24 Take ACTION Look at last quarter’s results: • Are your reps entering a high % of deals late in the quarter or doing post quarter cleanup? • What % of their committed deals were won, lost, deferred and adjusted? For the current quarter: • Are there a high percentage of expired deals? • Are there a lot of stale deals that haven’t been managed? Should they be closed? • Are Activities being updated regularly?

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