Sales Performance Is Up—But at a Price

Salespeople are working harder, and they're seeing some payoffs, according to this year's edition of CSO Insights' annual report, Sales Effectiveness Insights—2005 State of the Marketplace Review. For the first time since the dot-com bubble burst, the number of sales reps who meet their target revenue has risen, but several performance metrics are down.

Overall quota attainment, the simplest and favorite measure of sales effectiveness was up—from 49 percent in 2004 to 58 percent in 2005. Last year was the first time the number sank below the 50 percent mark.

But, as we at CSO Insights have been saying at conferences across the country, there is a dark side to this performance improvement. Several performance metrics have remained the same or declined in the past 12 months. Such indicators as the length of the sales cycle, the outcome of forecasted opportunities and the number of calls it takes to close a sale have stayed more or less the same—or have gotten worse.

In short, unless you were one of a very fortunate few who had your quota number reduced, you most likely got there by working harder, not smarter. That is, most reps put in more hours, worked on more opportunities, made more calls and submitted more proposals to get where they needed to go. There’s a limit to how far you can take this, both physically (there are only 168 hours in a week) and emotionally (it’s simply not worth it!).

Can CRM technology help turn this tide? Twenty-nine percent of companies that did invest in and implement CRM in the past year reported significant impact on their sales performance. At the same time, 19 percent reported no measurable improvement, and 38 percent reported minimal improvement. If ever there was needed reinforcement of the notion that technology alone is not a "silver bullet," these numbers should support it.

Better results were reported for companies that invested in sales methodology for their teams. Thirty-five percent reported significant improvement and 49 percent, noticeable improvement in their sales performance.

But the best results were companies that had a process; reinforced and enforced it; used technology to enable/support it; and provided ongoing performance feedback to their reps. We label these Level 4 companies, and they outpaced the general survey population by a wide margin.

As you see in the figure, Level 4 firms had an average quota attainment of 67 percent. This is a significant difference and will take you much further down the road toward making this year’s number.

There were several other areas where Level 4 companies outdistanced their sales cousins. Steps in the sales process had higher yields; forecasts were more accurate; and we identified a half-dozen other metrics where Level 4s were at least 15 percent higher in absolute numbers.

What does this all mean? Here's the bottom line:

• CRM is more than just technology
  
  
  
  
• Technology alone does little to significantly improve sales effectiveness
  
  
  
  
• Sales process coupled with enabling technology is paying real dividends
  
  
  
  
• Companies that focus on specific sales challenges are making the greatest gains
  
  
  
  

You can find other facts about the sales effectiveness marketplace in CSO Insights 11th annual benchmarking report, Sales Effectiveness Insights—2005 State of the Marketplace Review, available at the CRMGuru.com store.