Why CRM Data is So Important: The Elephant in Your Pipeline

How accurate is your sales forecast? According to the latest survey data from CSO Insights, less than 50% of pipeline opportunities close as forecasted. So why have all the massive recent investments in CRM systems failed to improve the situation?

Joe Galvin (@joegalvin) of Sirius Decisions believes he has the answer, and I'm inclined to agree with him. The "Elephant in the Room", as he describes it, is the integrity of your pipeline data. In a recent blog - which Joe has given me permission to republish in full - he explains the problem, and suggests a way forwards...

"Every B2B sales organization we know generates monthly or quarterly forecasts. In our most recent pipeline/forecast survey, we observed that most organizations continue to struggle with forecast accuracy and have seen little improvement from prior surveys. These same organizations have made huge investments in sales force automation (SFA) to generate forecasts – hence the nickname “sales force accounting.” What drives the forecast? The sales pipeline, of course. SFA does a good job of making it relatively easy for the sales rep to maintain an accurate representation of an opportunity’s status. SFA does the rest by adding the numbers to roll up the forecast based on opportunity close date.

SFA also populates pipeline dashboards, showing pipeline data sorted by any attribute (e.g. geography, product, vertical market) and sales stage. With the addition of an analytics application, we can visualize (e.g. conversion/velocity values by sales stage), analyze (e.g. sales productivity improvements) and prioritize (e.g. focus and measure enablement/training initiatives); the pipeline pumps out data that can be studied to our heart’s content. And today’s technology enables numbers to be added quickly and accurately, then presented in a multitude of reports, graphs and dashboards.

The “elephant in the room” is an English idiom for an obvious truth that’s being ignored. Pipeline integrity is the elephant in the pipeline. Inconsistent, random opportunity updates by sales reps using a variety of mutated milestone/methodology definitions – motivated by the political need to satisfy the manager’s request for a 3:1 pipeline ratio – calls the accuracy, quality and integrity of pipeline data into question. Then, if in fact we acknowledge the elephant in the pipeline, how can we use that data in decisionmaking? Why are we continuing to invest in costly SFA systems still plagued by adoption issues after 20 years of deployment?

Pipeline data can and should be the single most critical data point for sales. Before forecast accuracy can be improved, pipeline integrity must be addressed. Sales reps in every region need a common understanding of the definitions, activities and customer outcomes of the sales process. Then first-line sales managers must become fluent in the process and work with their reps to ensure they are accurately and consistently applying these concepts in assessing the status of each opportunity. Standards and expectations for opportunity accuracy and updates must be established.

At a minimum, every rep should update each opportunity at the end of their work week in terms of sales phase, product mix, revenue value and expected close date. That way, sales leaders can have a degree of confidence that Monday’s dashboard report for the global sales leadership call is current and accurate. It’s recommended that opportunities be updated at day’s end. With today’s mobile SFA capabilities, it’s considered best practice for sales reps to update their opportunities after the call itself.

It’s easy to buy and deploy technology. It’s equally easy to ignore the elephant in the pipeline and spin the data however you choose. But before the next SFA check gets signed, think about what it would mean if the pipeline data you looked at could be trusted. Think about what it would mean if you could actually make investment and resource prioritization decisions based on reliable data and then be able to measure impact. Then think about what it would take to get your sales force to manage their opportunities in such a way that the data was reliable. SFA will do the math, but don’t expect it to tame your sales behavior elephant; only leadership can do that. And if you are unwilling to address your elephants, don’t spend the money."

So there you have it. Technology by itself isn't the answer to improving sales forecasting accuracy. Reliable, up to date data is. And to achieve that, you need to address your sales behaviour elephants.

And that - as with so many factors associated with sales and marketing effectiveness - is down to management and leadership, and to establishing repeatable, scalable and predictable processes that every member of your sales force enthusiastically buys in to...