Benchmarking the world's sales organisations

Who is still benchmarking the world’s sales organisations, asks MARC BEISHON

For more than 20 years, CSO Insights, a specialist sales research firm based in the US, has conducted the biggest global survey of the metrics of sales organisations. Each year it has added new metrics, creating a year by year trend comparison of everything from sales quotas met, to forecasts successfully predicted, to CRM systems implemented. The results combine to show what the best performing companies do well. Not to be outdone, sales training and methodology company, Miller Heiman, started its own world class sales practices report, which while based on fewer metrics, also identified clear and often large differences between what the best performers do and those that often come second (and which demonstrated all too obviously the 80:20 rule of the Pareto Principle).

Now, CSO Insights has become the research arm of Miller Heiman, and the group is probably the only one carrying out this type of global benchmarking and best practice exercise, at least on this scale, and regularly Another firm that is competing is McKinsey, in analysing similar best practices, although it is not carrying out an annual survey; Mercuri has also carried out global surveys. More on McKinsey and Mercuri later in this WORLD CLASS PRACTICES

n Our salespeople consistently and effectively articulate a solution that is aligned to the customer’s needs. R n We deliver a consistent customer experience that lives up to and aligns with our brand promise. R n We continually assess why our top performers are successful. P n When we lose a salesperson (voluntarily/involuntarily), we consistently determine the reasons why. P n We effectively collect and share best practices across our sales and service organisations. P n Our sales managers are held accountable for the effective use of sales tools and resources by the salesforce. P n Our salespeople consistently and effectively communicate appropriate value messages that are aligned to our customers’/prospects’ needs. R n Our culture supports continuous development of salespeople and sales leaders. P n As part of our performance review process, our organisation consistently develops and ensures implementation of personalised performance improvement plans. P n Customers have consistently positive interactions with us regardless of which channel(s) they use to work with us. R n Our sales teams are effective at “surfacing” the specific reasons why certain customers stop doing business with us. R n Our salespeople are effective at selling value to avoid discounting or gaining comparative value in return for price concessions. R

Listed in order of significance R=relationship practice P=process practice article. But first how is the combined CSO Insights/Miller Heiman set-up taking this work forward? The numbers are impressive – apart from the track record, CSO says it has about 40,000 sales and service leaders participating from around the world in collecting more than 350 metrics. By comparing organisational practices against the metrics you can set a priority list of actions, it says.

Now, the title of the latest 2017 World-Class Sales Practices report is rather alarming: “Running up the down escalator”. The implication is that selling is currently in a “two steps forward, one backwards” situation, but it’s actually worse than that – it’s hard enough to just stay still, let alone get to the top. The reason is a topline finding, namely on salespeople making quota, which shows a decline from 2011, when 63% made quota, to just 53% today, which is a huge drop in 6 years. So currently, only just over half of reps are making their plans. Given that things improved for a while after the Great Recession that started in 2008, you might not expect this.

CSO says this isn’t for want of trying, as many sales organisations they know are engaged in transformation programmes, with training and sales tools, and change initiatives. But we seem to be in a new period of uncertainty in global economies, and the spectre of new, disruptive technologies is upon us, such as with artificial intelligence and connected cars. Not least: “Buyers are getting better at buying faster than sellers are getting better at selling.”

But some companies are doing well, and not just the tech giants, Google, Facebook and Amazon.

CSO’s report aims to tease out what makes the difference, and builds on previous work it carried out in constructing a framework for sales effectiveness. Part of this is a matrix – essentially a key account model where on one axis, “relationship”, you are at least an approved vendor, up to the ultimate, a trusted partner; and this is mapped against how well the process of relationships is managed – from random to dynamic. Only a quarter of firms in CSO’s 2017 survey attain the highest performance level (level 3) in terms of having strategic or trusted partner status and a dynamic process. Does this translate into better quota, revenue and other metrics?

For the first time CSO has combined these results with Miller Heiman’s “world class” organisational practices (there are more than 60 of these) to see what is driving a small number of key metrics that most companies can measure – quota and revenue attainment; win, loss and no decision rates; and involuntary and voluntary staff turnover. They have managed to refine this list of practices to just 12, half driving relationships, and half processes. These are listed in the box on page 12, in order of impact.

We have to say that some seem blindingly obvious, such as articulating solutions that align to customer’s needs, but the point is that doing this becomes harder as the selling environment becomes more complicated. And while the practices include some of the “usual sales methodology suspects”, there is now more focus on customer experience before and after a sales cycle, and on salespeople as communicators.

So, companies that agreed or strongly agreed that they did 10 of the 12 practices made CSO’s “world class” category – and their quota attainment is 70%, revenue attainment 96.5% of plan, and the win rate of forecast deals is 57%, which is 10% better than the average of all respondents. Loss rate is 23% (31% average), although no decisions in both groups is about the same, 20%–21%. Voluntary staff turnover in the best is about 4% (9% all), and involuntary 2.5% (6%).

And how many companies are world class, by these measures? Just 7% this year, which though is pretty much expected. When CSO then checked back to see how they also scored in the relationship/process matrix, most were large firms with complex B2B selling. But two other types of firm also do well – large commodity companies that nevertheless have a tight focus on customer processes, and small professional services firms that have excellent relationships.

There are other firms tracking and benchmarking sales organisations, but CSO/Miller Heiman looks to be the main leader in this field. There’s a YouTube presentation on the report at bit.ly/2ifhv2g and see csoinsights.com MERCURI’S PRESCRIPTION

Sales performance consultancy, Mercuri International, conducted a global sales excellence survey recently. Top practices (in order) are: n Systematic account management planning for each customer; a documented sales strategy; defined training and tools for each sales step n Corporate strategy defines explicit sales topics; documented sales processes; cross-functional approaches driven by sales n CRM tool that is integral to the company; image of sales within the firm is excellent; blended learning for developing sales competencies; clearly defined sales strategy. See bit.ly/2yvYRtq

“We seem to be in a new period of uncertainty in global economies, and the spectre of new, disruptive technologies is upon us”

MCKINSEY’S RESEARCH Of all the large management consultancies, McKinsey is probably the one paying most attention to sales. For some time it has been analysing what makes the difference in the sales cycle, and has homed in on the experience that customers have with salespeople, which reflects the emphasis on experience and communications that CSO is also making. McKinsey has developed what it calls a sales DNA tool, which has been applied to about 15,000 reps in a range of industries. It reports that “organisations with the fastest growth know who their top performers are – surprisingly, many businesses don’t – and know the personality traits and skills that correspond with success. They’re also far more likely to customise outreach, tools and techniques to the needs of different teams... it became clear that top-performing organisations treat their salespeople like customers.”

The best companies excel in three ways: l They are systematic in focusing on the intrinsics that really matter – such as hiring the right salespeople and examining the customer base to identify the traits and behaviours of their most profitable customer segments. l They identify the skills that matter and tailor their training accordingly – they are twice as likely as laggards to tailor training by sales role, and nearly half say they spend significant time and money on training, compared with just over one-quarter of underperformers. They are also more likely to invest in technology and processes. l They make it easy for their people – the strongest sales leaders try to make things as easy as possible for their reps so they can sell more. They focus on cutting down on paperwork, automating routine operations, and delegating administrative tasks. They also centralise common activities such as bid and pricing support and staff roles.

Top performers do well in pipeline management and product knowledge, and reps get as much as 75% of their time for customer-facing activities. To do better, it’s suggested you communicate well with the salesforce, invest in coaching and also in sales enablement apps – see our listings on page 28. McKinsey’s articles are at bit.ly/2gKr4Cv