Metrics that matter: How Mea

Metrics that Matter
How Measurable, Actionable CRM Data can
Improve Your Sales

Presented by:
Andy Schultz
Invoc
www.invoc.net
aschultz@invoc.net
713-240-3549

Trouble hearing? Call 1-517-417-5200
Participant Code: 419590

If you don't know where you’re going as a business,
it's impossible to plan a CRM strategy that will support
it.
- Geoffrey James, Selling Power

Tools aside, CRM is 30 percent technology, and 70 of
how to run your business and your strategy for
engaging with customers. That 70 percent is
invaluable.

- Brad Wilson, CRM General Product Manager, Microsoft Business
Solutions, quoted in Destination CRM


CRM is a tool. In the right hands, that is, in the hands of someone who knows what's
important to success in his/her business, it can be a powerful enabler. This is particularly
true of sales leaders.

Sales 2.0 is a sales strategy that uses the technology available to sales teams today to
improve visibility, efficiency, and accountability. Given that definition, Sales 2.0 and our
discussion about Metrics that Matter to sales leaders today are very mutually relevant and
related.


Sales VP: Mack
• Achieved success as a salesperson with a
pocketful of business cards and a lot of hard
work
• Powerful and persuasive personality
• Little patience with or desire to use
technology
• After promotion to VP, his company faced
serious turbulence from the economic
downturn
• Was not able to leverage the tools available
to him to help his team.


Mack didn’t understand this reality:

Selling is shifting from a freewheeling
organization to a culture of accountability.
Whether it is the optimization of sales
pipelines, the resizing of a territory or
performance monitoring to reward the right
sales behavior at the right time, [today's
modern sales organizations can] increase
accountability for all stakeholders while
reducing costs. Armed with precise data ...
sales managers will no longer act on hunches
but will manage by metrics and hold their
salespeople’s feet to the fire.

- Pelin Thorogood and Gerhard Gschwandtner,
Inside CRM http://www.insidecrm.com/features/sales2-
improve-business-112508/


Sales Pipeline Report:

• breaks the potential sales opportunities your sales people are working on down
into their current stages in your sales process
• shows the potential revenue for each of the stages
• made possible by keeping track of opportunities in CRM, along with potential
revenue and sales stage for each opportunity

Sales Pipeline
$1,410,500
$600,000

$400,000

$200,000

$0

Qualify Develop Needs Propose Close


Product Pipeline Report

Widget A Widget B Widget C
$637,500 $477,000 $467,000
$250,000 $250,000 $180,000

$160,000

$200,000 $200,000
$140,000

$120,000
$150,000 $150,000
$100,000

$80,000
$100,000 $100,000
$60,000

$40,000
$50,000 $50,000

$20,000

$0 $0 $0

Qualify Develop Needs Propose Close Qualify Develop Needs Propose Close Qualify Develop Needs Propose Close


2010 Pipeline Velocity


22 Days 28 Days 34 Days 16 Days

Overall Velocity: 106 Days


Pipeline Velocity: Aaron Stevens


Pipeline Velocity: Victoria Marsh



Pipeline Probability

Qualify = 25%
Develop Needs = 50%
Propose = 75%
Close = 95%

Weighted Revenue:
Est. Revenue = $100,000
Probability = 50%
Weighted Revenue Forecast = $50,000


Probability Based on Accumulated
Data
Opportunity

Opportunity

Opportunity CRM
Opportunity

Qualify = 12%
Develop Needs = 41%
Propose = 63%
Close = 79%


Sales Pipeline
$1,410,500
$600,000

Sales $400,000

Pipeline $200,000

$0


Pipeline Probability
Pipeline $250,000 41%
$200,000 63%
Weighted by $150,000 12% 79%
$100,000

Historical $50,000

$0

Probability Qualify Develop Needs Propose Close


Sales Forecast Report
• Typically organizes sales by estimated close date into months or rolling “30 – 60 – 90” buckets
• Estimated Close Date – a subjective value, which may be negative for some companies, but may
work very well for others
• Because the estimated close date for an opportunity is subjective, a sales leader can use this
report to hold reps accountable for their forecasting when they don’t come through
• Often used in concert with a pipeline report
Sales Rep 30 60 90 Grand Total
A Tillman $89,000.00 $120,000.00 $209,000.00
B Smith $84,500.00 $84,500.00
J Adams $136,000.00 $224,000.00 $360,000.00
J Roberts $77,000.00 $77,000.00
K Bright $95,000.00 $95,000.00
L Gregory $152,000.00 $152,000.00
M Baxter $67,000.00 $75,000.00 $142,000.00
O Locke $77,000.00 $65,000.00 $142,000.00
P Timmons $103,000.00 $94,000.00 $197,000.00
R Hull $88,000.00 $88,000.00
S Birch $101,000.00 $101,000.00
S Marcus $76,000.00 $76,000.00
S Nesmith $96,000.00 $96,000.00
T Barney $96,000.00 $99,000.00 $195,000.00
T Bingham $86,000.00 $86,000.00
Grand Total $805,500.00 $835,000.00 $460,000.00 $2,100,500.00


Activity, Time and Expense to Close Opportunities

• CRM enables reps to track the activities they execute to progress and close an
opportunity – i.e. phone call, appointment, email and task activities.
• Reps can track the amount of time spent on each of these activities, allowing that time
to be aggregated for the opportunity as a whole.
• Using the cost of the rep’s time to the company, the hours it took to work the
opportunity, and the revenue from the sale, you can get a good idea of the
profitability of the opportunity.
• You can then identify the types of opportunities that have the greatest profitability,
and pursue those with more focus.


Sales Profitability

One of the big advantages of Sales 2.0 is that it allows you to create a culture of
measurement. The point of examining each step of the sales cycle is to make sure that the
company experiences lower sales costs along with higher close rates.

In other words, metrics is all about profitability.

-Selling Power
http://www.sellingpower.com/content/newsletter/article.php?ia=9045
(free subscription required to view)


Sales Profitability

• Calculate the gross margin per individual sale

o Are you selling the most profitable items?
o Are you selling to the most profitable customers?
o Are you able to use profitability data to command the
proper funding and attention for your own and your team's
efforts?


Sales Profitability

Estimate the actual cost per individual sale

Yearly cost of sales efforts / Number of sales reps /
1,920 (work hours in a year for 1 rep) = hourly selling cost

From CRM, get the number of hours spent on each sale.
Hours per sale X Hourly Selling Cost = cost of sale


Sales Profitability

Base sales compensation on net profit
Gross margin of sale - cost of sale = net margin on sale

Give reps the ability to see the projected net margin on the sale,
and how it effects their commission.

The sales rep will now be able to see the commission become
smaller based upon the amount of time spent with the customer
– or, if the rep manages to increase the size and scope of the
deal's profitability, to see it go up.


Aligning Marketing and Sales

Selling and marketing are joining their separate silos into a seamless and completely
aligned organization. The core character of the Sales 2.0 world is that it relies on sales
and marketing alignment, with shared goals and new responsibilities throughout the
sales cycle, from lead generation and qualification all the way to closed deals. In some
companies, marketing is held accountable (and rewarded) for transactional business
and sales for consultative business.

- Pelin Thorogood and Gerhard Gschwandtner, Inside CRM (emphasis added)
http://www.insidecrm.com/features/sales2-improve-business-112508/


ROI

Marketing
Lead Opportunity Revenue
Campaign

Answer Questions such as:
• Which marketing activities have the best ROI?
• Which marketing activities generate the leads most likely to become closed
opportunities?
• Which marketing activities generate the leads that close the most quickly?
• And more …


Aligning Marketing and Sales

… every lead gets linked to its source, every marketing campaign turns into a quest for
improved ROI, every step of the sales process is measured, every sales initiative is
analyzed and every method is tested. Selling is no longer the place for amateurs who
are afraid of analytics … While amateurs may score an occasional win, professionals
deliver predictable results. With the help of Sales 2.0 tools, they are able to replicate
their best practices and share them across the organization. Sales 2.0 creates a new
breed of professionals that deliver predictability.

- Pelin Thorogood and Gerhard Gschwandtner, Inside CRM (emphasis added)
http://www.insidecrm.com/features/sales2-improve-business-112508/


Conclusion

• Using CRM, a sales leader can start with a few metrics and build a
more intelligent sales organization gradually.
• Intelligence builds upon intelligence.


Thank-you for Attending!

Free Offer for all Webcast Attendees:
CRM Assessment Worksheet: self-assess the quality of
your CRM system.
http://invoc.net/index21.html

Presented by:
Andy Schultz
Invoc
www.invoc.net
aschultz@invoc.net
713-240-3549


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