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Sales Performance Optimization Study 2016 Keep and Grow More Analysis




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Sales Performance Optimization Study – 2016 YŜŜǇ ŀƴŘ DǊƻǿ aƻǊŜ Analysis

mailto:[email protected]




Acknowledgments

We would like to thank all of the sales executives who annually share the data related to their previous year’s sales performance

and the best practices they are leveraging to optimize how they sell. Without their support and insights, the development of the

research knowledge base used to create the 2016 Sales Performance Optimization Topical Reports would not be possible.

Next, we would like to thank the following sales effectiveness companies for their partnership and thought leadership support for

this project: Accenture, InsideView, and PROS.

We owe a debt of gratitude to many colleagues, mentors, and advisors whose help made this project possible. To list them all

would be impossible, but a few deserve special mention: Sales Optimization Group, Selling Power, SellMoreNow, St. Meyer and

Hubbard, and Tellwise.

Finally, we would like to thank our editing team whose hard work, diligence, and endless hours made this project possible. Thanks

to Kim Cameron, Diane Hodges, PhD, Paul Maxwell, and Andy Jesmok.


http://www.accenture.com/us-en/pages/index.aspx

http://www.insideview.com/

http://www.pros.com/

http://www.pros.com/

http://www.salesog.com/

http://www.sellingpower.com/

http://sellmorenow.com/

http://www.stmeyerandhubbard.com/

http://www.stmeyerandhubbard.com/

https://tellwise.com/




Table of Contents

2016 Sales Performance Optimization Study Introduction .......................................................................................................... 1

Keep and Grow More Analysis Introduction ............................................................................................................................... 1

Ability to Renew Business With Customers ................................................................................................................................ 4

Ability to Penetrate Other Business Units Within Existing Accounts ............................................................................................ 7

Ability to Effectively Cross-sell and Up-sell ................................................................................................................................. 9

Ability to Generate Customer Referrals .................................................................................................................................... 11

Primary Responsibility for Minimizing Customer Churn ............................................................................................................ 14

Role of Customer Support in Generating Sales ......................................................................................................................... 17

Relationship Between Sales and Customer Support .................................................................................................................. 19

Ability to Farm Additional Deals From Existing Customers ........................................................................................................ 21

Ability to Effectively Communicate With Customers ................................................................................................................. 24

Ability to Create Customer Case Studies and References .......................................................................................................... 27

About CSO Insights .................................................................................................................................................................. 30




Page 1


2016 Sales Performance Optimization Study Introduction

The data used for this analysis were gathered as part of CSO Insights’ 22nd annual Sales Performance Optimization study. As part

of this research effort, we utilized the first 500 respondents surveyed from companies worldwide, collecting information on over

100 sales effectiveness related metrics to create this report. We continue to leave the survey open to collect additional data for

benchmarks based on geography, vertical industry, company size, etc. A detailed breakdown of the survey participants can be

found in Addendum B in the 2016 Sales Performance Optimization Key Trends Analysis topical report.

The following graphs reflect the aggregated results from the study participants. Advisory Services clients seeking segmented

responses based on factors such as industry, company size, country, complexity of sales process—virtually every metric in the

study—may obtain this information by contacting their CSO Insights Analyst.

Keep and Grow More Analysis Introduction

In this report you’ll see references to farming additional business in accounts and mention of the “hunter” and “farmer” labels for

salespeople. But, another label could be “fisher.” Fisher? Yes, think about this parable where a fisherman is standing on the shore

casting his/her line hoping to catch a fish way out in the waves. Meanwhile, the fish that have already been caught are in a bucket

that has tipped over and are making their way back into the water! So it goes: acquisition of new accounts continues to top the

list of CSOs’ objectives (see page 5) while growing and elevating established relationships seem less adventurous.

Want adventure? Try making your number without a seriously high percentage of your revenue target this year coming from

existing customers. Start-ups know this situation all too well and are manically focused on pleasing their first customer(s) to keep

them as proof points, reference sources, and the beginning of an established base. When and why does this devotion to keeping

and growing more shift to finding and winning more?

Once base customers have been established, there are legitimate reasons for looking further afield. For example, even delighted

customers may want to avoid sole source suppliers and/or service providers, and think that maintaining some level of competition


https://mhiglobal.az1.qualtrics.com/jfe/form/SV_6QBMicDHfVuDSzX?source=CSOIHL

http://www.csoinsights.com/about-us/Contact-Us



Page 2


will help assure more competitive pricing. Similarly, selling companies want to avoid having too many eggs in a single basket and

often strive to avoid any single customer representing more than, say, 20% of total revenues.

This percentage may seem disproportionately high, or too low/conservative, for some businesses. A more important question is

what target, if any, has been established, and what was the basis for doing so? Clearly, there is no one-size-fits-all correct answer,

but there is always interest in, and something to be learned from, trends. This year, the magic mix seems to be about two-thirds

of business from existing customers; this is where the percentage of salespeople meeting/beating quota and the percentage of

overall revenue attained max out.

During the Great Recession—you remember that, right?—companies paid attention to current customers like they were gold.

Seven years later, the ability to renew business with existing customers—the “land” portion of “land and expand”—has improved

slightly year-over-year, but the “expand” portion seriously lags. More than 60% of firms report the need to majorly redesign or

improve their ability to penetrate existing accounts, effectively cross- and up-sell, or generate customer referrals.

The focus on sales process, tracking key (i.e., leading) indicators, consistently executing, communicating, and supporting

customers—not just lavishing attention on new prospects—were lessons learned by paying a heavy tuition. As one CSO said back

then, “I’m measuring the sh** out of everything!” You may not feel the need to go that far, but finding an appreciation for rigor,

for consistent use of CRM and other tools already brought in but not fully/regularly leveraged, and for sharing best practices across

the sales team will serve sales organizations well.

“CX” is verbal shorthand for Customer Experience—not just for those prospects that are new to a company, their website, and

offerings, but for existing customers that helped get the company where it is today. “Keep and Grow More” with these accounts,

and the abilities needed to do so will become a virtuous cycle for attracting new accounts as well.

As you will see in the findings, if there was ever a time that being in sales was easy, now is not the time. Therefore, in addition to

pointing out the challenges salespeople are facing, we also present some best practices for companies to consider as potential

ways to deal with the issues impacting sales execution performance.




Page 3


After reviewing the findings, Advisory Services clients should feel free to call their CSO Insights Analyst to schedule a briefing to

discuss the potential changes your company may want to explore in order to improve performance in terms of keeping and

growing more business. We also encourage you to make notes regarding the areas where your company is underperforming.

Contact us if you would like to discuss how to improve your sales performance or have questions or comments regarding this

report. Lastly, if you want to know about companies that excel in a specific area or how best to invest your sales budgets, let us

know.

(877) [email protected]


http://www.csoinsights.com/about-us/Contact-Us





Page 4


Observations and Insights

The good news is that the percentage of responding firms

exceeding expectations in their ability to renew business with existing customers is up this year, while those needing a major

redesign or improvement are down. The percentage meeting expectations was unchanged. However, in 2010, coming out of the

Great Recession when everyone learned the value of staying close to customers, only 26.7% of firms reported needing

improvement in this ability—nearly 10 points less than today when you also account for companies that need a major redesign. It

seems that with the strengthening economy, attention has once again turned to chasing rather than keeping business.

To be sure, there is a significant payoff for doing well with this ability. The percentage of salespeople meeting/beating quota for

firms that exceed expectations in renewing business is 63% versus an average of 47% for those that need improvement or a major

redesign. It’s no secret that the most fertile field sales can plow is their existing customer base; this is also a cornerstone of the

Keep and Grow More topical report whereupon firms expand an existing base rather than starting over from scratch. So why do

one-third of companies lag in this area?

Key Findings

Some year-over-year improvement

seen in this metric.

Cautionary warning that tough

lessons learned may be fading with

time.

Best Practice: Implement a

renewal process as well as a sales

process to improve renewal rates.

Ability to Renew Business With Customers




Page 5


One reason may be the undue emphasis placed on “adding new

logos” each year. The chart to the right shows the top sales

objectives for companies as reported in our 2015 Sales

Performance Optimization study. Increasing market share and

rewarding “hunters” rather than “farmers” are common themes.

Still, the question remains: Why?

Clearly, if firms solely rely on their existing customers it will be

difficult, if not impossible, to meet each year’s higher revenue

target, even if no customers defect/depart. So continuing to

expand into new accounts is what fuels future growth. The

important point to be made is that these needn’t be mutually

exclusive initiatives. Like everything else, there must be a balance

between keeping existing accounts while adding new ones.

One major food services company signed multi-year agreements with their clients to provide on-site cafeterias and catering. They

often found themselves competing for and, too often, losing existing customers, even though they were the incumbent provider.

How could this happen when they were tangibly, physically present and, by all accounts, providing high-level service? After a long-

time and marquee client failed to renew, the CSO began asking hard questions. He discovered that the service delivery people

were well liked and enjoyed great relations with their daily customers (i.e., the client firm’s employees), but the account executive

had long since moved on to land other accounts.

They had a sales process but had not put a solid renewal process in place. In addition to improving their account maintenance

procedures, they implemented a renewal process that automatically launched nine months before a contract’s expiration due

date (which, of course, they knew). Simply by putting this program in place and raising the visibility of the issue months in

advance—instead of at the eleventh hour—their renewal win rates increased significantly. Also of note, if the salesperson did not

begin logging actions when the initial nine-month pre-notice was provided, within two weeks the salesperson received an alert

and that salesperson’s manager received an escalation notice.




Page 6


Questions to ask include:

1. What percentage of business comes from existing customers?

2. How does this compare with prior years? (Percentage and absolute revenue figures.)

3. What has been the trend over the past three years?

4. Is there a process in place to improve/ensure better renewal rates?




Page 7



As seen in the prior metric, capturing new accounts was the front-runner for sales objectives in 2015, and it remains so this year.

However, capturing an initial order from a new client is a far cry from occupying a favored position and receiving a disproportionate

share of that company’s business. It’s not unusual for firms to have a solid working relationship with one division, business unit,

or geography of a large company and do no business in adjacent or other parts of that same organization. This unhappy fact is

reflected in the graphic above, where more than two-thirds of firms need to improve or vastly reconfigure how they approach

other units of existing accounts.

What do the firms succeeding in this ability (meet or exceed expectations) know and/or do that differentiate them from the rest

of the crowd (need major redesign or improvement)?

Key Findings

Two-thirds of respondents need to

improve in this important ability.

Capturing new accounts is only the

beginning of ongoing work that

needs to be done.

Best practice: Creatively engaging

customers in the renewal process

can improve overall results.

Ability to Penetrate Other Business Units Within Existing Accounts




Page 8


Not surprisingly, firms doing better at penetrating accounts are seen as dominant or one of the lead players more often (72%)

than firms needing improvement (56%). It’s not news that established firms such as IBM have greater access to higher levels and

other business units than new or less recognized brands. The meets/exceeds firms are also, on average, larger, but not by an order

of magnitude: $304M versus $217M (weighted average).

When looking at a sales organizations’ ability to sell into other business units within an existing account, those that meet/exceed

in this ability have better processes, salespeople trained on these processes, and better alignment with marketing.

Ability to Penetrate Other Business Units in Existing Accounts

Needs Improvement/ Major Redesign

Meets/Exceeds Expectations

Random or Informal Sales Process Implementation 57% 45%

Formal or Dynamic Sales Process Implementation 43% 55%

Percent of Sales Force Consistently Using Process Trained More Than 75% of the Time.* 43% 54%

Sales and Marketing Definition of a Qualified Lead: Formally Agree/Informally/No Definition 34%/38%/28% 61%/25%/14%

*For those companies that need improvement or a major redesign in their ability to penetrate other business units in existing

accounts, 43% of respondents used their sales process more than 75% of the time, whereas among those that meet/exceeds

expectations in their ability to penetrate other business units in existing accounts, 55% of respondents used their sales process

more than 75% of the time.

An IT training company signed annual and multi-year contracts with its customers; typically the buyer was either the CIO or

someone reporting to the CIO. When a contract was coming up for renewal, the company would present them a global accounts

offer. This meant that if the CIO would invite counterparts from other operating divisions to review/sign-up for training and/or

professional services, everyone received the high-volume (i.e., global) discount pricing. In addition, the sponsoring (original) CIO’s

renewal further received the training company’s alliance partner discount. Increased renewal rates (i.e., reduced churn) along

with expanded services and minimal sales effort offset the discount pricing expense.




Page 9



Similar to the challenge of increasing penetration in existing

accounts, the ability to increase average deal size by cross-selling

and/or up-selling within an opportunity also pays high returns. Effectively, firms that do either or both of these activities well are

maximizing the potential of each opportunity. This reduces, though it doesn’t eliminate, the need to generate even more leads.

Larger deals comprised of bundled products/services also provide an opportunity to be more exclusive and, therefore, offer a

greater ability to avoid discounting. All good things.

And yet, minimal progress has been made over the past year in achieving this ability. The figures have improved, but only slightly. Fewer

firms report needing a major redesign in this area (9.4% last year) but more have moved to needing improvement (53.4% in 2015).

We’re hard pressed to call this real progress.

Still, there are two areas that firms succeeding at cross-selling and up-selling share: 1) higher levels of customer relationships (as

perceived by the buyer), and 2) leveraging Configure/Price/Quote (CPQ) applications.

Ability to Effectively Cross-sell and Up-sell Key Findings

Little to celebrate in this category

as firms continue to struggle at

increasing average deal size.

Working closer with marketing

correlates with up-selling and

expanding opportunities.

Best practice: Do not restrict cross-

and up-selling efforts to new sales.




Page 10


Ability to Effectively Cross-sell

and Up-sell

Needs Redesign/

Improvement

Meets/Exceeds

Expectations

Trusted Partner 8% 11%

Strategic Contributor 19% 25%

Solutions Consultant 29% 29%

Preferred Supplier 20% 21%

Approved Vendor 24% 14%

Typically, one thing that increases as companies move up levels of customer relationship is deal size; customers are willing to make

bigger bets with sellers that have demonstrated reliability, domain expertise, and strategic vision.

A successful international computer distributor would routinely be included in corporate “reverse auctions.” An example would

be a firm issuing an RFP for a new system purchase (e.g., 50 servers or 200 printers). While the distributor would respond to each

request, they were not aggressive discounters and, therefore, often were unsuccessful in these competitions to “race to the

bottom.”

However, whether they won or lost these initial buys, they knew exactly what the company issuing the RFP bought—even when

the company did not buy from them. Either way (win or lose), this distributor immediately created a user profile built for when

the buyer would need more RAM, more storage, a faster router, or a bulk supply of printer cartridges. Based on these profiles and

typical usage patterns, they would email offers for replacement parts/supplies on a prescribed timeline, followed by a call.

Margins on these little orders were only slightly discounted as opposed to big discounts on the initial deal because of the

competition.




Page 11



Ask sales leaders which lead source is the most useful, most

valuable, and has the highest return and, invariably, you’ll wind up with “referrals.” We can assert this because Joanne Black, CEO

of No More Cold Calling, has asked this question for the past decade, and the answer is always the same. Sure, having a prospect

or account directly contact a salesperson to ask how soon they can get delivery on something is great, but that’s hardly a “lead

source” and certainly not a scalable, repeatable one.

New Metric: Two-thirds of firms

are missing out on this most

invaluable of lead sources.

Needs improvement in this area

outnumbers exceeds expectations

by more than 10:1.

Best Practice: Put a formal referral

request program in place and

measure the results.

Ability to Generate Customer Referrals


http://www.nomorecoldcalling.com/



Page 12


Ability to Generate Customer Referrals

Needs Major Redesign

Needs Improvement

Meets Expectations

Exceeds Expectations

Percentage of Salespeople Meeting/Beating Quota

49% 56% 61% 74%

Percentage of Annual Revenue Plan Attained

83% 83% 86% 96%

Salesperson Turnover: Voluntary/Involuntary

13%/9% 11%/7% 8%/6% 8%/7%

So, if everyone knows referrals are valuable, and when the data so clearly support this notion, why do firms needing improvement

in this ability outnumber those exceeding expectations by more than 10:1? It’s likely the firms weighing down the left side of the

graphic above are relying on referrals that “organically” appear, that is, of the referring party’s own volition. Another possibility is

that the keen focus on “making the number”—closing the sale—means that less attention is given to delivering what was sold.

This is the perfect time to ask for a referral.

Joanne Black is a leading authority on referrals and gives suggestions in her latest book, Pick Up the Damn Phone!

1. Failure to Prioritize. If your sales organization has other priorities, answer her question: What is more important than

generating qualified leads, getting every meeting with decision makers, closing deals, and generating revenue?

2. Lack of Metrics. Many companies believe referrals are tough to measure or never added them to their sales goals.

Measure essential activities (e.g., number of referral introductions requested, referrals received, and meetings

conducted). Set referral goals for the company and each member of the sales team.

3. No Sales Process. Asking for referrals is a proactive strategy to be nurtured and integrated into your sales process, not

just left to word of mouth. Your clients may not speak for your work…unless you ask.

4. Lack of Skills/Process. Saying, “By the way, if you know anyone who could benefit from our services, please pass my

name along” may serve to check off your to-do list but won’t get you referrals.


http://www.nomorecoldcalling.com/pick-up-the-damn-phone-2/



Page 13


5. Personal Discomfort. No matter the skill or maturity level, asking for referral introductions feels uncomfortable for

most people. We worry that asking busy people to help us might mean risking those relationships. Worst of all, they

might say no.

These are just the tip of the iceberg you’ll want to thaw to start doing a better job of generating customer referrals.

The firms exceeding expectations also far exceed expectations in creating customer loyalty (50%) in contrast to the needs

improvement group (11%) which leads to our next topic: minimizing customer churn.




Page 14



The attraction of “Monthly Recurring Revenue” and the “long tail” of base business have migrated from the Software-as-a- Service

(SaaS) world to everyone looking at subscription services or other models that keep solution/service providers more actively

engaged in relationships with their customers over a longer period of time. This is a more current take on the Customer Intimacy

model which still has relevance in today’s world. Let’s face it, whether monthly bite-size amounts or big annual contracts, if sales

organizations don’t have a significant portion of their annual number coming from existing customers, then they have a long, uphill

slog ahead and a higher cost of sales putting them at a competitive disadvantage.

The table below shows that leaving customer care to sales is actually worse than not assigning anyone to the task! Even combined

with customer service, it appears that when two groups are responsible, no one is responsible—only worse.

Key Findings

Customer service is increasingly

shouldering this important aspect

of account management.

Surprisingly, little change seen in

the segment where “No One” is

responsible.

Best Practice: Identify appropriate

metrics to help predict and

prevent churn.

Primary Responsibility for Minimizing Customer Churn




Page 15


Primary Responsibility for Minimizing Customer Churn

Customer Service

Sales Organization

Sales and Customer Service

No One

Overall Churn Rate 8.6% 13.8% 13.9% 10.6%

It’s easy to take existing customer relationships for granted. After all, you’re doing a great job delivering what they bought, aren’t

you? But this is not an area where you want to relax or can afford to do so. In addition to minimizing churn, that is, maximizing

customer retention and the percentage of revenue from existing customers, you’ll want to pay attention to your best customers.

Across all size companies, geographies, and industries, the average percentage of business from existing customers is 65%. This

actually appears to be the right balance as shown in the table below. When the percentage of business from existing customers

drops below 60%, both salesperson and overall plan attainment drop. But when the percentage of revenue from existing

customers exceeds 70%, the performance numbers also trail off, though not as dramatically. This suggests a point of diminishing

returns when there is an over-reliance upon existing customers. Based on the 2015 data, the optimum balance seems to be 2/3

existing, 1/3 new customers.

Percentage of Business From Existing Customers <60% 65% >70% >80%

Percentage of Salespeople Meeting/Beating Quota 51% 61% 56% 56%

Percentage of Annual Revenue Plan Attained 82% 92% 91% 90%

Percentage of Business From Top 20% of Customers 56% 60% 67% 69%

Source: CSO Insights’ 2015 Sales Management Optimization study

Though not exactly Pareto’s principle, that 20% of customers represent 80% of revenues, it is noteworthy that the top 20% of

customers represent 60% of revenues at this same point (i.e., 2/3 existing:1/3 new). As the percentage of overall bookings tilts

toward existing customers, a disproportionate amount of business then accrues from the top 20%.

Beyond the figures gathered above, another interesting point has come from past workshops, so this is noteworthy but not

statistically validated. While 60% of revenues may come from the top 20% of customers, an even more concentrated portion of

business, roughly 50%, comes from the top 5% of customers. To paraphrase Ben Bernanke, former Chair of the Federal Reserve,




Page 16


these accounts are “too big to lose,” yet companies often do not have a comprehensive strategic/major account plan in place to

ensure they’re optimized.

If you’re familiar with the American Express OPEN or the FedEx OFFICE programs, both are designed to help their customers grow

their businesses—which, in turn, means more financial services or shipments. Similarly, a CRM software company has a program

where they send a team of business analysts/advisers into client companies to assess their business operations. These assessments

are across the entire enterprise and are paid for by the CRM company and offered to their top customers. They’re making these

investments to both strengthen and elevate their relationship and help their clients grow. Growth means: more revenue, more

salespeople, and, of course, more CRM.

Customer success salespeople are in an increasingly popular and prevalent role. They are individuals that proactively monitor

account activity—easy to do for SaaS companies but not restricted to them. These salespeople work to ensure clients are using all

the capabilities available to and/or appropriate for their situation to proactively keep them from becoming churn candidates.

These companies have also identified metrics that indicate when an account could become a flight risk. These are users that don’t

consistently/regularly log in, participate in user groups or discussions, or use more than the minimum out-of-the-box features, or

areas where customer service has seen a decline in these or similar metrics used to evaluate churn.

Whatever industry, sales leaders do not want to be among the 10.3% (i.e., 1 in 10) of firms that hold “No One” responsible for

minimizing customer churn. If they haven’t already done so, now would be a good time to ask, “What characteristics would be

leading or preliminary indicators of your own customers’ dissatisfaction?” And, “What programs could you put in place to spot and

address them so the customers don’t depart and become a churn statistic?”




Page 17



Traditionally, customer service/support has dealt with either

getting new customers up and running or helping existing customers when they’ve encountered problems. This function was

rightly considered both an important and necessary expense. The old proverb, “A stitch in time saves nine” holds true. Without a

timely response, a minor problem can quickly escalate to serious customer dissatisfaction if it means lost productivity (e.g., I can’t

log into my account), massive inconvenience (e.g., our website has been down for two hours!), or other potential issues in an

increasingly interconnected world.

Starting several years ago, some companies began to stop measuring how quickly customer service representatives could dispatch

a customer and began to have them proactively inquire whether the customer (with a just-solved problem/challenge) would be

interested in hearing about a current special offer or a service that the customer might qualify for based on his/her profile. For

example, the typical commercial bank offers sixteen products/services, while the typical commercial banking customer uses four.

Not every customer could use all sixteen offerings, but the average commercial customer could use more than one-quarter of

Key Findings

Percentage of responding firms

that informally pass leads remains

unchanged.

Customer support’s shift from cost

center to directly generating sales

continues steady growth.

While some abilities improve,

penetrating existing accounts

remains more elusive.

Role of Customer Support in Generating Sales




Page 18


them. Recognizing this, having just sorted out a business checking issue, the customer service person might inquire whether the

customer would be interested to learn about their payroll services. If so, they might be transferred to an appropriate banker then

or, if not convenient, the lead would sent to a banker to schedule a follow-up call.

This formal passing of leads would seem better than the informal approach reported by 40.5% of companies, a figure that has

remained constant over the past three years. As it turns out, formally passing leads has declined from 22% last year to 20.4% this

year. The difference? Customer support directly handling cross-sell/up-sell and customer renewals, each up 5.5 points over the

past two years.

In the table below, informally passing leads shows a massive need for improvement and only tiny instances of exceeding

expectations; however, while better, the numbers still show plenty of room for improvement in the more formal and/or direct

approaches. If anything, the data suggest that this is an ongoing and evolving transition—an evolution rather than a revolution.

The results may feel this way, but the shift from being purely reactionary and ending calls quickly to a more inclusive conversation

was revolutionary—and the revolution continues.

Role of Customer Support Generating Sales

Informally Pass Leads

to Sales

Formally Pass Leads

to Sales

Directly Handle Cross-

/Up-sell

Directly Handle

Renewals

Ability to Cross-sell/Up-sell: Needs Improvement/Exceeds Expectations

66%/2% 55%/6% 50%/10% 50%/10%

Ability to Farm Within Existing Accounts: Needs Improvement/Exceeds Expectations

60%/5% 61%/12% 46%/11% 46%/11%

Ability to Penetrate Existing Accounts: Needs Improvement/Exceeds Expectations

72%/1% 67%/4% 64%/3% 64%/3%

These figures show that customer support directly handling cross-sell/up-sell opportunities and renewals reportedly do better than passing them on to sales, but none of the approaches seem to be doing much for penetrating existing accounts. Yes, sales can farm more opportunities and better handle renewals, but customer support does not appear to provide a path toward greater account penetration.




Page 19



Clearly, if sales organizations are serious about keeping and growing relationships with existing customers, customer support is a

key element. Like marketing’s silo being adjacent to but separate from the sales funnel/pipeline for decades, what came after

the pipeline was also seen as separate (see below).

But a more helpful way of looking at these functions is as a

closed loop with orders/customer support not serving as

the end of the cycle but rather as a feeder of satisfied

customer leads channeled back into marketing—

completing and continuing the cycle.

Key Findings

Customer support as a

disconnected function continues to

decline.

Formal working processes

between sales and support pay off

in key account management

abilities.

Disconnected functions or informal

processes deliver poor results.

Relationship Between Sales and Customer Support




Page 20


“Satisfied customers tell our story best” is a tag line from an old ad campaign and is truer than ever with today’s social media.

Leads generated by customer service and customer referrals go up to 25% when a company’s ability to farm additional business

within existing accounts exceeds expectations; that is, when customers are satisfied and open to repeat and/or commit to add-on

business. In these instances, 40% of respondents report customer support working formally with sales.

When a company’s ability to farm additional business within existing accounts needs major redesign, the percentage of leads

generated by customer service and customer referrals is 20%; only 18% of these companies report customer support and sales

formally work together. Interestingly, combining customer support into sales does not strongly influence these figures either way.

The data are fairly consistent that tying support more formally to sales tends to yield improved results. The table below shows

two other key areas of account management: 1) Cross-sell/Up-sell; and 2) Renewing business, both within existing accounts. We

see that when the first of these abilities needs major redesign, 44% of the time it’s when customer support and sales are informally

working together. Conversely, when customer support and sales are combined, 44% of the time it leads to exceeding expectations

in cross-sell/up-sell ability. Here, the combined functions seem to perform better.

Relationship of Customer Support and Sales

Disconnected Function

Informally Work With

Sales

Formally Work With

Sales

Combined Into Sales

Ability to Cross-Sell/Up-Sell: Needs Redesign/Exceeds Expectations

11%/6% 44%/13% 28%/38% 17%/44%

Ability to Renew Within Existing Accounts: Needs Redesign/Exceeds Expectations

14%/0% 50%/40% 7%/30% 29%/30%

As shown in the 2016 Sales Performance Optimization Study Going Forward topical report, good things accrue at higher levels of

relationship and in today’s business environment this means across all customer touch points, not just early ones (i.e., marketing

and sales).




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Ancestral hunter/gatherers were forced to live a nomadic existence to feed themselves; when an area or a season’s supply was

exhausted they were forced to move on and find what was next. Farming and agriculture, of course, changed all this. Food supplies

became more predictable, methods and machinery became more efficient, and fewer people were needed to feed the population.

“Farming” existing customers is the perfect metaphor because the same benefits and dynamics are in play. More production can

be realized with the same, or less, effort and outcomes are more predictable. It is repeatedly said that, “The most fertile fields you

can plow are existing customers.” So why do the majority of firms (55.2%) still need to improve or majorly redesign their abilities

in this high payoff area? Once again, we turn to this year’s data to see what guidance it provides and what those doing well in this

ability have in common.

Key Findings

Ground lost in prior year has once

again been made up in 2015.

Though nearly the same

percentage of respondents, those

excelling at farming outdistance

those needing redesign.

Best practice: Align selling and

buying processes—it pays off.

Ability to Farm Additional Deals From Existing Customers




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Ability to Farm Existing Customers

Farm Additional:


Farm Additional:

Needs Improvement

Farm Additional:

Meets Expectations

Farm Additional:


Prioritize Accounts to Focus Selling Efforts 19% 25% 55% 67%

Develop Strategic Plans for Major Opportunities

12% 23% 53% 73%

Nurture Promising Leads 23% 22% 34% 53%


49% 56% 59% 73%

The differences in ability to manage and develop accounts and nurture opportunities translate into stark performance differences.

While the firms that know how to farm (exceed expectations) are well fed with 73% of their salespeople making/exceeding quota,

the companies not skilled in this area see their salespeople needing to move on, searching for opportunities to pursue, and barely

making it (49% reaching quota).

The farming metaphor is true in another important way. In 1920, roughly 30% of the population lived on farms; by 1987, that

figure had declined to roughly 2%. Despite predictions that sales, in general, and field sales, in particular, is dying, two-thirds (67%)

still plan to grow in size by an average of 12.6%, in the coming year. However, quotas and the need to continually increase

productivity are rising at least as fast. Improving skills and leveraging technology to meet these increasing demands must be part

of any game plan. The winners will reap bountiful harvests. Those not continually improving (e.g., skills development, leveraging

technology) will find it increasingly difficult to fight for scraps against all other vendors (and channels).

A $1B+ printing company realigned the way it sells with the way its customers want to buy. Key to doing this was realizing:

All customers, even within the same segment and circumstance, are not the same.

It is not possible and may not even be desirable to achieve Trusted Advisor relationships with all customers.

It is OK to be categorized in the “commodity bucket” as a solution provider.




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These realizations may seem self-evident and/or obvious, but each challenged the “do-all and be-all” culture that evolved and contributed to the company’s success over 30 years. Understanding these distinctions is important. Salespeople now follow a sales process roadmap to optimize the offers they present in light of, and in a manner consistent with, maximizing the benefit to the buyer’s business—where that business is in its maturity, market stage (i.e., innovator, early adopter, early majority, late majority, or pragmatist), buying style preference, etc.

If a customer or prospect is in the late pragmatist stage, the salesperson will not present a “Brand New, Never Been Tried Before!” campaign. The buyer has essentially told him or her, “I don’t buy ‘New’.” Instead, the salesperson works consciously and conscientiously to understand the buyer’s situation, goals, and objectives. The desired result is to optimize value by understanding each customer’s preferences and matching a solution to them.

The returns from matching selling to buying styles has allowed this company to farm both accounts and territories more effectively:

Close ratios are up

Unqualified proposal requests are down

Account representatives operate with greater self-sufficiency




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It’s nearly impossible to talk about this ability without harkening back to the Paul Newman movie, Cool Hand Luke, and its signature

line, “What we’ve got here is failure to communicate.” As everyone knows, communication is central to any lasting relationship—

and, once again, there is value in being perceived at higher levels on the relationship scale (see table on the next page).

But what does effective communication mean and/or involve? As has been amply chronicled, buyers today want to know what

the sales organization knows about them and, in particular, their situation (e.g., industry, challenges, trends, etc.). Although the

graphic above does not show this, the actual survey question was “Regularly/effectively” communicate with customers. Regular,

consistent, and ongoing are the hallmarks of communication to customers that work. In addition, “tailored” could be added to

this list. Increasingly, the ability for the receivers of your communication to select topics of interest to be sent to them is part of

the mix.

Key Findings

Might be worth investigating how

firms gauge their communication

effectiveness.

Effective communication and

perceived level of relationship

directly correlate.

Best Practice: Use value-added

communication to be an effective

communicator.

Ability to Effectively Communicate With Customers




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The chart on the right shows the level of relationship (as perceived

by the buyer) for three levels of communication. Needs Major

Redesign and Needs Improvement are combined since,

fortunately, the major redesign group alone was too small to be

reliable.

The level of relationship improves (left to right) directly with

improvement in effective communication. The percentage of

salespeople meeting/beating quota is just one performance

metric that similarly improves left to right: 52%, 59%, 66%,

respectively. Repeat business, willingness to be a reference (see

next metric), and the ability to farm additional business also rise

with increased communication.

But not just more communication; rather, the communication

must be perceived as value-added. One company had a great

example of how to both leverage technology to stay in touch and

communicate with customers and, at the same time, tailor content

to be relevant and useful.

A hi-tech manufacturing company with a global reach sold through

partners and wanted to involve them more efficiently in marketing

and lead generation. One of the first tactics their EMEA team came up with was a customized customer newsletter that came from the

field salesperson to his/her named accounts. These newsletters were marketing generated pieces sent out with the salesperson’s name

but without his/her active involvement. They determined that this model would be difficult to scale with the large number of North

American accounts, so they published industry specific newsletters that were sent by the sales leader for that vertical instead. The program

was so successful they have since hired strategic communications professionals in each of the geographies to help manage the volume

and content of their newsletter communications.




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Here’s what is so interesting: newsletters are mostly for awareness, not necessarily for demand generation. However, beyond simply

communicating (i.e., staying in touch), the company has now completed deals with cold accounts that were “warmed up” through the use

of the newsletters.




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After a fairly significant reversal in this ability last year,

capabilities recorded this year mirror levels reported in 2013-2014. This may actually be progress, given the often noted increase

in buyer expectations and demands and increased levels of competitive activity in today’s marketplace. Last year, needs

improvement and needs major redesign totaled 70%! While we’re big believers in celebrating progress, it should be noted that

those needing major redesign outnumber those exceeding expectations in this ability by more than 2.5:1. Not good—unless your

firm is one of those in the exceeds expectations column.

If you’re thinking in today’s high speed, always connected, and social environment that references don’t matter—well, they very

much do. Seriously, look at it. Customers and prospects are more connected than ever with online customer reviews/ratings,

discussion groups, and case studies—all available without ever speaking to a salesperson. These are the early steps in the “buyer’s

journey” that are usually undertaken without being accompanied by a seller. Instead, new buyers are looking for guidance and

insights from those that have walked the same path ahead of them.

Key Findings

Gains made in this ability over the

past year return to levels seen two

to three years ago.

Those in need of major redesign

still outnumber those that exceed

expectations by a wide margin.

References: It’s about the

relationship—duh.

Ability to Create Customer Case Studies and References




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In this environment, having customers that are willing to speak up for you in your (uninvited) absence are truly worth their weight

in gold. Throughout this report, and throughout the years, we’ve talked about levels of relationship (as perceived by the buyer).

The illustration on this page shows the positive things that firms accrue as they move up through levels of customer relationships.

The attributes in blue increase as sales organizations move up through levels of customer relationship. The items in red decrease

as sales organizations move down through levels of relationship.

All of these things are good for business but, with respect to the discussion item, one might wonder how important customer

references are in the grand scheme of things. The table on the next page suggests references are as important as they have ever

been—maybe more so.




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Ability to Create Customer References and Case Studies


Need Improvement

Meets Expectations


Level of Sales Process: Random/Dynamic 24%/9% 11%/16% 8%/17% 0%/43%

Perceived as Approved Vendor/Trusted Partner

34%/7% 21%/8% 14%/15% 13%/26%

>90% of Salespeople Use a Process TheyHave Been Trained to Use

13% 21% 20% 43%


52% 57% 59% 72%

Once again, we’ll be mindful of the admonition: Correlation is not causation. Establishing, elevating, and maintaining higher level

relationships don’t assure better performance and/or highly referenceable accounts, but every year the data show this to be true.

We looked to see whether customer service’s relationship with sales (e.g., disconnected, work together formally or informally, or

combined) had a significant impact on customer references—none appeared.

Once again, it seemed to correlate most closely with consistently following a sales process—thorough approach, consistent

delivery once a purchase is made, effective communication, and a smooth hand-off from sales to service. These appear to work

well. At least customers seem to think so, and they are the ones that, in turn, provide references.




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About CSO Insights

CSO Insights is the independent research arm within Miller Heiman GroupTM, dedicated to improving the performance and productivity of complex B2B sales. The CSO Insights team of respected analysts provides sales leaders with the research, data, expertise, and best practices required to build sustainable strategies for sales performance improvement. CSO Insights' annual sales effectiveness studies, along with its benchmarking capabilities, are industry standards for sales leaders seeking operational and behavioral insights into how to improve their sales performance and to gain holistic assessments of their selling and sales management efficacy. Annual research studies address sales and service best practices, sales enablement and sales performance optimization.


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Sales Performance Optimization Study · Accenture, InsideView, and PROS. We owe a debt of gratitude...

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Transcript of Sales Performance Optimization Study · Accenture, InsideView, and PROS. We owe a debt of gratitude...