The Sales Enabler - Jeff Ernst - Sales Enablement Best Practices

The real benefit of SaaS to customers

A lot has been written about the benefits of SaaS to customers, but Jeff Kaplan beautifully describes what I think is the KEY advantage in his Datamation article How SaaS Changes the Vendor-Customer Relationship.

Jeff says:

"SaaS shifts the responsibility of successfully deploying and maintaining software applications from the customer to the vendor. This moves the burden to the vendor to ensure the success of the application."

"...vendors are under more pressure to ensure their solutions satisfy their customers’ requirements or they risk abandonment."

SaaS vendors live or die on their renewals.  It's not widely talked about, but since vendors don't collect big upfront license fees, yet still incur costs of customer acquisition, a customer often doesn't become profitable to a vendor until the second or third year.  So if the customer doesn't renew after the first year, you got it, the vendor loses money.

With premise-based software, vendors aren't nearly as motivated to get customers up and running, which explains why so much of that software sits on a shelf.  But with SaaS, if six months goes by and the customer still hasn't rolled out the application, then worst-case, the customer won't renew, or more likely, will negotiate a lower subscription fee to, in effect get another 6 months for free or pay for fewer users.

I'm seeing a trend building where SaaS customers are starting to push back on annual subscription fees in favor of utility-based pricing models that are more reflective of the actual usage and value the customer is getting from the system.  For example, in a hiring application they want to pay by job post. 

This means an even smaller, or no upfront subscription fee for the vendor, and revenue only when the system is used.  With this model, the vendor is motivated to get it deployed, users trained, and the app ingrained as part of the business process it supports.  Otherwise the meter doesn't run. 

SaaS vendors should read Jeff Kaplan's article and arm their sales reps to talk about the REAL benefit of SaaS to the customer.

Do you focus more on the top 10%, or the other 90%?

It's such a common state that it's become accepted as a fact of life in sales:

20% of sales people bring in over 60% of the revenue

Year after year, surveys have backed this up.  CSO Insights, in their 2009 Sales Performance Optimization Report, showed the following:

People just assume this will never change.  But they're wrong, it is changing...for the worse.  I've talked to several sales leaders in the last 6 weeks who have said that the gap is getting even bigger in the economic downtur, to the point that 10% of sales people are bringing in 80% of the revenue. 

It's hard enough for average reps to hit their numbers in good times when companies are investing aggressively.  A combination of luck and accidental sales helps some of them hit their quotas.  But in a downturn, only flawless execution of the sales cycle will get you a deal.

I always ask them what their best reps are doing differently from the rest of the pack.  They usually have no idea, because they don’t have enough visibility into what reps do in the field. 

So they chalk it up to intangibles.  It’s in their DNA, it's intuition, it's stuff that can’t be taught to the rest of the reps.

The fact is that the best of the best are adapting and figuring out what works.  The best reps know how to get aligned with decision makers.  They’re doing this by uncovering the real buyer’s pain and issues, and having credible conversations about how working with your company will make those issues go away. 

The rest are struggling.  You’ve seen it, they always talk about all the great phone calls they had this week, but the phone calls don’t end up going anywhere, and all this activity isn’t translating to enough pipeline opportunities and deals.

What scares me the most about this is the number of Sales VPs who put all their attention on that top 10%, and sink or swim for their quarter on what those 10% can produce.

What you should be focused on is finding out what those 10% are doing, and pull out the nuggets that can be replicated by the mere mortals.

Now expect you’ll get pushback from lots of places.  Sales managers will balk, and say that the reps who aren’t selling just need more leads, or they’ll tell you that the best reps won’t reveal their secrets. 

The reps themselves will likely tell you that they don’t know what their magic is.  But if you push through this resistance, you’ll find gold. I know I find gold every time I do this for a company.

Listen in on sales calls.  Listen to the words the buyer is using when they talk about their issues and raise concerns. 

Get 20 minutes with one of your best reps.  Ask them:

• What do the conversations sound like when you’re at that stage with a buyer?
• What issues are they struggling with?
• What objections are the buyers raising?  How are you overcoming those objections? 

But don’t stop there. Talk to customers who recently bought from that rep, and ask the customer one question:

When you were going through your decision-making process, what did the sales rep do to earn your trust and help you make a confident decision?

You’re really looking to find out why they bought, and hear in their own words how they describe what you do for them.

I guarantee if you make the effort to find out what's working, you'll find a whole slew of things you can package up and use to arm the other 90% of reps so they can be delivering more value in the conversations they have with buyers.

Measuring CRM success (or failure) rates

Last week I wrote about the struggle most B2B companies have getting their sales people to adopt their SFA/CRM system.  Michael Krigsman's blog post about CRM failure rates: 2001-2009 last week pulled together statistics posed by various research firms over the last 8 years on CRM failure rates, and as you would expect, the numbers were all over the board:

• 2001 Gartner Group: 50%
• 2002 Butler Group: 70%
• 2002 Selling Power, CSO Forum: 69.3%
• 2005 AMR Research: 18%
• 2006 AMR Research: 31%
• 2007 AMR Research: 29%
• 2007 Economist Intelligence Unit: 56%
• 2009 Forrester Research: 47%

What this shows is that the definition of CRM success or failure is not clear. 

The AMR data was the most generous, though it only measured “% [of] respondents that have experienced any implementation failures that kept them from ‘going live’."  A few of the others were still looking only at the success of the "implementation".

As one commenter accurately pointed out, one reason its so hard to measure success of CRM is because most companies don't set quantifiable goals for what they're trying to achieve with CRM.  I've heard of companies that have said "we have to implement a CRM, just like we have to have a phone system."  

So how do we measure the success or failure of CRM?  If we decompose the name, CRM is about managing relationships with customers.  Everyone has seen those CRM vendor marketing diagrams that put the customer in the center with all the CRM modules surrounding the customer. 

So the measures of success should be centered around the quality of those relationships.  Why not interview customers and ask them if they are more satisfied with their 'relationship' with the company than they were before the CRM went in?  Why not measure the ways in which the CRM system has resulted in increased revenue?

Of course, there are internal efficiencies to be gained, such as centralizing all your customer data in one place, and reducing the time it takes for customer-facing employees to access information about a customer.  But if that's what companies are focusing on, then we should be calling it Customer Data Management.  And all those things should have a positive impact on your relationship with your customers.

Sales reps will never use SFA, so stop beating them over the head

I hear it at least 10 times a week.  Every sales or marketing manager I talk to about Sales Force Automation (SFA) says that their company has to beat their sales reps over the head to get them to use it.  Here's how one of my clients describes their SFA experience:

“We spent almost half a million dollars to roll out our SFA system back in 2005, because we wanted more visibility into our pipeline so we could get better sales forecasts. We tried everything to get the reps to enter data. First we offered incentives, but that didn’t work. Then we started sending emails to the sales managers when their reps hadn’t logged in. That didn’t work either.  Now we're threatening to withhold commission checks if they don’t update their deals. So the reps wait until the night before their sales manager's meeting with the VP to make update their deals. We don't have much confidence in the data, but at least we’re getting the salespeople to log in.”

I wish I had a dime for every time I’ve heard someone tell a story like this about their SFA adoption struggles.

You can't blame the salespeople.  They want to be out selling, but we're asking them to be bookkeepers.  As Joe Galvin from SiriusDecisions puts it, "SFA really stands for Sales Force Accounting, since it provides management with visibility into sales but does little to help people sell." 

It's no wonder it takes a stick to get them to use it.  Stop beating them over the head.

What would your reps say if you asked:

• Has the SFA system helped you be better prepared for the dialog you need to have on sales calls?
• When was the last time you won a deal because of your SFA?
• Do you get more value out of the SFA than you put in?

The last question is the kicker.  The value meter is way out of whack.  Reps are being asked to put a lot of data in, but they're not getting an equal amount of value out.  So they stick to using the tools they value...their Blackberries and iPhones.

While an SFA system has become an absolute necessity for the management of a sales team, it has been implemented as a tool of control rather than a tool of sales enablement. Traditional SFA systems are intended to collect data about sales activities for the benefit of managers, so they can get their pipeline and forecast reports, but are not built to help a sales person sell better.

If you want people to use your SFA and keep their opportunity records updated, give them a reason to go in.  As you're discovering the messages, tools, and conversations that are proving to work for your best reps, make sure these are delivered to your sales team through the SFA.  Put your sales playbooks into the SFA.  Turn your SFA into an SEA... Sales Enablement Automation.  More on this next week.

What is SFA usage like in your company?  And what have you done to get reps to use SFA?