The Sales Insider

Real quick:

Found an interesting research analysis by CSO Insight’s Barry Trailer that showed that sales rep quota attainment actually goes up when the ratio of reps to managers goes up.

In other words, sometimes we need to avoid the temptation to “over manage” and “over analyze” our sales people and simply let them do what they’ve been trained to do.

As Barry says,

“Any time taken from selling is reducing sales capacity. Coaching meetings, research and other value-added activities are valuable and important contributors to overall success. But standing meetings (e.g., every Monday morning at 8:30 am) are often holdovers from an earlier way of doing things. CRM reporting tools and dashboards can provide a basis for both managers and reps to communicate routine matters and to gain performance improvement insights.”

Ostensibly without the need to verbally re-hash each reps’ pipeline.

If by some serendipitous circumstance you were allowed to hang out at the InsideSales.com offices for day, you’d discover pretty quickly that we are passionate about the power of immediate lead response.

We help businesses get better sales intelligence, and effectively manage their sales and lead generation processes in a lot of ways. But we focus a lot of our efforts on immediate lead response for one simple reason:

It’s the #1 way to increase Web-generated leads’ contact and qualifying rates–and thus lead to more productive sales pipelines.

And the other reason we’re so zealous about it is that 65-70% of the business world frankly, well, sucks at it. (see our research with Dr. James Oldroyd, SKKU, Dreamforce ’08, Omniture Summit, and AA-ISP for proof).

In summary:

The aggregate data between the Dreamforce ’08, Dreamforce ’10, Omniture Summit, and AA-ISP Boston research studies shows that approximately 40 percent of all companies NEVER RESPOND A SINGLE TIME to a Web generated lead of any kind. Not “Follows up slowly and ineffectively.” Simply doesn’t do it at all.

Average response time for a first contact attempt OF ANY KIND (phone or email) for a Web-generated lead: 43 hours (when the MIT research shows that for Web leads, contacting a lead by phone within 5 minutes gives a 300 times increase in the probability of making contact).

Only 7.5 – 10 percent of companies EVER MAKE AN ACTUAL PHONE CALL to a Web-generated lead (the rest only use email).

Only 3 percent of companies call first, then send email, which is proven to be more effective than sending email, then calling.

Average number of contact attempts before a rep gives up on a lead? 1.7. Yet Dr. Oldroyd’s research at SKKU shows that barely 45% of contacts happen on the first two calls, and that to ensure 95% lead contact effectiveness, 12 contact attempts is the minimum. In other words, the average sales organization is throwing away half their leads as “uncontactable” simply because enough “touches” aren’t being made.

So what does it all mean? The bottom line?

Bad lead response and lead management isn’t a “problem.” It’s a business disaster of apocalyptic proportions.

Business are killing, annihilating the effectiveness of their marketing and prospecting efforts–and the vast majority of them don’t even know they’re doing it.

If you’re not on a call with a prospect or client RIGHT NOW, put down the phone, and stop what you’re doing.

And get off Facebook and quit fiddling with your iPhone too.

Pop Quiz, hotshot.

Here’s the rules: Without looking at your CRM system, think of your highest-probability deal in the pipeline right now, and answer these questions.

1. Name the specific title of the last person at the account you spoke with on the phone, and the department they work for.

2. Give the name and title of the person that the Person in Question #1 directly reports to.

3. Give the name and title of one of the people that reports to Person #1.

4. Give the name and title of the person that’s going to write the check/drop the corporate credit card/put the final signature on the PO when your prospective sale closes (if you’re lucky, the answer will be the same as Question #1).

5. When was the last time the Persons in Questions #1, 2, and 4 met together to discuss the problem your product/service is going to solve?

6. What paperwork/research/data did they have in front of them when they did?

7. Who else was in the room?

8. How long is it going to be before they meet again?

9. How many other vendors are they considering?

10. Who are they?

11. What features/benefits/advantages of competing vendors are most appealing to them?

12. What’s their “drop dead,” point-of-no-return deadline for implementing any purchased products or services?

13. Which of the Persons in Questions #1, 2, or 4 is setting the budget?

14. What is the budget they’ve set?

15. How is your product service emotionally making life better for the Persons in Questions #1-4? This isn’t about features and benefits, it’s about the direct connection to how you’re going to emotionally change their lives, their jobs, their daily tasks. From Day 1, how is what you’re about to sell to them going to make them enjoy their job more/hate their job less?

16. How is your sales data, case studies, testimonials, research, and best practices justifying the emotional reactions of the Persons in Questions #1-4?

17. Based on Questions 9-16, are you even in the running for this sale, or are you clinging to false hope?

18. Are you tracking the progress of the deal based on your internal sales process,, or on how the prospect is actually approaching the purchase?

19. Based on Questions #5-18, how accurate is your current closing forecast?

20. If your sales manager knew the true answer to Question #19, how would that change what you do for the next 14, 30, 90 days?

Ran into a great blog by Bob Apollo (@bobapollo on Twitter) on the Inflexion-Point Blog this morning that really got my wheels turning, entitled “Is your CRM system a sales prevention system?”

Since one of my company’s biggest products is a lead management CRM, I was intrigued by Bob’s five “danger signs” that a company’s CRM “is actually behaving as a sales prevention system:”

1. Unhelpful Stage Definitions
2. Give – Get Imbalance
3. Poor Forecast Accuracy
4. Static Sales Process
5. Failure to Reflect Prospect Decision Making Process

Items 2 and 3 particularly resonated.

• Give–Get Imbalance

If data input to the CRM is not not being used to give reps feedback, it simply falls into a “black hole,” Bob states, “with no evidence it is ever subsequently used by management for any practical purpose. Sales people need to believe that the information they enter is used by management to help them improve their chances of winning.”

Bob is absolutely correct, and this is generally more of a process problem than a data problem. My experience is that companies that waste time entering a lot of data into their sales intelligence systems do so because they don’t have a specific process for defining wins and losses–so reps feel compelled to enter anything and everything they think is going to help them.

Fix the process–identify key sales staging points that align to the customer, not the seller, then configure the CRM software to make data input direct and as easy as possible. I regularly see clients go through crazy finaglings to create some “essential data view” that their CRM system would support natively—if they knew how to use the system’s report engine properly, and then aligned their processes to leverage it.

• Poor Forecast Accuracy

Here Bob points out that according to CSO Insights, sales forecast accuracy for most companies hovers right around 50%, and that “Even if the projected headline revenue number is achieved, the way in which the number is made up bears little relationship to the deal by deal forecasts, and relies on heroic selling rather than intelligent use of resources.”

Sales metrics gurus The Bridge Group have repeatedly stated that a forecast should be 90% accurate in terms of both time frame and dollar value–and in my opinion, forecasts that don’t reach that level of accuracy aren’t much better than licking your finger and sticking it into the wind.

Accurate forecasting requires a process based on how the customer buys, not on the rep’s sales process. Revenues and time frames aren’t about telling the sales manager “how close” the rep thinks the deal is to going final—it’s about what’s actually going on inside the prospect’s “box.”

At some point every sales organization that engages in outbound prospecting has a debate over whether targeted sales voice messages make any real difference in results.

The primary complaints of those who don’t like using voice mail as a prospecting tool:

1. It doesn’t work
2. Even if it does work, it’s too time consuming.

I’m here to debunk both of these myths.

Myth #1: It doesn’t work.

The Reality: voice mail works, and it works well.

On any objective level, this complaint is a straw man argument. Inside sales industry insider Ken Krogue has created and nurtured two $1 million+ a month sales teams in two different industries—business development at Franklin-Covey (now Franklin-Qwest), and telecom with inContact, formerly UCN. Every piece of data he’s ever compiled from his teams shows that direct prospecting voice mail averages a 4-6 percent response rate –and it’s often much higher, depending on the product, vertical, and targets chosen.

To give some perspective, consider that The Direct Marketing Association states that direct mail marketing pieces are typically believed to get between 1 and 3 percent response rates, and Business Week states that since 2006, Web banner click-throughs average around .2 percent across the board.

Voice messages while phone prospecting gets double the average response rates of direct mail, and 25 times the response rate of Web banner ads. Even at the baseline level of effectiveness, if you’re not leaving voice messages with your prospects, you’re essentially losing 1 contactable lead for every 20 dials you make.

Now here’s the kicker: Ken’s experience has also proven that voice mail responses from prospects increases if you include another medium along with it—email, or fax, or both.

Combined together, all of the forms of contact create a synergy that pushes response rates upwards into the 12-14 percent range.

Myth #2: Even if it does work, it’s too time consuming.

The Reality: a dialer tool makes this a total non-issue.

Without a dialer automating the voice messaging process, the time investment can be heavy. When you consider the average voice mail is a variation of the same basic 30-second message, if you’re making 80 calls a day, and 60 of them go to voice mail, you’re spending 1800 seconds, or 30 minutes of every single day, simply talking into somebody’s inbox. If you’re a lead gen specialist making 150 to 200 calls a day, that time waste doubles.

But throw in a dialer tool, (like the InsideSales.com PowerDialer) and that wasted time sink vanishes into the ether. Dialer systems are sophisticated enough now where you can record an entire block of potential voice messages, all in your own voice, that you leave for a prospect at the click of a button.

You transfer to the prospect’s inbox and instead of going into your scripted spiel, you simply say the prospect’s first name:

“Hi Dave,”

And then click a button that drops any of your prerecorded messages down. You disconnect from the call, and at that point, you’re free to immediately move to the next call in sequence. Send a short, targeted email to synergize with your efforts, and you’re off to your next (hopefully more productive) call, leveraging the benefits of voice mail and email in a matter of seconds.

The bottom line:

If you don’t want to do voice messaging as part of your prospecting mix, that’s fine, no one’s stopping you. Just don’t go claiming that it’s bunk to make yourself feel better for not doing it.

As a football coach for a city league team of 13-year-olds, I came across a very interesting statistic over the weekend.

Want to know what the difference between success and failure in the NFL?

It’s one yard.

It’s the difference between having a 2nd down and 5, versus 2nd down and 6.

An NFL offense that can average 5 yards on 1st down instead of 4 converts nearly 30 percent more 1st downs.

The same principle applies in baseball.

To bat .300 (the statistical “All-Star” gold standard), a player has to get 180 hits in 600 at-bats.

The difference between hitting .300 and .250 in 600 plate appearances? 30 hits, or 1 additional hit every 20 at bats.

That’s it.

A five percent increase in base hits a year is the difference between being an All-Star (and getting paid like one) and run-of-the-mill.

So what’s the big “So what?” here?

Mostly that I don’t think the majority of us plan our sales pipelines around prospects walking up and saying, “I need what you have, where is it and how soon can I get it?”

If you’re one of the lucky sales reps who gets leads that are always qualified and ready to buy, more power to you, but I know for most of us, sales aren’t 80-yard touchdowns or “home runs.” They’re a consistent process of “moving the chains,” controlling down and distance, and setting ourselves up for success.

Hitting singles, moving baserunners, and setting up RBI opportunities.

Too many reps go into their next phone call, their next email, their next conversation not really knowing what they want the outcome to actually be—so it’s not for lack of reason that noted sales evangelist Paul Castain preaches using a “sales playbook.” A playbook teaches a rep how to make the “right call” for the right “down and distance,” and to make progress with every “touch.”

If it feels like you’re constantly facing “3rd and long” situations in sales, go back and look at your strategy and playbook–for every down and distance. Occasionally you’ll convert a “3rd-and-13″ type of prospect out of sheer luck, persistence, or both. But good “down and distance” means running the right “plays” to have productive first and second downs–and not having to sweat the pressure of converting a “3rd and long.”

Top 20 Articles on www.KenKrogue.com

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Had an interesting discussion yesterday about some common sales intelligence metrics and analytics, thought I’d share a short tidbit with you.

Someone asked whether it’s more important to focus on the Cost Per Lead (CPL) versus the Cost Per Opportunity (CPO).

CPL is the cost in direct marketing spend to generate an inquiry, no matter how raw or unqualified.

CPO is the cost of creating an actual, viable, closable opportunity that enters a buying cycle.

Here’s the trick: The real gauge of value isn’t necessarily the actual number of either one—it’s the disparity between the two.

If your cost per lead is very low, it’s usually a good thing, right? It means we’re generating a lot of leads at very economic cost.

But what’s the difference between it and the cost per opportunity? If the difference in numbers is significant, it tells you that you’re generating lots of low quality leads that really have no chance of closing—and thus a lot of your marketing budget is getting wasted.

Obviously you want both metrics to be as low as possible, but pay attention to the spread, as it will give you some significant clues about how effective your marketing actually is.

It’s pretty simple: In three and a half years doing client services in the sales software space, here’s the Top Five Things I’ve found that will kill even the most promising sales automation purchase.

1. The true value of the system is never made apparent.

Forcing people to use new software or systems is certainly a management right, but an effective sales tool must appeal to the reps by solving immediate pains, and by making it easier for them to stay organized and keep promises to their customers and co-workers.

It has to provide better sales intelligence (data), improve speed and efficiency (automation), or heighten overall employee impact (training and process development), or employees simply tune out.

2. No one in management owns the outcome.

It’s not rocket science. In many cases, organizations simply don’t demand accountability from someone–anyone–to make sure the initiative succeeds. They don’t plan for data migration needs, never align the process to work with the new software, and don’t prep their sales collateral to move to the new system.

Most implementations work best when one key individual, or maybe two, have final say on what gets done and what doesn’t. “Implementation by committee” means too many people have their hands in the pot, and conflicting agendas and priorities inevitably boil up.

3. Bad data.

As Trish Bertuzzi and the sales metrics gurus at The Bridge Group recently reminded us, bad data costs sales teams money every single day.

Though programmers will always design their systems to be as customizable as reasonably possible, too many take for granted that functionalities are often hard coded and cannot be changed. Having to redesign an entire department process just to get some value out of a new sales analytics system is rarely at the top of managers’ “Fun List of Things to Do With My Time.”

Working for a strictly B2B sales company (caveat: many of our clients sell direct to consumers, but we ourselves really only target businesses), I’m constantly evaluating the differences between B2B and B2C selling — as well as the similarities as they arise.

Branding, connecting with the customer, sales approaches, creating demand, and so on, all have some crossover between the B2B and B2C worlds.

But I’ll admit I’ve had a hard time justifying investing lots of money into social media. In the B2B space, it just always seemed relatively unimportant in the scale of things, compared to other means of business development.

So I was interested to see a post on No More Cold Calling that affirmed my suspicions.

Author Joanne Black states,

“Social media is a powerful tool for three things and three things only:

1. Search engine optimization — use your key words and raise your presence on the web.
2. Find out who people are — learn about a person’s background and your connections.
3. Find out who people know — look for close connections that you can leverage.

Some salespeople tell me they actually get clients through social media. Well, maybe if you have a commodity business. Could it happen? Yes. Do I rely on it? Absolutely not. I only count on what I bring about-through a proactive, intentional, referral strategy with personal introductions.”

As Joanne says, are there absolutely zero direct marketing opportunities in B2B using social media? No, but the very nature of B2B demands working with multiple decision-makers, multiple levels of needs to address, and multiple tiers of implementation. The simple fact is, the “reach” necessary to make large scale B2B sales happen through social media is incredibly thin.

If you’ve spent any time on this blog, you’ve probably heard me bring up a company by the name of High-Yield Methods (http://www.h-ym.com) and its founder, Dick Lee.

Dick’s been a top-level business consultant for three decades now, but he’s also an insightful blogger on CustomerThink.com, a voracious researcher, and possessor of a wicked sense of humor.

In his “Another Inconvenient Truth About Lead Management” whitepaper, Dick bemoans that far too many CRM software vendors tell their prospects that CRM will magically take care of their bad lead management and sales processes. His precise words were, I believe, “Yeah right. And Santa Claus still comes down our chimney every year.”

In other words: Don’t buy technology to solve a problem it has no chance of solving.

Purchasing technology is not a “strategy.” Technology doesn’t hire employees, or mentor sales reps. It doesn’t naturally improve poor leadership, analyze market trends, or make any of the million-and-one daily decisions that form a company’s direction, ethos and culture. It doesn’t magically motivate reps to do lead nurturing or make important prospecting calls, and it certainly doesn’t create compelling content and customer-centric sales presentations that serve prospect’s needs. Buying a sales automation system to fix bad processes is akin to buying a Corvette because you’re always 10 minutes late to work.

The bottom line: if your underlying sales strategy is garbage, the result of sales automation technology is generally little more than the production of more efficiently derived garbage.