Connecting the Dots on Sales Performance

Leveraging the 2012 Sales Performance Optimization Study to Inform Sales Effectiveness Initiatives

In 2012, chief sales officers (CSOs) are breathing a cautious sigh of relief. The global economy has modestly improved from a couple of years ago, bringing optimism along with it. Customers are spending again, albeit in a more measured way, which is giving rise to investments in sales effectiveness. Closing sales should be as simple as that game you used to playconnect the dots. Right? Not quite. Although the business mood is more ebullient, the economic rebound will only take sales organizations so far. In fact, drawing a line that links traditional sales tactics to improved sales outcomes is no longer a valid move.

According to Accenture analysis of the 2012 Sales Performance Optimization Study sponsored with CSO Insights, in the last three years, between 36 to 47 percent of sales representatives have failed to reach their annual sales quota numbers. While some CSOs may chalk that up to challenging times, the difference between the data for quota attainment in 2011 and 2012 is less than one percentage pointa clear indicator that the recovery is not helping sales organizations to achieve their goals (see Figure 8).

application of process), how they are choosing to invest (typically spending on sales force technology), and what results, or lack thereof, they are realizing from their choices. The CSO Insights 2012 data clearly shows that CSOs are missing an opportunity to address their organizations underlying sales effectiveness issues. Knowing this, CSOs can instead proceed strategically to achieve lasting sales effectiveness by improving across three key areas in the organization: Customer-centric sales methodologies and processes Sales talent acquisition and retention practices Sales tool adoption. Connecting these three points can be a winning solution for CSOs and their organization as a whole.

It is time to play a smarter game.

To boost sales effectiveness, Accenture asserts that CSOs have to look deeper to fix a fundamental disconnect between where they see issues in their sales organizations (primarily in sales methodology and

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Top priority to increase sales effectiveness

No matter how they play the sales game, CSOs across the globe say that their top priority this year is to increase sales effectiveness (56.3 percent), followed by increasing revenues (51.9 percent) and improving up-selling/cross-selling at 38.9 percent (see Figure 1). Increasing sales effectiveness is clearly a worthy response, but it begs the question: What do CSOs really mean by sales effectiveness? The definition of sales effectiveness, and the ensuing strategies

and tactics that organizations take to achieve it, can vary considerably. For some CSOs, the connotation relates to improving sales productivity and quota attainment. For others, it is about reducing the sales cycle or the cost of making a sale. Win rates, customer satisfaction and discounting are additional metrics that CSOs may use to track sales effectiveness. CSOs striving for high performance will inspect the inner workings of their sales organization and determine which levers will truly improve sales effectiveness. They will rethink the game and refine their strategies.

Based on Accentures experience with multiple clients and our analysis of the CSO Insights 2012 data, we assert CSOs have an unprecedented opportunity to achieve significant gains in sales effectiveness by focusing on three key areas: Develop consistent, customer-centric sales methodologies and processes that sustain customer loyalty Embed more science into sales talent acquisition and retention practices Drive adoption of sales tools through alignment with processes, especially with mobile solutions that provide a distinctive sales representative experience.

Figure 1: The main objective for CSOs is to increase sales effectiveness. Increase sales effectiveness Increase revenues Improve up-selling/cross-selling Improve customer loyalty/satisfaction Capture new accounts Improve margins/reduce discounting Improve team selling Optimize lead generation Reduce sell cycle time Increase reorder/renewal rates Other (please specify)
Source: CSO Insights 2012

56.3% 51.9% 38.9% 38.5% 37.0% 29.8% 17.3% 12.5% 8.7% 8.2% 4.3%

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Consistent, customercentric sales methodologies and processes

Despite the sophistication and success of global companies in the survey, CSO Insights 2012 data indicates that sales organizations across every industry are underutilizing their sales methodology and failing to use common go-to-market processes. Onequarter of CSOs indicated their sales force consistently uses their sales methodology less than half of the time, with another 31 percent using it up to only three-fourths of the time (see Figure 2). Accenture knows that improving adoption of sales methodology has a direct correlation to results. In fact, according to last years survey, sales representatives who use an organizations sales methodology 90 percent of the time achieve 70 percent of their targets. (This question was not asked in the 2012 survey.) The number drops to 55 percent for representatives who use a methodology less than threequarters of the time. Likewise, 92 percent of representatives who consistently used a sales methodology achieved their quota, whereas only 86 percent of representatives reached quota without the methodology. This inconsistency is compounded with the findings that the maturity level of many sales organizations existing sales methodologies and process is too low. When asked which sales efforts require improvement in their organizations, 60.9 percent of CSOs indicated they wished to help sales representatives more thoroughly research prospects prior to sales calls. This was closely followed by finding ways for sales representatives to sell value and avoid discounting (60.6 percent) and helping representatives to develop their sales strategy (52.9 percent - see Figure 3).

Figure 2: Sales representatives are not consistently using their organizations sales methodologies and processes. >90% 12% Dont know 4%

<50% 25% 76-90% 28% 50-75% 31%

Source: CSO Insights 2012

Figure 3: CSOs cited sales methodologies and processes as key targets for improvement.
Thoroughly research prospects prior to call Sell value/avoid discounting Develop sales strategy plans for key prospects Properly qualify and prioritize opportunities Clearly understand customers buying process Close deals in time frame originally forecast Prioritize which accounts to focus selling efforts Align solution with customers needs Effectively present features and benefits

60.9% 60.6% 52.9% 46.4% 46.0% 43.8% 43.5% 35.0% 24.1%

Source: CSO Insights 2012

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It is important to note that all of the sales parameters CSOs want to fix are related to sales methodology or process issues, including poor discounting practices, inaccurate forecasting efforts and the inability to understand how particular customers buy. Inconsistent and immature sales processes can reduce the sales organizations ability to close business and can significantly extend the sales cycle, which decreases speed to revenue. Case in point: Almost one-half (42 percent) of CSOs report that the average length of time it takes to close a deal with a new customer is more than six months (see Figure 4). The extension of the sales cycle shows that organizations are losing focus in the sales process for reasons ranging from inadequate sales planning to an inability to properly incubate leads. The issues with sales methodology and processes are exacerbated by the fact that customer loyalty is eroding more quickly than ever before. According to the Accenture 2011 Global Consumer Research, customers are increasingly likely to change brands or partners, which has widespread implications for how sales organizations go about maintaining and expanding their customer base. The CSO Insights 2012 data shows that almost 40 percent of respondents think they need to improve their organizations ability to create customer loyalty (see Figure 5). This statistic is up more than 13 percent over last years data, indicating how rapidly buying behaviors are divergingand how existing sales organizations efforts are not sufficient to counteract the trend.

Figure 4: CSOs indicated that the sales cycle is getting longer, especially with new customers. Average sales cycle to close a deal with new customers
25% 22% 20% 16% 15% 11% 10% 9% 8%

42% takes >6 months to close

18% 15%

5%

0%
<1 Month 1-3 Months 4-6 Months 7-9 Months 10-12 Months >1 Year Do Not Know

Source: CSO Insights 2012

Figure 5: CSOs indicated that their ability to create and maintain customer loyalty is dropping.

Ability to create customer loyalty

Needs improvement Meets expectations 55.1% Exceeds expectations Dont know or N/A 41.2%

60%

49.6%
50%

39.7%
40%

30%

27.3% 21.2%

26.6% 17.6%

20%

15.2%

10%

1.9%
0%

3.2% 2010 2011

1.50%

2009

Source: CSO Insights 2012 Page 6 | Connecting the Dots on Sales Performance

CSO Insights results relevant across the enterprise

Accenture, in collaboration with CSO Insights, a leading research and benchmarking resource for chief sales officers, recently completed the 18th annual study on sales performance optimization. The research surveyed more than 1,500 companies worldwide to assess current sales performance, challenges facing sales teams, the reasons those problems exist, and what organizations are doing to effectively address these issues. As part of Accenture sponsorship of this research, the analysis and insights of this paper focus on companies with at least USD $1 billion in sales revenue. In this years study, 218 respondents were from enterprises with more than $1 billion in revenue.

In addition, the Web-based survey collected data on more than 100 metrics related to sales performance from a broad base of enterprises across multiple industries, including electronics and high technology, manufacturing, banking/ insurance, communications and others. Data is also parsed by geographies: Nordic, Brazil, India, Latin America, Canada, United Kingdom/Ireland and Europe. While the survey is directed at CSOs, the 2012 research results are relevant to executives across the enterprise. The data implications have a direct bearing on CFOs, who want to cultivate better sales performance; on COOs, who are looking for ways to improve operational performance; and on CIOs, who are responsible for the technology related to sales tool enablement.

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In addition, although the data shows that almost 75 percent of business comes from existing customers, CSOs said it is getting harder to get into the door with 21 percent saying their ability to renew business with existing customers needed improvement. After seeing advancements in performance in the CSO Insights data over the last three years, this trend has reversed in 2012. Organizations that achieve the highest customer loyalty metrics, with strong customer relationships combined with dynamic sales methodologies and processes, can shift the performance curve. Accenture analysis shows that when sales organizations are viewed as trusted partners or strategic consultants that create solutions aligned with customers problems, sales representatives are 13 percent more likely to make quota and six percent more likely to attain plan (see Figure 6). The 2012 data shows that only 11.5 percent of CSOs believe their companies have achieved this coveted trusted partner status so far.

Figure 6: CSOs who cultivate customer loyalty achieve better results. Sales Relationship/Process Matrix - 2012 SPO survey analysis
Trusted partner Strategic contributor Solutions consultant Preferred supplier Approved vendor Random process 2012 Sales performance optimization study level comparison % Reps making quota % of Company plan attainment % Forecast - wins % Forecast - losses % Forecast - no decisions % Sales force turnover Informal process Formal process Dynamic process Performance level 3 33% of firms Performance level 1 24% of firms Performance level 2 43% of firms

Level 1: 2011 results 55% 85% 43% 34% 23% 31%

Level 2: 2011 results 61% 89% 49% 28% 23% 25%

Level 3: 2011 results 68% 92% 54% 24% 22% 20%

Source: Accenture analysis; data from CSO Insights 2012

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Scientific sales talent acquisition and retention practices

As in years past, the CSO Insights survey questions delved into how organizations acquire and retain sales talent. Rapidly changing customer behaviors, the blurring of lines of multiple industries and an ongoing shift from product focus to business solutions are altering the sales landscape. As such, it is making it more difficult for CSOs to find, hire and keep the right people. CSO Insights 2012 data shows an overall lack of rigor in sales organization acquisition and retention processes. Although a full 65.5 percent of CSOs believe that a scientific approach, such as using competency testing to hire sales representatives, delivers greater sales effectiveness, the data shows that very few organizations are actually pursuing a more systematic hiring practice. In fact, nearly half (47.6 percent) of CSOs surveyed say their organizations are not conducting sales aptitude and competency testing (see Figure 7). On the upside, the 2012 data shows that more organizations are improving at hiring the right sales people with 35.3 percent of CSOs saying that they consistently hire representatives who succeed at selling, a 10 percentage increase over 2011 data. Even as they celebrate the progress, CSOs know there is still work to be done as 65 percent of new hires are not succeeding. As a more critical bottom-line indicator, the percentage of sales representatives attaining quota is not improving. In the last three years, a startling 36 to 47 percent of sales representatives have not reached their annual sales quota numbers. Despite the economic upturn, 2011 and 2012 data differs by less than a percentage point, indicating that the improved business environment is not helping sales representatives meet expectations (see Figure 8).

Figure 7: CSOs believe competency testing can significantly improve hiring success rates, yet few are doing it.
Impact of sales aptitude/competencies assessment method on ability to hire the right sales people?
Significantly improves hiring success rates 12.6%

As part of your new sales rep hiring process do you conduct any sales aptitude/ competencies assessment testing?

Do not know 14.9% No impact 19.5%

Improves hiring success rates 53%

No 47.6%

Yes 52.4%

Source: CSO Insights 2012

Figure 8: A large percentage of sales representatives continue to miss annual quota targets.
70%
61.5% 64.0%

2009 2010

60%
53.3%

2011
46.7% 38.5%

50%

40%

36%

30%

20%

10%

0% Meets or exceeds quota Source: CSO Insights 2012 Under quota

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Finally, organizations are continuing to experience high attrition problems. CSO Insights 2012 data indicates that the annual sales representative voluntary and involuntary turnover is at 21 percentmeaning that over one-fifth of hired sales representatives either choose to leave their organizations or are counseled out every year. This inability to retain sales representatives is most likely due to bringing in unqualified people in the first place. According to Accenture analysis, since talent hiring and retention policies impact as much as 10 percent of the top line per year, it is imperative for CSOs to use scientific profiling to reduce attrition rates, as well as the time it takes for sales representatives to become proficient and make quota (see Figure 9). Figure 9: Using scientific hiring and retention practices can have a direct impact on revenue. Average annual quota Average annual sales force turnover rates: voluntary vs. involuntary
37.5% 12.0% 9.9% 30.4%

Average time for new sales rep to be fully productive

47.3%

<$50,000 $50,000-$75,000 $75,001-$100,000 $100,001-$150,000 $150,001-$200,000 >$200,000

13.1% 8.0%

11.9%

15.9% 13.6%

22.3%

Impacts 7 to 10% of the top line per year

US$1 billion

% Voluntary turnover (rep leaves)

% Involuntary turnover

0-6 7-12 >1 Year Months Months

Average annual quota ~$147.88K

Source: Accenture analysis

Turnover rate = 21.9%

Reps with time to proficiency > 6 months = 77.7%

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Enterprise and mobile sales tools that deliver a distinctive experience

Consistently, companies are still struggling to get sales representatives to use their CRM technologies. According to CSO Insights 2012, 46 percent of CSOs surveyed say that their CRM tool adoption rate continues to be low (see Figure 10.). Why is it so difficult for organizations to get their sales representatives on board and using deployed tools? According to Accenture client experience, sales representatives often believe that CRM tools exist for management, so that the organization can track what representatives are doing. Or, they think the tools fulfill an administrative function, such as creating reports. In reality, these tools are often creating an administrative burden for sales representative, rather than assisting in driving productivity Sales tools should exist to promote the adoption of optimized sales methodologies and processes. And at all times, CSOs and their CIO partners must focus on implementing technology to support specific objectives and provide value directly to the sales representative. This value could be in the form of helping sales representatives to sell more quickly, reduce cycle times or increase insights about customers.

The transition to mobile CRM may already be providing the catalyst that CSOs need. One particularly bright spot in the CSO Insights 2012 data indicates that mobile access to CRM technology is at an alltime high with smart phones and tablets rapidly being incorporated into the sales process. However, simply transitioning existing CRM functionality to mobile devices is insufficient. Instead, CSOs need to exploit the newest capabilities in mobile technology that deliver a distinctive experience to both sales representatives and customers.

Tablet devices provide an exciting opportunity to drive adoption of selling methods, processes and tools. According to CSO Insights 2012, more than 90 percent of firms are actively using or starting to use tablet devices in their sales organization (see Figure 11). This number has increased significantly since 2011, when only 45 percent of survey respondents had provided their sales forces with mobile-enabled sales capabilities. However, nearly half of the organizations surveyed in 2012 do not yet have a formal program around tablet usage, indicating that CSOs need to get a jump start on incorporating mobile CRM tools into their overall methodologies and processes.

Figure 10: CSOs indicated that CRM tool adoption rate is less than 50 percent.

Figure 11: Sales organizations are rapidly adopting tablet devices in their sales efforts. % Sales force using tablet to support sales activities
Do not know 5%

CRM tool adoption rate

<25% 6% 25-50% 17%

>75% 12% 46% 51-75% 7% 26-50% 16%

<10% 23%

>90% 34%

51-75% 23%

10-25% 37%

76-90% 20%

Source: CSO Insights 2012

Source: CSO Insights 2012

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Understanding the disconnect

Based on the 2012 data, CSOs indicated that they saw three areas in which to drive strategic change in their organizations: existing sales methodologies and processes, sales talent acquisition and retention practices, and sales tools adoption. Yet when polled on areas CSOs planned to invest in 2012, the majority of respondents indicated their sales effectiveness initiatives were related to deploying technology. Ironically, across the board, there was little investment planned on the very areas CSOs cited as requiring improvement. Honorable mention

investments included improving customer interactions, enhancing lead generation programs, revising sales talent processes, or focusing on how to leverage sales tools to help the sales representative sell more effectively. The unvarnished truth is that a technologycentric approach has consistently failed to achieve results. According to the CSO Insights 2012 data, fewer than 15 percent of organizations achieved improved win rates from implementing sales toolsmobile or otherwise. To make matters worse, more than 85 percent of organizations surveyed did not increase revenue from technology deployments and more than 90 percent did not reduce the time it takes to close a sale (see Figure 12).

Recognizing the challenges in the sales organizations is a first step to making improvements. Unfortunately, CSOs are collectively failing on the second step, which is to challenge historical behaviors and avoid succumbing to technology-focused investment in lieu of solving systemic sales process and organizational issues.

Figure 12: CSOs say sales technology deployments are not delivering expected results. 51.5% 41.7% 27.2% 16.5% 21.4% 17.5% 21.4% 14.6% 16.5% 14.6% 8.7%
Over 85% see no benefit to revenue Hardly anyone sees improved sales cycle Fewer than 15% get improved win rates

Improved sales rep/manager communications Improved forecast accuracy Reduced administrative burden on sales Reduced new sales rep ramp-up time Improved support of channels Improved best practices sharing Improved order processing accuracy Improved win rates Other Increased revenues Shortened sell cycles

Source: CSO Insights 2012

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Sales effectiveness metrics across industries

Analytics The data shows that only 25 percent of CSOs surveyed are using analytics to look at their business and processes. Exceptions appear Accenture analysis of CSO Insights in the banking and insurance 2012 data by industry, including industries, in which 35 percent of electronics and high tech, respondents indicated they are manufacturing, communications, using analytics, with even more banking and insurance, shows in the manufacturing industry at some revealing trends: more than 40 percent. However, Sales methodology and processes even those sales organizations that CSOs indicated that their ability to are running analytics are typically adapt sales processes to keep pace relying on descriptive analytics, which provide a review of what with the change in the insurance, has already happened, instead of telecommunications, and predictive analytics, which forecast electronics and high technology what is likely to happen in future. industries was generally only 50 percentor approximately onehalf of the time. The statistic is especially surprising in the high technology world, which is usually considered to be a progressive and fast-paced industry.

Customer Loyalty The inability to maintain business with existing customers is most severe in the communications industry, where CSOs indicated that nearly 25 percent of business is under pressure. The numbers are slightly lower in the insurance (24 percent) and banking (21 percent) verticals. The electronics and manufacturing industries represent the best results with customer retention, with approximately 11 percent respectively experiencing churn.

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Connect the dots and emerge the winner

What is the next move for you as a CSO? Keep in mind that it is important to approach sales effectiveness holistically, as a multi-year journey guided by the principles of standardization, consistency and collaboration, ease of use, quick start up, and modular roll out with localization capabilities. To get started, Accenture recommends defining what sales effectiveness means in your organization. Perhaps it is achieving quota and revenue numbers, or strategically positioning the sales force to achieve new levels over the next several years, or fulfilling sales plans with fewer sales representatives. Collaborate with other leaders and balance the definition with the strategic intent of the CEO, as well as the objectives of the chief marketing officer and chief financial officer. Based on the collaborative definition of sales effectiveness, develop a plan that addresses the key challenges your sales organization faces. Then create a business case that clearly defines how to drive sales productivity within the organization with a roadmap focused on three points:

1. Increase maturity and customer centricity of sales methodologies and processes, across business planning and strategy, sales execution and sales operations. Document these refined processes to improve consistency. Invoke management discipline and implement the right mix of incentives and management by objectives to improve sales representatives adoption rate. 2. Embed more science into sales talent acquisition and retention practices to create a measurable impact on finding and keeping the right sales representatives. Establish a clear understanding of the competencies, capabilities and behaviors that lead to high performance sales representatives in your organization. Tailor recruiting and hiring practices to fulfill this benchmark. Build an ongoing competency development program to continuously improve and retain sales representatives. 3. Automate with sales force technology that delivers distinctive value to sales representatives and ultimately customers. To get the most out of sales technologies, especially the newer capabilities available with mobile, it is important to first design and model the sales tools against institutional, mature processes. Instead of building the tools to serve the needs of sales managers, focus on delivering a distinctive, value-based experience to sales representatives. Commit to a process of continuous evolution and improvement in the tools deployed to sales. CSOs that connect these dots will be able to significantly improve sales effectiveness while also emerging the winner in other ways through increasing revenues, penetrating new markets and developing value-oriented selling skills across the sales organization. It is a game that is definitely worth winning.

Contact us:
For more information about the Accenture Sales Transformation offering and how Accenture can help your organization improve sales performance, visit Accenture.com or contact: Yusuf Tayob Partner, Accenture Sales Execution and Enablement yusuf.a.tayob@accenture.com

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About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

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