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Sales 2.0: Where Your Sales Force's Technology Is Headed
April 05, 2007
Software trends that are shaping the way your sales force works
By Julia Chang
What does it mean to be a productive sales force? Well, that depends on who you ask. For some companies, productivity is a science, and is measured by factors such as how much time reps spend in front of customers or the speed with which they close deals. For others, judgments are as lax as the number of times reps' cell phones ring or their BlackBerrys buzz.
Luckily for the sales force, technology is evolving to meet the demands of reps who are pressured to produce, but don't always have the tools to get there. All the gadgets in the world won’t help your sales team meet its goals if there's no behind-the-scenes help with activities such as lead generation, pipeline management—and even getting paid. Here are some areas where software can make a significant impact on easing the sales force’s productivity pains:
Taking the Confusion out of Compensation
A salesperson's strengths lie in his ability to be resilient, engage people, and clearly communicate a value proposition. What's not on this list is being a math whiz. So why do most companies expect their salespeople to figure out the complex formula used to pay them?
In an ideal world, your sellers shouldn’t have to re-crunch the numbers. Enterprise incentive management (EIM) software that helps manage and reward performance—and prevents the head-scratching that goes with figuring out commissions—can go a long way toward taking the headache out of calculating incentive pay. And when the process of paying your reps is more transparent, it motivates your sales force and eases the burden on your sales administrators.
When Mark Coleman, vice president of field administration for Thrivent Financial, a membership-based financial services nonprofit for Lutherans based in Minneapolis, meets with his firm's top financial advisors, he says he typically hears the same thing: "'I don't know how I get paid, I just trust that I'm getting paid right.' We put so much effort into comp design and we think it's simple, but the people we design it for say it’s not that simple."
But not understanding the formula was the least of the company's worries. Thrivent's commissions were handled by a legacy system that was the product of homegrown systems used by the two companies that merged to form Thrivent in 2002. "We couldn't get a paycheck correct for the first six months, and changing the old system was like a junkie playing Jenga," he says. That is, one wrong, shaky move and the whole system could fall apart.
The clunkiness of its pay process and the firm's changing business models sparked an effort to revamp Thrivent's compensation strategy. On top of being unreliable, the homegrown system was based on a transactional sales model, and it wasn't able to accommodate changes such as new sales roles and hierarchies, team-based incentives, different channels for selling, and the increasing demands of compliance in the financial industry. "We had a one-size-fits-all comp plan, and we don’t have a one-size-fits-all world," Coleman says.
The change would be a daunting task—so daunting, in fact, that when Coleman was making his pitch to top executives on the need for a new compensation program, the flow chart he used to illustrate the process of paying the 2,500-member sales force was 40 feet long, covering a wall in the conference room. "People say, 'It's just field compensation. What’s the big deal?'" Coleman says. But when they saw it laid out before them, "they were overwhelmed. All of a sudden they understood why it takes six to nine months to change stuff."
Thrivent is currently piloting several program designs and expects to roll out a new compensation system in May, with TrueComp, software from EIM vendor Callidus, as its centerpiece. The system is expected to halve the cost of compensating the sales force, provide more commission transparency, quickly accommodate the introduction of new products and services, and incorporate new incentive variables, such as net promoter scores (a customer-engagement measurement). "Reporting and performance management, and trying to get that out of our former merged system, was a nightmare," Coleman says. "We needed a more flexible infrastructure to support our evolving sales."
And like customer relationship management software and other sales technologies, EIM software is available in packages for smaller firms, too, or those who want fast, no-frills implementation. "Maybe five or six years ago, the software was extremely complex, you had to have a compensation consultant, and it was a couple-hundred-thousand dollar proposition to do anything," says Bruce Culbert, managing director of BPT Partners, a CRM consultancy based in Smyrna, Ga. Now, however, vendors are providing low-cost versions that follow the software-as-a-service model popularized by CRM providers. Culbert recently started using an offering from EIM firm Centive in his other job as CEO of consulting firm iSymmetry. He estimates it costs him $50 to $60 per user. It's an improvement upon the old method of "using a spreadsheet and taking two days to explain to the sales guys why they got paid what they got paid," Culbert says. "Now they have visibility in their pipeline and there aren't a lot of questions. I was floored by the drastic change in footprint and the time it took to get the whole thing up and running."
Casting a Net on the Web
When social networking sites caught on a few years ago, it was only a matter of time before the corporate world realized the potential such sites had for finding jobs and business leads. But online business networking is evolving beyond simple searches for contacts in the same industries or with similar interests. Sites now offer a depth of information that makes a stronger impact on prospecting and data mining.
Jigsaw bills itself as an online marketplace where members can buy or trade business-card information. To join, members either pay $25 per month or add 25 contacts per month. They purchase contacts on a points-based system, which they can earn by adding contacts, correcting contacts—Jigsaw relies on its members to update its database like Wikipedia does—or providing referrals. The company bills itself as a data provider that relies on an eBay-like community model to maintain its rolodex: Members have ratings and can be punished for providing bad data. “We really are complimentary to the business-networking sites, and directly competitive to the data companies—that's who we are trying to disrupt,” says Jim Fowler, CEO of Jigsaw, based in San Mateo, Calif.
Mike Davis, director of West Coast operations for Marketing Central, a provider of on-demand marketing automation tools based in Norcross, Ga., says Jigsaw helps him find executives who aren't always accessible, but who are more related to his needs, such as chief architects (a less-common IT title), or marketing administrators (vs. the more generic marketing manager). "Not a lot of data-mining or network-to-network organizations let you find the right title," Davis says. He recalls one six-figure deal he closed with a chief architect of open-source technology for a Fortune 500 firm, whose contact information he couldn’t find without Jigsaw. "I get to the contact I need [quickly], and not into the voice-mail loops and dead ends."
Spoke Software started as purely a business networking site, but has since added data-mining capabilities that show contact information, as well as basic company data that comes from crawling the Web, licensed sources (such as D&B), and information from its own user network. "We combine all this data in one place," says Spoke CEO Frank Vaculin. "At the end of the day, we think we provide better qualified leads [because] we combine people information with company information."
The speed with which she can start sales campaigns is one reason why Elise Segar likes using Spoke. "It's definitely increased our productivity," says Segar, the manager of account development for North America for RedDot Solutions, a New York–based provider of open-text Web content management technology. "We're able to pull up a list, download it, and put it into our prospecting system within minutes. If we have a campaign ready to go, we can start making phone calls that day." Segar uses Spoke in conjunction with other lead-generation and e-mail marketing technology, but the software has "helped us to really streamline our prospecting," she says.
To be sure, it's still up to the seller to craft a pitch that won't have prospects freaking out over privacy issues. One of the precarious points about online networking is that people in the database don't always know their information is out there. (Vendors typically don’t provide personal e-mails and phone numbers.) "I still position it with an introduction and 'You might be interested in what I have to sell,'" Davis says. "If you say, 'I got your info off of Jigsaw,' you might get a lot of doors slammed in your face.” On the other hand, with the Fortune 500 chief architect, "He asked how I got his info, so I divulged, and I turned him on to Jigsaw."
Next Gen CRM
First there was contact management software to aid database marketing and cold calling. That evolved into sales force automation, which took it a step further and helped with tracking leads, forecasting and other steps in the sales process. That has since morphed into customer relationship management, which often incorporates SFA functionality and is meant to manage customer information across functions, including marketing and customer service.
What do we learn from this, class? That the CRM industry doesn't stay static. What were once mammoth installations are now available as on-demand, low-maintenance offerings, which is spurring growth: Analysts believe the CRM market will grow to somewhere between $10.9 billion to $18 billion by 2010, depending on how big you expand the umbrella of products that constitute CRM. And currently more than 67 percent of sales organizations use a CRM system, compared with 45 percent in 2001, according to sales-performance research firm CSO Insights.
Additionally, what constitutes CRM is always expanding, as are the features that vendors keep piling on. "You'll continue to see a natural migration of point solutions adding more complimentary capabilities," says BPT Partners' Culbert. Here’s how you can expect to see CRM offerings continuing to evolve:
Deeper sales and marketing integration. Improving visibility between marketing and sales is probably the biggest goal for CRM vendors. This means better ties to leads mined from sources such as the Web and e-mail marketing, and quicker allotment to salespeople. "People don’t bridge that gap very well because of the amount of data that’s out there, but if you have integration between the marketing front end and the sales system, the salespeople love that," Culbert says.
More workflow capabilities. This service triggers a task or an alert when an activity is completed and ready for more action or approval. "That's important for managing complex sales situations, for when you need to have sales, marketing, service and corporate approvals," Culbert says.
Better knowledge management. Disparate sales teams and the need for more qualified and local leads is leading to further integration with Web-crawling technology or traditional data-mining sources such as Hoover's or OneSource, says Barry Trailer, cofounder of CSO Insights, based in Marin County, Calif. Salesforce.com's AppExchange program has made it easier to for such vendors to integrate with CRM. Managers should also expect to see improvements in one-stop-shop type repositories where salespeople can go for reports, sharing best practices or peer-to-peer collaboration.
CRM 2.0. It's only a matter of time before wikis, blogs and mashups make it into CRM to provide better customer intelligence. "You'll be seeing a lot more partnerships to get those capabilities added to CRM," Culbert says. Trailer believes this trend still has a ways to go, however. "[Web 2.0 technologies] are a social phenomenon and a way of connecting businesspeople, but they still need to establish credibility … there is a lot of complexity and a whole lot of error" that needs to be addressed before Web 2.0 becomes a serious sales tool.
Sidebar: Get out of Excel
Want your comp plan to meet strategic objectives? Here are a few enterprise incentive management vendors to get you started:
Synygy is the largest provider of sales compensation management software, and also provides consulting and data-center services. www.synygy.com
Centive's flagship software is called Compel, an
on-demand solution that uses features like dashboards to help executives track day-to-day incentive management. www.centive.com
Callidus' TrueComp is a scalable solution
that offers modeling and strategic analysis. www.callidussoftware.com
Xactly's on-demand flagship application Xactly Incent includes features such as order evaluation and data import and export. www.xactlycorp.com
Sidebar: Dueling Vendors
The CRM market has never been more competitive. The merger of Oracle and Siebel Systems created a juggernaut among CRM vendors. But according to technology research firm IDC, Amdocs still leads market share in the communications/media space; Reynolds & Reynolds leads in the retail automotive sector, and Salesforce.com is strong in industries like professional and consumer services, where on-demand applications are popular. Meanwhile, in an evaluation by Forrester Research of CRM providers in first-quarter 2007, Salesforce and Oracle were joined by RightNow Technologies and Microsoft Dynamics CRM as top midmarket vendors. For the first time, Forrester's evaluation also included an open-source offering from SugarCRM.
For more about new and notable sales technologies, go to www.salesandmarketingmanagement.com.
Sidebar: Start Spinning Your Web
Get started with your online networking by checking out some of these popular sites:
LinkedIn is a free site that lets you search your online network by keyword, name, industry, location or title, among other variables. It can be used for prospecting, but is most popular for job seekers and recruiting. www.linkedin.com
Jigsaw is an online marketplace where users can buy or trade business card contacts, and members get rewarded for providing information. Its database currently has more than 5 million
contacts. www.jigsaw.com
Spoke Software combines basic corporate data from licensed vendors, Web crawling, and its user network in one interface. It currently has a database of 35 million contacts. www.spoke.com
Plaxo offers a free basic service that automatically updates your Web-based address book and calendar. The Plaxo toolbar works with Outlook and other major Web browsers to synch with your online Plaxo account. www.plaxo.com
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