FEBRUARY 2010: In this issue...

Forecasting, and most importantly, fact-based forecasting, has become a hot topic as we look to build our way to a better bottom line. Estimates, guesses and numbers based on numbers developed last year and largely in the dark are simply not going to cut it. To be a true performance leader, sales and marketing executives will need to put a little more real-world perspective into their numbers. What we are seeing in report after report is that incorrect, misguided or misdirected forecasts can actually set off a chain of events that leaches budget.

Take the correlation between sales forecast and marketing supply chain. If sales figures are forecasting up ... and I mean dramatically up ... a wise marketer in operations will likely make sure that enhanced digital assets, refreshed print assets and customer service and promotional materials are in place, awaiting this onslaught of new business. But, if those numbers were based on wishes and fairy dust, little can be done for the dollars spent on a wing and a prayer.

In this month's CLOSE eJournal, we take a closer look at how best practice leaders are mapping their goals and roadmaps to best achieve results and align with business goals. It's just one more building block in our arsenal against this recession. What we want to hear is what you are doing to better leverage customer insights to accurately develop your forecasts. Have you cracked the code? Do you know which levers to push to get the insight that matters most? We invite you to send us your best practice tips and solutions. The more we get, the more we'll share - and don't worry, we'll even keep it anonymous if you want!

Until next month,

Liz

Interview with Vance Williams LaVelle

Taken from the 2009 Customer Experience Board report by the CMO Council, Service Invention to Increase Retention

Vance Williams LaVelle recently moved to Avaya from SIRIUS Satellite Radio, where she led customer marketing, sales, and service driving subscriber and revenue growth. Concurrent with Vance's leadership of SIRIUS subscriber based businesses, SIRIUS achieved record-breaking subscriber growth, best performance in industry customer retention and positive free cash flow. Her prior roles include CEO of Time Circle, a strategic marketing consultancy, Chief Marketing Officer of PNC Financial Services Group, SVP of Marketing at Chase and various executive roles at AT&T.

LaVelle says that throughout her career, she has observed that one of the main challenges to providing a great customer experience lies within inadequate business systems and procedures.
"Often the back office support for the customer-facing organizations is not flexible enough to facilitate what's being requested on the customer's part. There is a lack of freedom and autonomy on the front-end and a lack of malleability on whatever the customer interface is, whether it is the web, a person or third-party partner. There's a lack of flexibility in the framework or the business system to allow them to adapt their delivery to satisfy the need of the customer. So the issue is, in essence, the business systems, processes and procedures haven't been set up to adequately address the customer's need. And it turns the customer off to the brand."

One of the main customer experience considerations inside a service business, LaVelle notes, is the effort a company puts forth on behalf of the customer in any given customer interaction.
"People either have time or money, and the people that have money do not have time. So often what generates loyalty for a service business is effort, and the less effort I have to extend as a customer, the more I will appreciate and repurchase from a company."

For service providers looking to improve customer service, says LaVelle, the key is learning to identify what she calls the 'moments of truth' in customer interaction.
"Identifying what moments in a customer interaction matter the most, and at what point in an interaction a customer would become an advocate for the brand, allows a company to drive loyalty and repeat business. A company must identify what the consumer considers an 'ante', then make sure they perform well on those, because those are the differentiators that drive advocacy."

"I think the way in which a marketer should go after understanding what the antes in the game are is from looking at a data pattern, and then determining what the best methods of differentiation are in those moments of truth. You have to go in there and find something to differentiate you, and you have to do that through research."

If you would like to join the Customer Experience Board conversation in 2010 and join the Advisory Board to contribute your insights, please contact Netty Devonshire at ndevonshire@cmocouncil.org

Inject Reality Into Your Sales Forecasting Process

By Brian Berlin for Straightline Strategies

The complexity of the enterprise sale has led many sales leaders to employ a creative handicapping system for the different stages of the sales cycle. For instance, a Suspect is a 10% opportunity, a Prospect has a 50% chance of buying and a Closed Opportunity is rated at 100% (you think?) The early stages of the sales cycle are based on imaginary numbers since the sales rep has no way of knowing the value of a deal at the suspect stage.

A $100,000 deal at the Suspect stage now becomes $10,000. Now all the imaginary numbers are being handicapped and rolled up to a pipeline number. Let's say the rolled up number is $1,000,000. Congratulations, you now have a million-dollar pipeline. Or do you?

A handicapping system based on percentages and incorporating imaginary numbers is a recipe for failure. It creates a false sense of security and impedes the sales management process. Not to mention it can ruin credibility.

The sales cycle stage is meant to represent the progression to YES. The typical challenge question is "where are you in the sales cycle with XYZ Corporation?" The typical answer: "Should come in this quarter." What percentage should be assigned to that answer?

Distilled to its basics, a sales cycle has only three stages: YES, NO and MAYBE.

If you want to know where you really stand in the sales cycle, try this exercise. Across the top of your war room whiteboard, write the headings YES, NO and MAYBE. Then put your open deals under one of the categories. Depending on where you are in the quarter, most if not all of your deals will end up under the MAYBE heading.

The percentage handicapping system would actually put some of your MAYBES into the YES column, simply because the rep has rated the deal as high probability. This encourages passivity about the true status of deals and encourages creative upward communication about the real value of the pipeline. MAYBES kill.

Selling is about getting to YES or NO. Sales people hate NO, so sales cycles always represent the steps to YES. But NO doesn't have to mean, well, NO. NO is better than MAYBE, but not as friendly as YES. NO is out of the sales comfort zone. Yet it does not mean THE END, it simply means NO.

Managing your sales cycle means working towards YES or NO. Arriving at NO removes MAYBE and means you will have to determine if you can get to YES. The more efficient and scientific you are at getting to one or the other will determine how real your deals, and subsequently your pipeline, truly are.

Oversimplification? I doubt it. A deal is or it isn't. Try the exercise. Take the reality check. Get real about your deals and your pipeline.

Insist on Evidence-Based Pipeline Management

By Inflexion Point

According to recent research from CSO Insights, on average fewer than 50% of the deals that had been confidently forecasted by sales people ended up closing at the value or within the timeframe originally predicted. Of the remainder, many were lost to the competition - others declined significantly in value, were deferred to a future quarter or simply decided not to buy.

As they point out, for all the apparent sophistication that may be used to assess the likelihood of winning business, for most companies their forecast accuracy is worse than the odds they would get from simply flipping a coin to make their decision.

But there may be a light at the end of the tunnel. The same study identified a subset of sales forces that consistently achieved win rates of more than 75%. What set these organizations apart, and what can we learn from their experience? CSO Insights observed that they did the homework necessary to chose the right deals to pursue in the first place, and then employed the appropriate methods to engage the prospects.

In other words, they systematically identified their most valuable prospects and addressed their most important issues - and aligned their sales and marketing efforts around facilitating the buying process. They were able to qualify bad deals out early in the process, rather than waiting until the end of the sales cycle to discover that they were never going to buy.

Evidence-based pipeline management

We've observed a further characteristic of the most effective sales organisations - they manage their pipelines and generate their sales forecasts on the basis of observable evidence of buyer behaviour, activity and commitment. Instead of depending on the often unreliable hopes of their sales people, they insist on tangible proof of the buyer's intent.

This isn't just reserved for the forecasting process - the discipline applies throughout the pipeline, from the moment that a new opportunity is added. They also tend not to associate any value with the deals in their pipeline until there is evidence of money, authority and need - on other words until the prospect has reached the evaluate stage.

Revaluing the sales pipeline

As you might expect, when first implemented these principles tend to have a dramatic effect on the value of the pipeline. The total value of the pipeline appears to come crashing down. But the truth of the matter is that most of the revalued deals were never properly qualified in the first place, and gave a falsely positive picture of the situation.

Armed with a more realistic picture of the true pipeline, the sales team can focus their attention on closing the well qualified opportunities, and on advancing each prospect to the next stage in the decision-making process. The marketing team can focus their attention on generating more well qualified leads that reflect the consensus between sales and marketing about the characteristics of their most valuable prospects. Progression through the pipeline now depends upon observable evidence of each prospect's behavior, activity or intent.

Intelligently investing resources...

Armed with a clear appreciation of their prospects' buying processes, it is possible to eliminate the wasted effort that plagues the production of so many sales tools and marketing campaigns by investing resources only on those activities that have a clear and measurable impact on facilitating the prospect's decision making. The sales focus is equally clear - where is the prospect in their decision making process, and what could be done to accelerate their progress to the next stage? How can we eliminate the obstacles and constraints that might be holding the prospect back? And what can we do to ensure we emerge as the lowest risk of all available options - including a decision to "do nothing" instead?

How does your pipeline management compare?

Does your pipeline management process reflect a crystal-clear understanding of how and why your prospects choose to buy? Are all of your sales activities and marketing campaigns devoted to accelerating their buying process? How do your processes compare with the best - and what could a best-in-breed approach do for your revenue performance in the coming year?

And what about the dynamics of your pipeline? Are you able to instantly see what's changed in your pipeline since your last review, and why? Can you identify the deals that should have moved, yet haven't? And are you able to see exactly where your efforts need to be focused to achieve your forecast?

Recommendations

• Align the key stages in your CRM system to the key steps in your prospects' buying process
• Insist on tangible evidence of prospect commitment before allowing sales opportunities to be promoted to the next stage in your CRM system
• Don't include value deals in the pipeline until you have established money, authority and need
• Systematically track and measure how long it takes deals to pass from stage to stage in the pipeline
• Systematically track and measure conversion rates from stage to stage in the pipeline
• Measure forecast accuracy at every level in your sales organization