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Sales Performance Optimization Study 2014 Key Trends Analysis

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CSO Insights Measuring Sales & Marketing Effectiveness


© 2014 CSO Insights CSOiCL67112

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Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be produced or distributed in any form or by any means, or stored in a database or retrieval systems, without the prior written permission of the publisher. For additional information, contact CSO Insights, 3855 Orange Court, Boulder, CO 80304, Phone: (303) 521-4410, email: [email protected]. The reader understands that the information and data used in preparation of this report were as accurate as possible at the time of preparation by the publisher. The publisher assumes no responsibility to update the information or publication. The publisher assumes that the readers will use the information contained in this publication for the purpose of informing themselves on the matters which form the subject of this publication. It is sold with the understanding that neither the authors nor those individuals interviewed are engaged in rendering legal, accounting, or other professional service. If legal or other expert advice is required, the services of a competent professional person should be sought. The publisher assumes no responsibility for any use to which the purchaser puts this information. All views expressed in this report are those of the individuals interviewed and do not necessarily reflect those of the companies or organizations they may be affiliated with, CSO Insights, Insight Technology Group, or Sales Mastery. All trademarks are trademarks of their respective companies.

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Acknowledgments

We would like to thank all of the sales executives who annually share the data related to their previous year’s sales

performance and the best practices they are leveraging to optimize how they sell. Without their support and insights,

the development of the research knowledge base used to create the 2014 Sales Performance Optimization Topical

Reports would not be possible.

Next, we would like to thank the following sales effectiveness companies for their partnership and thought leadership

support for this project: Accenture, Richardson, Velocify, Xactly, and Zilliant.

We owe a debt of gratitude to many colleagues, mentors, and advisors whose help made this project possible. To list

them all would be impossible, but a few deserve special mention: Anthony Robbins, Co-founder at CloudCoaching

International, Walter Rogers, CEO and Co-founder at CloudCoaching International, Tim Sullivan at Sales Performance

international, and Jack Hubbard at St. Meyer & Hubbard.

Finally, we would like to thank our editing team whose hard work, diligence, and endless hours made this project

possible. Thanks to Kim Cameron, Diane Hodges, PhD, and Andy Jesmok.

http://www.accenture.com/us-en/pages/index.aspx

http://www.richardson.com/

http://www.velocify.com/

https://www.xactlycorp.com/

http://www.zilliant.com/

http://www.tonyrobbins.com/



http://www.spisales.com/

http://www.spisales.com/

http://www.stmeyerandhubbard.com/




Table of Contents

2014 Sales Performance Optimization Study Introduction ........................................................................ 1

2014 Sales Performance Optimization Study Key Trends Analysis Introduction ....................................... 1

Selling 2013 – On Average, How Well Did You Do?................................................................................... 3

Sales Performance Optimization Study: 2012 to 2013 – What Has Changed? ........................................... 6

The Path to Achieving 2014 Revenue Plans ................................................................................................ 7

Sales Performance and the 2014 Sales Relationship/Process Matrix™ ..................................................... 9

Beyond the Averages: Attributes of World-Class Sales Organizations ...................................................... 13

Addendum A – Sales Relationship/Process Matrix™ ............................................................................... 15

Addendum B – 2014 Study Demographics ............................................................................................... 17

Current Research Studies by CSO Insights .............................................................................................. 18

About CSO Insights ................................................................................................................................ 18


© 2014 CSO Insights CSOiCL67112 1


2014 Sales Performance Optimization Study Introduction The data used for this analysis were gathered as part of CSO Insights’ 20th annual Sales Performance Optimization (SPO) study. As

part of this research effort we surveyed over 1,200+ companies worldwide, collecting information on over 100 sales effectiveness

related metrics. A detailed breakdown of the survey participants can be found in the introduction to the 2014 Sales Performance

Optimization Key Trends Analysis Topical Report.

The following graphs reflect the aggregated results from the study participants. Advisory Services clients seeking segmented

responses based on factors such as industry, company size, country, complexity of sales process—virtually every metric in the

study—may obtain this information by contacting their CSO Insights Analyst.

2014 Sales Performance Optimization Study Key Trends Analysis Introduction

An advantage derived from conducting a longitudinal study (versus a one-time assessment on a topic) is the ability to see trends over

time. In our initial Sales Performance Optimization study twenty years ago, we asked the 150 participating firms to identify their

sustainable competitive advantages. Number one on the list was the products they sold, and number two was their level of service.

Fast forward to today and see how much things have changed. Product life cycles across all industries have collapsed to the point

where if a competitor doesn’t have a feature or capability that a company needs today, they may well have it tomorrow. The

cell/smartphone market is a perfect example of this trend. Whereas hardware architectures once had a lifespan of years; in the

smartphone space, real competitive advantages in their product offerings can be measured in mere months or even weeks.

And what about service? Today, good customer service is the entry price for consideration. In that, if your company doesn’t have it,

you will not make it to the initial evaluation list. If you do have it, well then, so does everyone else, and you will be on the short list

with strong competitors for the final decision.

So, where is sales today? Is it at the point where everything is commoditized, and the final decision to buy anything boils down to

price? That was the question we sought to answer this year as we designed our 2014 Sales Performance Optimization study.

http://www.csoinsights.com/About-Us/Contact-Us




For those who may be new to CSO Insights, for the past twenty years we have conducted primary research to assess the challenges

sales teams face, why the problems exist, and how firms can leverage people, process, technology, and knowledge to address those

issues. While our initial focus was the U.S.-based technology sales marketplace, we expanded to a major cross-industry, cross-

geography based effort with over 5,000 companies taking part in our four major studies in 2013 and into 2014.

The data used for the following Key Trends Analysis were gathered as part of our 20th annual Sales Performance Optimization study.

For this research effort, we surveyed more than 1,200 companies worldwide, collecting information on over 100 sales effectiveness

metrics. A breakdown of survey participants by vertical industry demographics can be found in Addendum B of this analysis.

For those who are familiar with CSO Insights’ past Sales Performance Optimization studies, a fundamental change in how the

information is presented will be evidenced. In the past, we produced twelve topical reports based on the study data. When we met

with our advisory board in mid-2013 to plan the 2014 Sales Performance Optimization study, the sales and marketing executives we

turned to for candid advice gave us exactly that. They pointed out that the format of our analysis came from an analyst’s perspective,

meaning we wanted to put topics into nice compartmentalized buckets. For example, last year two of the topical reports dealt with

core CRM and CRM 2.0 technologies, focusing on the functionality of each application.

Our advisory board, CSOs, and CMOs reminded us that their executive positions were based on functional areas within their

organizations, and as such, they were more interested in how technology could help them achieve gain or remove pain. Reflecting on

the fact that CSO Insights’ roots are tied to managing sales and marketing teams, we asked our advisors to help us explore a new

and macro way to deliver our study results in a way that was more meaningful to the C-suite and senior sales and marketing leaders,

and thus would deliver more value. After a brainstorming session, we ended up with the following seven words on a white board:

Find More, Win More, Keep & Grow More

As we discuss further in the 2014 Sales Performance Optimization Going Forward Analysis, over 94% of firms stated that their

revenue target for this year is higher than in 2013. Putting a goal on the wall is one thing; making it happen is another. To achieve

increases in sales performance often means firms have to execute differently than they did the previous year. But what aspects that

sales organizations deliver to, market to, sell to, and service their customers best represent their best chances for improvement? To

help firms determine these is what compelled us to reorient a major part of our 2014 Sales Performance Optimization study analysis

to include a detailed focus on Find More, Win More, and Keep & Grow More.




But before we dive into optimizing 2014, let’s first review 2013 to see which lessons we can learn from, where we have just been,

and apply these to where we are going.

Selling 2013 – On Average, How Well Did You Do?

The first metric we look to in order to gauge what is happening in

the world of selling is individual rep performance. Specifically, how

many reps met or exceeded quota? The chart to the right

summarizes the distribution of responses we received from the

2014 Sales Performance Optimization respondents.

The average in 2013 was 58.2%, which represented a decline in

the percentage of salespeople who met or exceeded quota for the

first time in three years. The chart on the next page shows the

trend over the past five years. The 2009 number represents an

all-time study low and came on the heels of the economy going

into a tailspin at the end of 2008.

* * *




Since that time sales teams made a recovery—coming up with ways

to hit their goals even in the face of uncertainty over the next couple

of years—before flattening out in 2012 with 63.0% of reps making

goal. It is worth noting that at the end of last year, 92% of firms

raised their revenue targets for 2013.

But this year, looking at sales team performance, more salespeople

couldn’t meet this challenge, and the percentage of reps making

plan dropped noticeably. So next we want to understand if/how this

impacted the sales force as a whole.

The chart below shows the distribution of responses received when

we asked how the company did against their overall revenue target.

The average for 2013 across the 1,200+ firms surveyed came in at

83.9%.

* * *




Again, to help put this in perspective, on the next page, we see the averages for overall plan attainment for the past five years. This

is a similar story to that of the trending of the percentage of salespeople meeting/exceeding quota; an increase in 2010, an increase

in 2011, essentially flat in 2012, and a noticeable decrease in performance in 2013.

In summary, we have two trends and one story; sales teams stepped up their game for the past few years, and in doing so, made a

noticeable contribution to increasing revenues. But the impact of that tenacity to sell more through hard effort may well have hit its

peak. In comparing sales results in 2012 to 2013, we saw a number of trends that can positively and negatively impact performance.

We conduct a deeper analysis into a number of these factors in each of the individual topical reports that comprise this year’s Sales

Performance Optimization analysis. We have a few significant findings to share now so you can consider the implications as you

read each of the study analyses.




Sales Performance Optimization Study: 2012 to 2013 – What Has Changed?

Sales Force Demographics Analysis: Sales force turnover hit another all-time study low. With planned 2014

net-new hiring also decreasing, on the plus side, voluntary churn in the sales force should remain low for this

year. On the downside, the average deal size decreased—meaning reps need to close more deals to hit plan.

Sales Process Analysis: While the study analysis continues to show that companies with a formal sales

process outperform firms that let their sales reps decide how to engage with customers, we continue to see

roughly half of all sales organizations consciously opt to go the random/informal sales process route.

Find More Analysis: Much of the burden for surfacing leads continues to fall on salespeople, although some

firms are turning to customer support to identify new sales opportunities. Sales is also having more difficultly

converting qualifies leads to first conversations.

Win More Analysis: Win rates of forecast deals are once again lower on a year-over-year basis. More firms

are looking to CRM 2.0 technologies to help increase the effectiveness of sales teams at performing key

aspects of the sales process.

Keep & Grow More Analysis: While virtually all companies view their existing customer base as an asset that

needs to be protected and further developed, less than a third of firms have a formal account management

process in place. The biggest Grow More challenge is penetrating other business units within existing customer

accounts.

Sales Management Analysis: While poor forecast accuracy is seen as a problem sales management needs

to address, few firms are opting to use CRM 2.0 solutions to support this task. In addition, while sales coaching

is seen as important to sales rep success, only one-in-four firms has formalized that process.

Going Forward Analysis: Even though the 2013 sales performance numbers slipped from the percentages

achieved in 2012, nearly all companies surveyed stated that they have raised their 2014 revenue targets. The

issue they now face is: what will be different this year that will help reps hit those targets?




The Path to Achieving 2014 Revenue Plans

To assess how sales executives plan to increase sales performance, we asked study participants to identify their 2014

top objectives. The following chart shows the wide variety of paths that sales organizations are considering to achieve

the revenue growth they, and their investors, are expecting this year.

The objectives on the chart reinforce conversations we’ve had with our advisory board. Considering that Capture New

Accounts and Optimize Lead Generation are first and third on the list, Find More and Win More are getting the lion’s

share of attention for 2014. But for many firms, their existing customer base also represents a great potential to assist

in achieving this year’s growth, if they can improve at Keep & Grow More.




This list represents the best thinking within firms that need to know what needs to be accomplished to hit higher

numbers, but it doesn’t say anything about how to do it. So, the next phase of the study analysis looks for the key

levers that companies can utilize to achieve these goals.

One item to point out: the statements “58.2% of reps made quota” and “83.9% of overall firm attained plan” are

averages. As with any average, these results are comprised of a variety of data inputs that include some figures above

and below average. Let us share what we found when we analyzed the study findings in detail.

* * *




Sales Performance and the 2014 Sales Relationship/Process Matrix™

By now, you should be familiar with our contention that how you sell can be a sustainable competitive edge. This

finding arose from the trends we saw year-over-year in our Sales Relation/Process (SRP) Matrix™ analysis of the

Sales Performance Optimization study data. The SRP Matrix™ is based on research we initially published in Harvard

Business Review (HBR) in 2006 and then expanded to a paper we published with HBR in Europe in 2011. The

outcome of those analyses was that the level of sales process rigor you apply to the marketplace in sales, combined

with the level of customer relationship developed with your client base, directly effect sales performance. The following

is a summary of the breakdown showing levels of customer relationship and sales process adoption rates based on

the 2014 Sales Performance Optimization study data.

CSO Insights 2014 Sales Relationship/Process Matrix™

See Addendum A for Levels of Customer Relationship and Sales Process Implementation

Definitions.




Two sections of the SRP Matrix™ are gray. They illustrate that if companies are totally random in process, while

individual salespeople may reach the status of trusted partner with their specific clients, the company as a whole does

not get to that level. At the other end of the spectrum, when a company has implemented a Level 4 – Dynamic Sales

Process, they have normally been able to determine how to reach, at a minimum, the relationship of Level 4 –

Preferred Supplier with the majority of their customer base.

In focusing on the remaining sections of the

matrix, companies that are in the red section of

the grid tend to perform the same (in terms of

key sales metrics) as those firms in the yellow,

and those in the green sections. The

reasoning behind our choice of the red, yellow,

and green colors becomes evident when

looking at the chart to the right that compares

performance between these three groups.

After you review the numbers in the chart,

ponder these questions. As a CEO, would you

rather have a Level 1, Level 2, or Level 3 sales

organization? As an investor, would you rather own stock in a company with a Level 1, Level 2, or Level 3 sales

organization? Finally, let’s bring it closer to home: as a CSO, which level of sales organization would you want to

lead?

Let us point out the distinctions that separate these three levels that have been consistent over the past seven years

and are becoming wider each year. A case in point is the variance in outcome of forecast deals. When we first

published the SRP Matrix™ in the 2008 Sales Performance Optimization report, Level 2 firms had a five point higher

win rate than Level 1 firms; today that spread is nine points. And, the range between Level 2 and Level 3 firms has

also increased to seven full points.




These differences in performance have not been lost

on the world of sales. We have been tracking the

percentage of firms that fall into each of these

categories over the past seven years. As shown in the

chart to the right, companies (whether consciously or

subconsciously) have made moving up the customer

relationship/sales process hierarchy a priority;

although, as we see in the 2012 to 2013 comparison,

firms gave up some ground this past year.

When looking at the performance differences between

levels displayed on the previous page, and then

reviewing the distribution percentages shown in this

chart, you may question why there aren’t more Level 3

companies. Having benchmarked hundreds of firms

that have started sales transformation projects, sales

management often underestimate the amount of

change required to make the transition.

Going back to the SRP Matrix™, let’s discuss what might seem to be a reasonable shift for companies: Moving from

Level 1 – Informal Sales Process and Level 2 – Preferred Supplier to Level 4 – Dynamic Sales Process and Level 3 –

Solutions Consultant. What kinds of changes might these entail?

Do you think that transition would change the profile of the salespeople you hire to fill open territories? Would revise

your compensation programs, or leave them the same? Would adoption of a sales methodology or usage of your CRM

system be voluntary? Could you see the profile of the people you move into sales management changing? Would you

continue to coach and mentor sales reps the same way?




Again, having profiled these types of transitions, we can tell you the answer to most, if not all of these questions, is no.

And, if managed incorrectly, those noes turn into a series of decisions that can create an environment of resistance to

change on the part of the sales force.

So, yes, moving up the customer relationship/sales process curve can be challenging, but staying where you are—

especially if you are Level 1—can be fatal to your company’s business health.

* * *




Beyond the Averages: Attributes of World-Class Sales Organizations

In the 2013 Sales Performance Optimization Key Trend Analysis, we identified the attributes of high performing sales

forces in 2012. The feedback we received was useful; however, today the qualities of world-class organizations go

broader and deeper. This year we segmented the data into three categories: the Top 10% of study participants, the

Middle 60%, and the Bottom 30%. We then compared fifty-two sales performance metrics.

The following are mega-trends that surfaced when analyzing the aggregated study data across all 1,200+ companies

surveyed.

The Bottom 30% –

44.7% of Reps Met/Exceeded Quota and Achieved 50.8% of Full Company Plan

64.2% of firms are Sales Process Level 1 or 2

37.6% of firms have a Sales Process Adoption Rate of >75%

The Average Customer Relationship Level Score was 2.76

The Average Spend on Training Per Sales Rep Per Year was $1,762

61.2% of firms have Implemented a Core CRM System

Of firms that have a Core CRM System, 34.5% have an Adoption Rate of >90%

The Middle 60% –

63% of Reps Met/Exceeded Quota and Achieved 91.6% of Full Company Plan




The Average Spend on Training Per Rep Per Year was $2,121






The Top 10% –

71.6% of Reps Met/Exceeded Quota and Achieved 116.6% of Full Company Plan




The Average Spend on Training Per Rep Per Year was $2,595



Advisory Services clients should contact their CSO Insights Analyst for an individual sales performance review where we will share the findings specific to your industry, sales force size, geography, sales cycle complexity, and more.

These mega-trends show the interplay between customer relationships, sales process implementation, and sales

performance. Also of note is not only the difference of investments made in sales training and technology, but also the

dissimilarity in adoption levels.

Advisory Services clients should contact their CSO Insights Analyst for an individual briefing on user ratings of the

various sales methodologies and CRM solution providers that the study participants have chosen.

As you review the remaining 2014 Sales Performance Optimization Study topical reports, you will see the depth and

breadth of the challenges facing sales teams today—and the numerous opportunities for improvement. We encourage

you to use this information as the basis for brainstorming, goal planning, and to identify and prioritize your

organization’s operational challenges. Everyone can benefit from understanding the strategies and tactics of other

companies, but in the end, you have to implement solutions that help your teams Find More, Win More, and Keep More

& Grow More in your marketplaces. Please feel free to contact us directly at:

Jim Dickie Barry Trailer Managing Partner Managing Partner CSO Insights CSO Insights (303) 521-4410 (916) 712-9621 [email protected] [email protected]



mailto:[email protected]

mailto:[email protected]




Addendum A – Sales Relationship/Process Matrix™

The main premise of the Sales Relationship/Process (SRP) Matrix™ concept is that in addition to what you sell, there

is the matter of how you sell. How you sell has two major components: 1) what value your customer perceives you are

bringing to the table—your relationship; and 2) how you engage and work with your clients—your process. Within

these two aspects of selling, companies fall into one of a few categories. For those of you who are new to our SRP

Matrix™ concept, let's explore relationships first.

Companies achieve one of five different levels of relationship with customers and prospects in their marketplaces:

Five Levels of Sales Relationships

Level 1 − Approved Vendor: You are seen by the majority of your customers as a legitimate provider of the

products or services you offer but are not recognized for having any significant, sustainable competitive edge

over alternative offerings.

Level 2 − Preferred Supplier: Based on your marketplace reputation and past dealings with customers, while

competitors may offer alternatives, you are normally seen as the preferred vendor with whom to do business.

Level 3 − Solutions Consultant: Based on a specific set of product-related, value-added insights or services

you offer, your customers see you not only as a vendor, but also as a consulting resource on how to best use

your products or services.

Level 4 − Strategic Contributor: Above and beyond the products and services you offer, your customers view

you as a source of strategic planning assistance for dealing with broader-based challenges they are currently

facing.

Level 5 − Trusted Partner: At this highest level, you are seen as a long-term partner whose contributions—

products, insights, processes, etc.—are viewed as key to your client’s long-term success.




In addition, sales organizations fall into one of four levels relative to the processes used to find, create, and expand

customer relationships.

Four Levels of Sales Process

Level 1 − Random Process: Your company may be perceived as being anti-process, although what you really

lack is a single standard process. Essentially sales reps do their own thing their own way.

Level 2 − Informal Process: Your company exposes your salespeople to a sales process, indicates that they

are expected to use it, but its use is neither monitored nor measured.

Level 3 − Formal Process: Your company regularly enforces the use of a defined sales process (sometimes

religiously). You conduct periodic reviews of the process to see how effective it is and make changes based on

that analysis.

Level 4 − Dynamic Process: Your company dynamically monitors and provides continuous feedback on

sales’ use of your formal sales process. You proactively modify the process when you detect key changes in

market conditions—new competitors, changes in governmental regulations, shifts in the economy, etc.




Addendum B – 2014 Study Demographics Since 1994, CSO Insights has conducted an annual survey to assess the challenges facing sales teams, determine

why those problems exist, and benchmark how companies are leveraging people, process, technology, and

knowledge to increase the efficiency and effectiveness of their sales forces.

Again this year, the 2014 Sales Performance

Optimization study had broad-based

participation. The chart provides a breakdown of

the industry segments of the firms taking part in

the 2014 Sales Performance Optimization study.

Based on the expansion of the Sales

Performance Optimization study participation

base, we are able to produce segmented

analyses for the following vertical industries:

Advertising/Media/PR/Publishing

Banking

Distribution

Manufacturing

Medical Devices

Professional Services – Business

Professional Service – Technology

Software

Telecommunications




Current Research Studies by CSO Insights

4,000 Firms Worldwide Surveyed Annually

Sales Performance Optimization

Key Trends Analysis Win More Analysis Sales Force Demographics Analysis Keep & Grow More Analysis

Sales Process Analysis Sales Management Analysis Find More Analysis Recommendations Going Forward

Sales Management Optimization Key Trends Analysis

Lead Management Optimization Key Trends Analysis

Sales Compensation & Performance Management Key Trends Analysis

Custom Surveys Addressing Key Sales and Sales Management Challenges Worldwide

* * *

About CSO Insights CSO Insights is a sales and marketing effectiveness research firm that specializes in measuring how companies leverage

people, process, technology, and knowledge to improve the way they market and sell to customers. For twenty years,

CSO Insights’ surveys of over 15,000 sales effectiveness initiatives have been the standard for tracking the evolution of

the role of sales, revealing the challenges that are impacting sales performance, and showing how companies are

addressing these issues.

http://www.csoinsights.com/Publications/Shop/Sales-Performance-Optimization

http://www.csoinsights.com/Publications/Shop/sales-management-optimization

http://www.csoinsights.com/Publications/Shop/Lead-Generation-Optimization

http://www.csoinsights.com/Publications/Shop/sales-compensation-performance-management

mailto:[email protected]?subject=Custom%20Surveys

http://www.csoinsights.com/

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