Data Driven

How Performance Analytics Delivers Extraordinary Sales Results

Jenny Dearborn

• Publisher: Wiley
• Year: 2015
• ISBN:
  9781119043362
• Edition: 1
• Topic: Business
• Subtopic: Sales
• Index: Business

A "how-to" guide to boosting sales through predictive and prescriptive analytics

Data Driven is a uniquely practical guide to increasing sales success, using the power of data analytics. Written by one of the world's leading authorities on the topic, this book shows you how to transform the corporate sales function by leveraging big data into better decision-making, more informed strategy, and increased effectiveness throughout the organization. Engaging and informative, this book tells the story of a newly hired sales chief under intense pressure to deliver higher performance from her team, and how data analytics becomes the ultimate driver behind the sales function turnaround. Each chapter features insightful commentary and practical notes on the points the story raises, and one entire chapter is devoted solely to laying out the Prescriptive Action Model step-by-step giving you the actionable guidance you need to put it into action in your own organization.

Predictive and prescriptive analytics is poised to change corporate sales, and companies that fail to adapt to the new realities and adopt the new practices will be left behind. This book explains why the Prescriptive Action Model is the key corporate sales weapon of the 21st Century, and how you can implement this dynamic new resource to bring value to your business.

• Exploit one of the last remaining sources of competitive advantage
• Re-engineer the sales function to optimize success rates
• Implement a more effective analytics model to drive efficient change
• Boost operational effectiveness and decision making with big data

There are fewer competitive edges to gain than ever before. The only thing that's left is to execute business with maximum efficiency and make the smartest business decisions possible. Predictive analytics is the essential method behind this new standard, and Data Driven is the practical guide to complete, efficient implementation.

Chapter 1
Playing the Blame Game

Pam Sharp, chief sales officer of Trajectory Systems, paced back and forth across the front of the conference room as the seven members of her leadership team filed in and seated themselves around the table. She found their jovial banter inappropriate under the circumstances. They obviously didn't appreciate the seriousness of the situation.

When Exalted Enterprises took a majority share of Trajectory Systems three years before, Trajectory's revenues were growing at the rate of 40 percent per year, and profits were climbing even faster. Although the company's annual sales were only $90 million, compared to Exalted's $2 billion, people at Trajectory joked about how the little fish was someday going to swallow the big fish. That was more than a year ago, before Trajectory's sales began to flatline. Now, even though it was only two weeks after the end of the fiscal year, word had somehow reached the “Street” that this once-brilliant investment had turned in yet another disappointing annual performance. As a result, Trajectory's shares had tumbled 8 percent in the past few days and showed signs of dropping further.

Sharp had been brought in to turn the situation around. Since coming aboard three months before as chief sales officer, she had spent most of her time racing around the world to help sales reps close critical year-end deals, dropping by the home office only often enough to get a pulse check on employee morale. Now she was about to shift her focus from putting out fires to building a sustainable sales function. Somehow she knew this first sales leadership team meeting of the new year was not going to be fun.

“We did some things right this past year,” Sharp began, extending her five-foot, eleven-inch frame to its full height and making eye contact with each of her direct reports. “All of you and your people worked hard; sales of the new hospital system are off to a good start; and we hired twenty new sales reps who are now ramping up. Unfortunately, that's the only good news I have for you today.”

On the other side of the large picture window that formed one wall of the conference room, the sun was shining brightly under a cloudless sky: another typical mid-January day in Palo Alto, California. The rolling green foothills that surrounded Trajectory's corporate headquarters on Page Mill Road projected a feeling of serenity, but serene was the last thing Pam Sharp felt today.

Sharp continued: “The bad news is that our sales fell 17 percent short of our goal for the year that just closed, and they're even 9 percent below the sales for the prior year. That's unacceptable. And to make matters worse, some of you forecast as late as November at the company luau that we were going to come within 5 percent of making our quota. Remember that? The Pina Coladas, the limbo contest, the fake sales projections. I don't like these kinds of surprises, and I'm sure you don't either.”

An uncomfortable stillness fell over the room. Pam noticed that Cathie Martinez, head of sales enablement and training, was dejectedly hanging her head. Cathie's was a good but delicate soul, and Pam thought to herself: “I'd better keep an eye on her confidence, because we're headed for some even tougher times.”

Sharp didn't have that concern about Joe Kirsch, however. If anything, her VP of North America sales was too self-confident for his own good. A former defensive back on the USC football team, Joe still kept his 225-pound body in game-day shape. More than once, Pam had heard him brag about how he had ended the career of a UCLA running back with a helmet-to-helmet tackle. Now she wondered whether Kirsch wanted to end her career in a similar fashion. He clearly resented being passed over for the CSO position she was hired to fill. While most of the other people at the table were attentive, Kirsch looked downright combative.

Sharp continued: “When I came on board, I promised David Craig that I'd fix sales, and I will.” She didn't have to elaborate. It was well known that Craig, the CEO of Trajectory, did not tolerate missed commitments. “At the national kickoff for our reps, our theme for the year will be ‘Go Big or Go Home!’ Well, that also applies to each of us in this room. If we don't make our sales number this year, some of us, or maybe all of us, will be asked to go home.”

Barbara Acres, director of presales, didn't appreciate Sharp's implied threat. On the notepad in front of her she sketched a rocket ship crashing back to earth. Underneath she wrote “Trajectory's trajectory.” Yuri Vosnov, VP of product development, saw the drawing and grimaced.

Sharp went on: “Today I want to know from each of you your plans to fix this problem. But first, let's start with the numbers. Stacy, what can you tell us?”

Stacy Martin, director of sales operations, made her way to the front of the room. “Let's start with an overview,” she said. She projected a slide onto the white board (see Figure 1.1).

Figure 1.1 Sales Rep Performance Overview

“Like Pam said, you'll notice that we missed our bookings goal by $20 million, or about 17 percent. Out of our 100 reps, 20 percent made quota and half were below 50 percent attainment.”

“That average bookings figure of $1 million per rep looks great!” said Raj Kapoor, director of marketing.

“Averages can be deceiving,” said Stacy. “That average is high because a few reps did very well. Here's the booking distribution report (see Figure 1.2). As you can see, most of our reps averaged well below $1 million, and we had eighteen reps who didn't sell anything. I have a detailed leader board with names if you want to see it.”

Figure 1.2 Rep Booking Distribution

“You can't blame the reps for these results,” said Joe. “They're doing the best they can with the products they've got.”

Sharp, of course, had known about the large variations in productivity. In her three months of meetings and ride-alongs with various reps (she'd never imagined she'd ever spend so much time in various BMW 3-series vehicles), she had noted serious issues and heard lots of complaints about reps not receiving enough training or support. But she had rather expected these kinds of gripes from an underperforming sales unit during a major transition. Now, as she saw rep performances represented visually, she realized that the problems were deeper and more pervasive than she had imagined. Something had to be done, but what? The data didn't tell her what she really needed to know. She turned to Stacy: “Why did these reps miss their targets? Were they the wrong reps, or did they simply need more training? Was it a product issue, a territory issue, a pay incentive issue, or something else?”

“Probably a combination of all of those things,” Stacy answered, shrugging her shoulders.

“It looks like a few of our sales reps are playing a lot of golf,” quipped Andy Mahoney, Trajectory's HR business partner. Most everyone sitting around the table snickered, except Joe. A two handicap, Joe's clenched jaw (which not surprisingly was as muscled as the rest of him) indicated that he had taken the comment as a personal affront.

“Most of those strike-outs were turned in by recently hired reps,” explained Stacy. “It's taking us longer than expected to ramp them up.” She put up the next slide (Figure 1.3). It showed an opportunity pipeline of $500 million, a win rate of 20 percent, and an average deal size of $100,000.

Figure 1.3 Pipeline Performance Overview

“That's more like it,” said Cathie Martinez, the director of sales enablement. “An average deal size of $100,000 is terrific.”

There was much less enthusiasm for Stacy's next three slides, however. The first showed no year-to-year growth in the average deal size; the second slide showed that the win rate for deals marked probable (that is, deals on the short list in the final stage of the sales process) was a dismal 30 percent; and the third slide revealed that the abandoned-deals rate was approximately 40 percent.

Sharp turned toward her VP of sales. “Joe, what do you make of these numbers? What's going on?”

“You can't blame me or my reps for missing quota,” Joe countered. “My sales force is stretched too thin, and the new hires that came on board in the second half of last year aren't productive yet. On top of that, the economy stinks, our prices are too high, our products' technology is behind the competition, and our sales goals were too aggressive from the start. You know how they're set. David holds up his finger to see how the winds are blowing on Wall Street. Then he tells the capital markets what they want to hear and passes the quotas down to us. I had no say in our targets.”

The fact was, Joe was right. And Pam knew it, but yet she still had a point to make.

“If the revenue goals were so unrealistic, why did you tell me in November that we'd come within 5 percent of making them?” countered Pam. “You had a full pipeline, and you projected which deals you would close. That didn't happen. Yes, you closed a few deals in December that weren't on your list, which is positive in one way. But it is also deeply concerning, because you didn't see those deals coming. Overthrowing the ball is almost as bad as under-throwing it. I have the impression that sales is operating in the dark.”

“We need better leads, better advertising, and better support from presales,” argued Joe. “Besides, there's only so much I can do with the current products. They don't have the features that our customers are asking for, and our demos are so weak they put our prospects to sleep. We're getting hammered by the competition.”

“I can't give you better support unless I get more headcount or unless your reps do a better job of pre-qualifying leads,” interjected Barbara Acres, director of presales. “They're constantly calling in and wasting my staff's time. Things will improve as the new reps get more training and experience, but for now, I'm doing the best I can.”

“Your reps don't need more leads, Joe,” said Raj Kapoor, director of marketing. “They don't even follow up on all the leads we give them. I know for a fact that lots of leads go entirely untouched!”

Yuri rarely spoke at meetings like this. So when he raised his hand to offer an opinion, everyone was surprised. Pam knew this was good and necessary if things were going to change.

“I want to get back to something that Joe said about our products,” said Yuri Vosnov. “I can tell you for sure that our systems have features that our competitors' products don't have, and we're adding new features all the time. The product analysts rate u...