Boosting your sales ROI: How digital
and analytics can drive new performance and growth
Successful
sales leaders use four principles to tailor digital and analytical tools to
their companies’ unique needs.
Few business leaders would dispute the fact that
sales teams must evolve. They are already investing billions of dollars in
sales technology and training in response to automation and artificial
intelligence, which are making ever deeper inroads into the sales function.
The trouble is that
these investments aren’t paying off. We speak with many sales leaders who are
frustrated with the lack of clarity on the ROI of their investments and
surprised when their new “shiny toys” (such as a new lead-generating tool) fail
to deliver meaningful performance improvement.
The truth is that
driving sales growth today requires fundamentally different ways of working as well as outstanding
execution across large, decentralized sales teams and channel partners. While
many sales leaders accept this reality in principle, they don’t put sufficient
energy or focus into driving that level of change. Advances in digital and
analytics, however, mean that sales leaders can now drive and scale meaningful
changes that pay off today and tomorrow.
Companies that get this
right typically see 5 to 10 percent revenue growth with the same or improved
margins. And they see many of those benefits quickly, often within a few
months. In addition, their longer-term health, as measured by better customer
and employee satisfaction, improves.
The four ways digital and analytics drive successful
change
Digital and analytics
can radically accelerate—and improve the chances of delivering—successful
change. But undisciplined investment can be counterproductive and expensive. In
our experience working with companies that have successfully boosted the ROI of
their sales investments, these four actions make a meaningful difference:
1. Provide insights that sales reps need
A wealth of sales
insights are discoverable today through advanced analytics, but they often
don’t translate into sustainable revenue for a few reasons: the front line does
not trust the data, the insights are overly complex, or reps simply feel that
their own experience and expertise are being ignored. Successful change
programs rely on a deep understanding of the needs of the salespeople and a
willingness to work back from there to deliver insights that actually help reps
sell better. The best sales organizations use data to understand the effect of
all the steps in sales, from what matters most in driving a sales opportunity
forward to where reps struggle or miss opportunities. They then package those
insights and send them to sales reps. Actively involving sales reps in the
process greatly increases the chances of providing relevant and easy-to-use solutions.
Car manufacturers offer
an excellent example of how to manage frontline needs. Their dealer networks
are often quite autonomous (stocking and product-configuration decisions are
made by individual dealers). This means, for example, that having 2,000 dealers
in a given market equates to 2,000 separate decisions on what stock to take.
Traditionally, there has been little attempt to use data from the entire dealer
network to optimize those decisions. As part of a shift to optimize and upgrade
the stock at its dealerships, one manufacturer aggregated data on specific car
configurations (engine type, trim, color, etc.) purchased across the network.
It then calculated the optimum mix of stock based on a combination of
profitability and customer appeal, which could be updated in real time as sales
were made.
The insights were
played back to each dealer, to speed up the process and make them better
informed, with specific recommendations on which cars to order. What was
fascinating was the degree of uptake of the new system. The adoption rate
within nine months was 80 percent, a striking contrast to a previous effort
where the adoption rate was below 10 percent. Cars spent far less time in the
showroom before being bought, heterogeneity of vehicles increased (which helped
with residual values), and the contribution margin grew by more than 10
percent.
What changed? The first
time around, the company had been clear on what the outcome needed to be, but
it hadn’t taken the individual dealers’ perspective into account. The dealers
resisted what felt like a top-down idea imposed on them, because they didn’t
really understand the benefits, and implementation was difficult. This time,
the digital tools that delivered the insights were built hand-in-hand with the
dealers from the outset, to understand what functionality and information was
most helpful for them. The manufacturer also used an agile approach to
development, refining the tool quickly based on real dealer feedback. The
dealers were engaged in the process, understood what the company was trying to
achieve, and recognized it would make their lives easier. As uptake was so
high, the impact for the company was also high.
When done well, this
approach can also empower the sales force. As part of a sales transformation
focusing on pricing and growth, a chemicals company used analytical tools that
gave the field sales force transparency on the overall business, which
encouraged and enabled them to create their own strategies and implementation
plans. They could create their own projects on the platform, which of course
could be tracked by managers, and the impact was impressive: within just a few
weeks of implementation, churn was down and pricing was up, and within a year,
it contributed an additional $50 million to EBITDA. The magic was the
combination of getting insights to the front line in a simple, easy-to-digest
way while allowing reps the freedom to explore some of the underlying input,
which let them develop their own ideas.
2. Use digital to enable what matters for
each sales rep
We often find companies
that have excellent operational discipline but fail to apply a similar rigor to
sales. They seem to linger under the misunderstanding that sales is all about
relationships or that sales teams are motivated solely by incentives.
The core elements in
enabling effective sales operations are focusing reps’ time and attention on
the handful of metrics that disproportionately matter. Those often include the
size of the pipeline and conversion rate, and incentives that are consistent
with the company’s overall vision for its transformation, rather than those
based on out-of-date ideas or on criteria beyond the sales rep’s control.
Embedding weekly routines and daily expectations of activities reinforces the
ultimate goal of driving sales growth. Crucially, then, sales leaders need to
focus on digital and analytics capabilities that deliver on these needs.
A technology company
had limited data on sales, margins, and products sold at the rep level, and no
performance-management systems. When it attempted a large transformation that
involved capturing new growth, realigning coverage to match opportunities,
building frontline capabilities, and redesigning compensation structures,
results were slow to arrive—and quarterly-target pressure did not let up.
The company realized it
needed to use analytics and an automated report system to create dashboards
personalized for each salesperson and highlight the opportunities they needed
to follow-up on.
Reps now see their top
opportunities on a daily basis, which helps them prioritize their actions.
The techniques were
also used to help sales support staff drive the most efficient selling process.
Pricing specialists were flagged on where the hottest opportunities were and
also on opportunities to cross-sell with their customers.
Importantly, from a
performance-management perspective, the dashboard also introduced transparency.
Managers all the way to the C-suite could now identify the best-performing reps
and what opportunities they had closed, and where reps needed coaching. It
worked both ways. Reps could also flag where they needed help, all the way to
the C-suite, which ensured that priority opportunities got the right level of
attention.
The combination of
reporting, enablement, and coaching delivered an enormous impact very quickly:
a $55 million uptick in revenues for that quarter using “quick and dirty” tools
effectively rather than making enormous investments. The trick was making the
information available at the individual level.
Using digital tools is
necessary to scale solutions across the sales organization. That includes
creating tailored dashboards for all sales personnel as well as decisioning
tools to help reps in the field make better decisions. These don’t need to be
overly complex; even quick and dirty solutions can deliver profitable results
without waiting for more sophisticated IT investment and development.
One software company
turned to digital to crack a recurring problem: the sales force was so
fragmented and dispersed that it was hard to know whom to call for help. There
were more than two dozen sales roles within the function, from account managers
to software architects, and the company realized that the right people were
seldomly working on the right deals. It developed a digital tool to embed
within the CRM system that could give sales reps the precise names of the right
people to call for any particular deal—there could be as many as ten at any one
time—based on their specific experiences. This tool also scrapes email and
calendar data to understand what patterns of sales-staff interaction are most
highly correlated with strong performance: How often do they interact, at what
stage of the deal, and which specific combinations of people work well in which
situations? Ultimately, the company has recognized the power of collaboration
and is using data and analytics to change the behavior of thousands of sales
reps, guiding them to better outcomes.
3. Use data to prioritize and personalize
capability building
Best-in-class sales
organizations place an enormous emphasis on building frontline capabilities during a transformation; this applies to their own sales
force and channel partners. They recognize that otherwise there is no hope of
any new tool or new approach delivering results. But they don’t stop there.
These sales leaders use analytics to get very specific on what skills to teach
and to whom in order to reengineer the very DNA of the sales organization.
By using analytics to
identify the traits and skills of top performers, it becomes clear where
everyone’s gaps are. Then digital tools can be deployed alongside more
traditional learning mechanisms to effectively roll out coaching to large and
widely distributed sales forces.
The technology company
above understood that building frontline skills was the key to a successful and
sustainable transformation. But with so many new skills needed, they struggled
with prioritizing them. Sales leaders turned to analytics. Our analysis (based
on our Sales DNA database on sales rep performance) revealed that although
pipeline management was an important skill, it was also one that the organization
was already quite good at. The data also showed that top performers were much
better at understanding the customer needs and quantifying the value
proposition being delivered.
Once the company knew
which skills to prioritize, it used multiple formats to deliver the training.
First, the company reinforced key concepts through e-learning modules that then
were applied in daily routines. These modules included interactive elements and
videos from experts on subjects such as how to tailor a value proposition, which
reps could then practice on the job.
Second, frontline sales
staff had to record their own value-proposition delivery, or elevator pitch,
using a digital platform that allowed managers to observe sellers and their
behaviors. These mini-testimonials were then benchmarked by assessors and the
top performers’ pitches were disseminated to highlight best practices. Managers
did their own assessment of the videos but were also flagged on where there
were important gaps so that they could provide coaching. The new approach
delivered a 5 percent quarter-on-quarter sales increase for those reps whose
skills demonstrably improved.
There are times when
digital tools have to take a backseat to more traditional training methods. At
the chemical company mentioned earlier, much of the training was done using the
new data-driven tool, but a huge amount of work had to be done by the sales
managers in weekly one-on-one meetings. Managers need to devote significant
time and attention to teaching reps about the business and imparting
critical-thinking skills so reps can understand what the data are showing and
tailor it appropriately.
4. Communicate, communicate, communicate
Sales leaders need to
set out bold vision based on where the opportunities for growth lie, but then they
need to make that personal for each seller and manager. Advanced analytics can
help set granular targets and personalize those targets to each individual
region, manager, and seller.
Some of the digital
tools that B2C companies use to personalize the customer journey and change consumer behavior can be used very
effectively to communicate changes to each individual in the sales
organization. Specific tools that work well include
shared dashboards, visualizations of activity across the team, “gamification”
to bolster competition, and online forums where people can easily speak to one
another.
Leading companies also
make sure they demonstrate progress, using analytics to communicate real-time
insights and share early wins. More sophisticated tools can even show
individual contributions toward the common goal, which can be very motivating.
Overall, this sort of communication makes the change feel more urgent and real,
which in turn creates momentum.
A large technology
company uses an incredibly data-rich scorecard fed by data from across the
sales organization. It tracks up to 50 metrics, which are updated daily and fed
into leadership meetings on a weekly basis so managers can see what’s working
and what’s not and adjust course accordingly, feeding insights back to the
front lines for rapid realignment where necessary.
Digital tools and
analytics insights, if correctly applied, offer a powerful way to accelerate
and amplify a sales organization’s capacity to grow. However, let’s be clear:
the tool should not drive the solution. Each company should have a view of the
new behavior it wants to reinforce and design a practical, integrated approach
to leverage digital and analytics.
By Bertil Chappuis, Steve Reis, Maria Valdivieso
De Uster, and Michael Viertler February 2018
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/boosting-your-sales-roi?cid=other-eml-alt-mip-mck-oth-1802&hlkid=764b36a86f4348aa8830ff1fc4ad9731&hctky=1627601&hdpid=2c0ac652-e442-4361-8c4f-cf5528021fc0
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