1- Does a CRM platform help sales teams increase revenue?
Furious’ PROPHET is an enterprise yield optimization platform that uses data science and machine learning to help leading sellers of TV advertising and manufactured products maximize revenue and profit.
As part of Furious’ strategic planning process, I have been auditing and analyzing software platforms used by sales teams across more than 10 industrial sectors to try to understand how data is used to intelligently manage price and grow revenue.
According to research from the National Center for the Middle Market, companies that invest in digital transformation grow 75% faster than their peers. Although 54% of executives said that digital transformation was extremely or very important, only 9% said it was a cornerstone of their strategy. Much of the investment in digital transformation in 2020 was to enable remote workforces and digitize direct sales. During the past 12 months, most sectors have also seen significant increases in the cost of materials, fulfillment and production.
Once a company reaches a certain size, they have no choice but to invest in software and systems to automate procurement, production and distribution processes, often referred to as the supply chain. The wheels simply fall off the bus with just QuickBooks and Excel to manage hundreds, if not thousands, of orders and/or products. Integrated software that "digitally transforms" or manages these operational processes is called enterprise resource planning (ERP) software and often delivers significant improvements in cost and efficiency by automating manual processes and minimizing defects, rework and waste. Much of the savings is attributable to the ability of a company to use data to make better decisions regarding what to buy, what to make, and how to ship it to minimize cost and maximize output.
Because demand, and in particular, a demand forecast, is a key input that drives the supply chain, often the first investment in software that supports the sales process is done to offer a firm visibility to the sales pipeline and better predict demand. Companies do this hoping to improve sales KPIs as well, including revenue growth, annual sales per salesperson and average value per customer.
This is when a customer relationship management (CRM) platform is usually introduced to the enterprise. Salesforce, the undeniable market leader, defines a CRM as, “a technology for managing all your company’s relationships and interactions with customers and potential customers.” Increasingly, customer leads and relationships are found and nurtured online through digital communication channels.
So, I set out to understand the role that CRM systems played in not only helping to track relationships and increase productivity but also in actually helping sales teams sell and increase customer value, not just volume.
2 - Methodology
To inform the Furious product roadmap, I needed to understand how CRM platforms were helping companies manage and increase revenue and if they were using data to do it. I started my journey by implementing a CRM system within my own company and took a hands-on role in configuration and use. Then, over two months, I conducted surveys and interviews with sales leaders, sales teams and sales support functions, including pricing and inventory managers, marketing, finance and technology.
After establishing the CRM in use and how long it has been in place, I typically posed questions to ascertain how it was used and the role it played in the day-to-day sales process:
- What is your company revenue and size of the sales team?
- What is the approximate number of active customers?
- If a sale executive:
- How does the CRM help you day to day?
- How often do you interact with it to input data?
- How often do you review data or use automation capabilities?
- What information does it provide you to help you sell?
- Does it provide any insights about your customer or the market to help you sell?
- What is the general perception or opinion of the CRM?
- If a sales leader:
- How often do you interact with the CRM system?
- For what reasons do you go into the CRM?
- How does the CRM help you manage your sales team?
- How does it help you deliver sales and revenue?
- If outside of sales:
- How is the CRM used by your organization?
- Does the CRM play any role in your day to day?
- Do you use any data from your CRM to make decisions?
- General questions to all:
- Is there any pricing or competitive intelligence provided in the CRM?
- Does the CRM create proposals as well?
- Do you have a CPQ or proposal system? If so, is it integrated with the CRM?
3 - Findings
How and why the CRM was implemented?
I heard a variety of perspectives on the rationale for implementing and the need for a CRM. Every person interviewed at a company where a CRM was in place, regardless of function, agreed that once certain size thresholds were met, such as the size of a sales team or the number of accounts overseen by salespersons, a CRM was necessary to maximize the productivity of sales. Only one of the 10+ companies I interviewed did not have a CRM platform, and they were a company with $600MM in annual revenue and a hundred-person sales team that competed in a highly price-competitive market. This meant the belief that a CRM platform was essential for every sale organization once it reached a certain size was not universal.
In mid-sized companies ($50MM to $500MM in annual revenue), sales leadership often played an active role in configuring the CRM and was part of selection conversations. In companies that had implemented an ERP system, they would often implement the CRM module within the integrated ERP alongside the implementation of finance and manufacturing modules. Therefore, price and ease were often the most important criteria in the selection of a CRM platform; therefore, sales leaders often played more of a supporting role than a decision-making role.
Two of the mid-sized companies with whom I spoke found that the most well-known vendors were not meeting their needs. One company, with a 1,600-person sales team, 400 of whom sit in a call center, chose to develop their own CRM solution, while another, in the automotive space, decided to go with a CRM platform specifically for a segment of the automotive industry.
Large enterprises (>$1B in annual revenue) were more inclined to depart from their ERP partner. Salesforce was the most common independent CRM platform for large companies, whose sales teams often have thousands of members. The implementation and configuration projects often take one year or longer and require mid to high seven-figure implementation costs and a third-party consultancy to lead the project.
In speaking to salespeople, or the "boots on the ground," unless participating in a mostly automated sales process via email, the general sentiment was one of neutrality. They recognized the CRM helped them report their activities and, if they had a large number of clients, stay on top of follow-ups, etc., but did not trust the CRM. One salesperson said: “I won't put all of the info in the CRM. We are going to be protective of our accounts, our customers and contacts. We [salespeople] are islands and need to take care of our book of business and to protect it.” Essentially, what he was getting at was that he needs to keep some things out of the CRM to guard against internal competition at the risk that he could be terminated tomorrow and another salesperson could easily take over his accounts because they had the playbook and contact details.
This means that the data put into the CRM is often incomplete and inconsistent. A recurring theme I heard — a lot — was the challenge of a lack of consistency and data hygiene amongst users. One interviewee, a sales leader said: “GIGO. Garbage in, garbage out, which makes using the CRM as the tool to run your business a challenge.”
One participant, a seasoned chief revenue officer at large companies, said: “If you can't track, you can't plan. If you can't plan, you can't measure success against the plan. If you can't do that, what ARE you doing? From bottoms up to pipeline management to understanding retention, close rates, sales cycles, underserved segments ... you can't run a business today without it.” Just before this comment, he also mentioned that a successful CRM implementation required accountability and ownership as well as clarity around process and everyone’s part in it. Without this, data that goes into the system will be "s*&t."
This was a theme I heard time and time again — that planning, ownership and involving sales in the process of configuration are key. For example, have religion around the definitions of milestones and how and why a customer would advance in the pipeline. This was critical for sales leaders to be able to use CRMs to help their teams close and use the CRM pipeline and reports to identify where action needed to be taken.
Companies that built their own CRMs often introduced features that expanded well beyond that of a traditional CRM and created new tools by bringing in third-party data, creating segmentation models and other ways to score or rate leads. This all ultimately led to prescribing a sales playbook to be used to move a customer through the pipeline. Whether it is because a business is unique or much of their sales success is because the secret sauce for growth was developed internally over time, the cost to customize a large CRM solution does not provide the ROI.
Every sales leader and every seller of CRM software said that training and sales enablement is essential. This might also help change the optics of what a CRM is and can be for salespersons, who felt it was as much of a burden as it was a sales tool.
How is CRM data used by other functions?
Chief revenue officers and sales leaders in technology industries sang the praises of CRM software the loudest in helping them manage their teams and deliver their numbers. It was clear in my interviews that there were varying degrees of technological savvy among sales leaders and salespersons. My gut tells me that the extent to which sales leadership is using the CRM will be a determining factor in the quality of the data and usage levels of the team in any organization.
It is the consistent usage and application of the data within a CRM by the sales team, top to bottom, that drives the quality of the data within the system. If no one is really looking at or studying your reports and pipeline status, why are you going to invest time inputting data when you could be out selling?!
When sales leaders use the CRM to run their teams and meet their goals, the CRM data quality elevates to a level that can be used confidently to inform other business processes. Other functions that rely heavily on good CRM data are digital marketing teams, finance and production.
The CRM data, and in particular, contact details, when integrated with marketing automation solutions across all customer touch points, can serve to help move customers through the sales funnel. When I talk to marketing executives at companies of varying sizes, they say the contact information around customers is a mess. The fat finger problem seems to be rampant in all companies, in all sectors.
When accurate and granular, meaning there are details within the CRM about the products or services in a deal, as a deal progresses, it can serve to modify forecasts, triggering other functions to hire more staff, procure more raw materials or more closely monitor production capacity to ensure that orders, once placed, can be delivered on time.
However, when I asked other business teams about the confidence they had in the CRM data, and in particular, if they would hire or purchase against it, they always said not until they spoke directly to the sales leadership and they were confident enough to commit to delivering the business.
Overall, I found there to be many members of an organization who would love to have customer and pipeline data from which to inform their business decisions. However, the level of confidence in the quality of the data or, more importantly, the reliability of it to invest time and money was too low. It was only large companies with large IT investment budgets that were investing in data cleansing and transformation initiatives to use CRM data to inform and feed other business processes.
How does the CRM system help teams increase revenue?
Consistently, sales leaders and executives found the CRM to be most valuable in tracking the sales pipeline, finding places where action needed to be taken to keep a customer moving through it, and providing visibility to revenue and demand.
When I directly asked how the CRM helps increase revenue, the responses I received were really about task management. I heard that when a salesperson has many accounts, the CRM helps them stay on top of outreach, communication, follow-up, etc., and that it provides more structure and order to an otherwise unstructured process.
Everyone expressed the belief that structured processes with oversight deliver better outcomes. When I sat back and reflected and unpacked this all, I realized that everyone saying “Yes” to my question, “Does the CRM help increase revenue?” believed it did because, ultimately, if salespeople properly use a tool like a CRM, they will perform better and more deals will close.
And more deals closing implies more revenue. But there is more to revenue than just, well, more. There are so many qualitative aspects of sales beyond the score on the board, including profitability, customer satisfaction and repeat orders, to name only a few.
4 - Conclusion
When I asked about increasing revenue, I was asking mostly to understand if a CRM was more than just a sales productivity tool. I wanted to know if it really helped salespeople sell — and sell smarter, not just faster or more.
Some of the unfortunate stereotypes you often hear about salespeople are about their laziness and consistent reliance on discounts and lowering the. price to close. So, in the context of a CRM helping sales grow, I am really asking if it helps increase the value provided to and received from customers. How much they spend, how often they return, how the perceived value of each product sold changes over time, successful negotiation of a fair price, as examples of increased value.
When thinking about not just more but smarter revenue, clearly how you incentivize your sales teams is a key part of the conversation, but let’s put that aside for now and ask: Does a CRM help a salesperson sell smarter?
I was left concluding the answer to this is: No, not really. No one with whom I spoke described a use case where the CRM used data from other systems, like the ERP, to provide context about a customer, their historical sales, competition or cost. In other words, there was little intelligence provided around the customer or business, all part of sales, but instead only intelligence about the sales process.
The CRM functions as a tactical or productivity tool for sales teams, not as a strategic platform to provide actionable intelligence and context to help sales leaders and salespeople make better decisions or package, price and communicate offerings more effectively.
This finding is significant considering that sales revenue is crucial to a company’s survival and growth. The weight lies on the shoulders of sales teams to ultimately deliver their company’s future. Yet they are being sent into a gunfight with a knife, as they sit across tables from buyers and procurement teams who are armed with data, technology and insights with a primary mission of driving down the price they pay for your goods and services.
I believe there is an immense gap in today’s typical enterprise infrastructure and, therefore, opportunities to empower sales teams with tools to manage revenue and price more intelligently. By offering context and providing transformed data about a market, customer and pricing guidance, companies could see another step-change in revenue improvement from their sales teams while combatting price erosion and protecting profit margins.
In short, if you expect sales teams to sell smarter, you have to give them the smarts with which to sell. The smarts lie in data that is not incorporated into the CRM today. If data were purposefully transformed to help sales teams price more intelligently and tell a story to customers, the CRM would have a wingman that would be pushing a 100% close rate.
Furious is a cross-platform, enterprise yield optimization solution for media companies and distributors. Consistently, our experience shows that significantly higher yield can be achieved when combining human expertise with established techniques from AI, data science, machine learning and operations research. Furious’ platform, PROPHET™, does just that, leveraging the world’s leading data science and machine learning to unify and automate campaign and portfolio reporting, forecasting and planning. A horizontal SaaS platform that sits atop and connects a variety of advertising systems and data sets, PROPHET is custom-configured to help media companies automate the key workflows of running an advertising business, resulting in higher yield, lower operational costs and increased profitability.