After an MCA Strategy meeting in Cornhill last week, the conversation turned to a subject that is, if you gaze around the homepage of this very website, the Association’s topic of the moment: productivity. We mused upon the distinction between productivity and efficiency; and having reflected, I think it all boils down to this.
Efficiency improvement creates an output with a progressively smaller amount of effort or diminishing expenditure of resource. That efficiency is a necessary but not sufficient condition for productivity: productivity itself is only improved if output increases too. In manufacturing widgets, that’s an easy concept to exemplify. But what about other outputs? What about, for example, sales?
Few areas of business improvement have attracted more investment in the past decade than the quest for efficiency in sales – expressed through wondrous faith in the fashionable deity of CRM systems. Around the world, companies have spent $150 billion on the stuff since 2010, and I’ve yet to meet a client who thinks they’re using it well or fully. So, is anybody thinking about the contribution it could make to productivity?
Those of us who are charged with developing new business or with managing those people, especially if we are doing so with the help of a CRM system, ascribe a likelihood represented as a percentage to the chance of winning each opportunity. Each incremental rise in the likelihood of that sale towards an eventual 100% is an output – a product, if you like – of the sales process. The tricky part is deciding (with any degree of honesty or accuracy) when, whether and by how much to increase the percentage.
That depends on having clear objectives and being clearly objective. Anyone can come back from a new business meeting where they’ve enjoyed the coffee, swapped opinions about the game at Twickenham on Saturday, chatted about the business environment and agreed to write a proposal, under the mistaken impression that this constitutes progress. And on the back of that illusory progress, they’ll update their CRM sales forecast probability.
But what, actually, has changed? Who has taken responsibility to do the next piece of work – the seller exclusively or (at least to some extent) the buyer? What resources of time or money has the buyer committed to the process? How easy is it for the buyer to use deflection or misdirection to give the seller some homework to do – which for the unscrupulous can take the form of free consultancy?
This is the difference between an Advance and a Continuation – and the (sometimes wilful) failure by those in business development roles to draw that distinction is one of the biggest barriers to productivity improvement in the sales process. A hard measure of productivity is the achievement of a pre-agreed milestone towards the achievement of an objectified Advance. That (and that alone) confers on the seller the permission they need publicly to declare a quantifiable increase in the likelihood of the sale. An advance is when the prospect agrees to co-fund a feasibility study or proof of concept; or when they fix a date to bring their Chief Digital Officer to a reference site visit; or when instead of just asking for a proposal, they book a meeting room or video conference suite and undertake to fill it with expensive decision-makers for you to come back and talk them through it step by persuasive step. It could be a commitment as small as writing a short email to a peer level colleague to help collect evidence of the need for, and value of, the solution you are proposing – with you in copy of course. The important point is that they are making a commitment. The size of that commitment will determine the permissible degree of increase in the percentage probability that then populates the CRM – and you will have agreed that with yourself or your manager beforehand. The ultimate Advance of course, is the signed contract. Do pass Go. Do collect 100% on the CRM.
Productivity measures flow from this more rigorous approach to the inputs and the outputs. Increased velocity through the customer’s Buying Cycle compared to historical trends; higher value of deal compared to the mean over a period; fewer staff hours consumed by the opportunity in desk, travel and face-to-face activities.
If those probabilities are rising in return for the same amount of effort, or ideally for less, then we have enhanced productivity. If they’re repeated tens, or hundreds, or thousands of times across the organisation, then we have a sales productivity step-change.
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*The Year of Disruption follows on from our very successful Years of Digital (shortlisted for an Association Excellence Award), Growth and Diversity. For more information, please visit the Year of Disruption specific hub.