May 10, 2008
The Critical Missing Data on Sales Technology Effectiveness
Posted by Paul McCord under Sales Force Automation, Sales Metrics Technology, Sales Performance Management, Sales Technology Research, crm, sales | Tags: crm, impact of sales technology, paul mccord, Sales Performance Management, sales technology, Sales Technology Research |From a simple Google search of sales technology keywords such as CRM, Sales Force Automation and Sales Performance Management, one would think that sales technology is taking over the world. There are dozens upon dozens of companies competing for the technology sale. From internet based programs designed for individual salespeople and small sales teams to mega systems designed for the largest organizations in the world, anyone considering the purchase of a system is faced with a maze of choices.
Naturally, any field that has the volume of activity as sales technology is going to attract attention from academics–and sales technology has certainly attracted its share. Another Google search of keywords relating to research on sales technology generates a gross number of about 350,000 hits. Although a large number of these hits are ancillary to sales technology research, a fair number are directly related to the topic.
Unfortunately, few address the most critical question—does sales technology improve the sales or sales management process?
To date, the study of sales technology has been primarily relegated to how well the technology has been accepted within the sales force. There have been studies at Penn State, a study published in the Journal of Business Research, and others.
However, little has been done in studying what impact the technology has on sales performance. A paper in the Journal of Personal Selling and Sales Management and reprinted at Allbusiness.com seeks to analyze the impact CRM technology has had on sales performance, but as the authors admit, a great deal of further study is needed.
Yet, within this single paper are indications of both the potential value and the potential pitfalls of sales technology. The study found that there is a point of diminishing returns to the use of CRM technology. Salespeople who ‘underused’ and those who ‘overused’ the technology experienced reduced sales while those who were ‘optimum’ users experienced an increase in sales performance and sales. Unfortunately, there wasn’t a uniform standard for the optimum usage. Each company must determine the optimum usage point for themselves—meaning investing a great deal of time and energy into monitoring and training.
Additional studies are underway to examine the real world impact of CRM and SPM systems. Currently, companies must rely on anecdotal tales or their own biased experience to determine the value—or lack thereof—of the technology. It will be very interesting to see the additional data as it become available.
Yet, even without the additional studies, I believe the study referenced above is a strong indication that sales technology if implemented properly will have a very positive impact on salespeople, managers, and companies. The key is the proper implementation, meaning not just training salespeople and managers on the ‘how’ to use the system, but more importantly, what to do with the information the system produces—and that seems to be the single biggest hurdle to determining whether an investment was wise or whether the company simply has an expensive new toy
May 12, 2008 at 8:49 am
Hi Paul,
This is a very interesting topic which I talked about a few times on my Blog, with the latest entry “ICM Solution Return on Investment - Ask the Expert #4″ last week. (http://compensationexpert.blogspot.com/2008/05/icm-solution-return-on-investment-ask.html)
In that post I agreed with David Cichelli that the impact of a sales compensation system is hard to measure in terms of how it improves/increases sales and encourages certain behaviors.
I think you are missing a major factor to determine the value of sales technology, more particularly of ICM, SPM systems. The value of such systems cannot be determined by the impact on performance alone - other factors must be taken into consideration such as:
- How many problems are there with the current system / spreadsheets?
- Is the company significantly over-paying commissions and bonuses? (An ICM/SPM system would most likely fix this.)
- How much time is spent every month to handle issues and complaints, or just to review sales data for accuracy?
- How much time is spent calculating commissions every month
- etc.
An ICM system could make the calculations much less error prone, requiring much less time and involvement from the comp team, and be very valuable from an audit perspective.
Having worked on implementing several SPM systems for many large companies, I have seen some of my clients realize savings in excess of 1 million dollars monthly by replacing their legacy incentive system.
May 12, 2008 at 12:34 pm
Julien,
I think where we are parting is only on the relevance of the technology for the sales team. Certainly, there are tangible benefits for the company–and ancillary benefits for the salespeople–with ICM and SPM systems. Saving money, time and energy is something every company would appreciate.
But for the sales team, those items are of little fundamental importance. They may get commission checks right the first time, but they don’t put money in the salesperson’s pocket–that is, they don’t help them improve their performance.
From a sales perspective–and this is a sales blog–if the technology doesn’t offer the sales team something of critical importance, the impact is minimal at best.
How the systems impact performance is of critical interest to sales. These systems are often sold to sales a performance enhancement tools. If they are sold to sales that way, then they should be studied as such.