These days customers are more equipped with more information about the company’s products and services before they have even talked to the salespeople. Unfortunately, in most organizations, the sales function normally lacks high-quality data to drive sales effectiveness. For example, sales managers lack data to help align sales incentives, overcome price pressures and become a strong competitor in the market.
In these organizations, finance can play a critical role in delivering the information required to maximize sales productivity. In today’s economy of big data, the difference between success and failure more than ever lies in the quality of the data that finance shares with the organization’s salespeople.
Taking advantage of its analytical skills, the finance function can assist salespeople obtain the most relevant information about the company’s customers which ultimately helps transform the selling process and cultivate new relationships with the right customers. For any organization, sales costs are a major component of the expenses hence the importance of managing sales processes and improving sales performance. It is therefore imperative that you improve the way your company gathers and uses sales activity data in your planning, budgeting and forecasting processes. How do you rank the quality, timeliness, accuracy, transparency and completeness of the sales information used to forecast top-line revenue?
The quality of sales data at your disposal determines the usefulness of that particular data and your company’s ability to plan. In a world where technology is constantly evolving and aiding successful decision-making, to maximize sales force effectiveness, company’s should invest in analytical and modeling techniques in order to find out what changes would bring the best improvements in outcomes. This also includes improving management’s ability to use sales reporting tools such as dashboards. Getting hold of high-quality data for revenue forecasts requires you to match sales resources to changing opportunities and business objectives. This will help you retain customers from the jaws of aggressive competitors.
By gathering and integrating timely information about the company and its industry, salespeople will be able to gain insights about changes in customer behaviour which in turn leads to smarter pitches, shortened sales cycles and opening up of new opportunities. Data that reliably reveals valuable selling processes and practices as well as patterns in customers’ buying habits is effective for improving sales force effectiveness.
As market competition continues to intensify, managers must improve the effectiveness of their salespeople as quickly as possible to avoid losing market share to rivals. Improving sales performance involves improving existing sales methods and processes, better training, better hiring, better sales management and making use of refined selling behaviours such as cross selling, bundled selling, targeted discounting and focusing on sales profitability.
In many organizations, salespeople are regarded as catalysts for growth and profitability. For salespeople to successfully fulfill their role, they need high-quality data and analysis. Thus sales must partner with finance in order to gain better insights necessary for effective decision-making. Instead of just reporting on the periodic sales figures, finance can educate salespeople on data gathering and analysis and provide them the relevant information so that they become better informed prior engaging current and prospective customers. Improving collaboration among finance, operations, sales and marketing and human resources enables the company to reach its stated objectives.
As the guardians of the company’s finance data, the finance function is in a better position to supply salespeople with the information they need to take a more strategic and data-driven approach to winning over customers. Finance is able to provide more analysis, more insights and more recommendations so that people are aligned with what drives the business forward. Thus with quicker and better information, as well as accurate forecasts and targets, salespeople are empowered to make more informed decisions about which customers to target and interact with.
To successfully deliver on their business partnering role, finance people should move beyond their isolated number crunching and routine transaction processing roles and partner more with other functions of the organization. Finance must become more proactive with data. More than projecting into the future, finance could use the information in the present to improve market and competitor insights and build better selling tools. Making data-driven decisions helps managers deliver more customer value with less, outperform rivals, target the right profitable customers, design the right value proposition and create value for the company. The key for finance is therefore to provide better information that is actionable to improve sales.
If salespeople are lacking in high-quality data about their company’s costs and price competition, they can and do end up working in complete opposition to management’s goals. Selling is not about selling products that are considered legacy products but no longer support the company’s strategy. Instead, selling is about selling products that are targeted to grow top line revenues. Salespeople should therefore not be encouraged to close deals that weaken the bottom line. Pricing controls should be implemented to ensure minimum levels of profitability while remaining sensitive to market competition. Find more profitable customers and avoid negative margin deals.
Furthermore, finance can also help educate sales managers redesign sales incentive compensation plans by better linking rewards with the salesperson’s achievements and the company’s strategic objectives. However, there has to be a mutual understanding between sales and finance of what success looks like so that incentives line up with the organization’s performance measurement systems. By utilizing ABC/M techniques, finance can provide salespeople with quality information that helps them understand the various cost components of their activities, their drivers, whether they can be influenced or not and their ultimate impact on bottom line.
With the right data, salespeople will have answers to their various questions. For example, “Whether to sell to existing customers through cross selling”, “Whether to use leads to tap new markets”, “What price is no longer worth making the sale”, and “What the financial impact of sale is.” Finance therefore plays a critical role in helping the sales function achieve its effectiveness.
As sensibly as the sales function may plan and implement its strategy, it will not produce better leads, attract more customers and generate higher profits if the data is not used dynamically by finance. Finance ensures the timeliness of sales and sales-activity reporting. Finance is also capable of responding quickly to changing business situations with relevant reports and analytics.
How else can finance drive sales effectiveness?
I welcome your thoughts and comments.