“There’s no stronger time than now, where a sales executive needs a really strong partnership with business ops or sales ops or revenue ops,” said Todd Abbott, as he opened his presentation at Ramp 2019, the revenue ops event of the year hosted by InsightSquared. Abbott’s words spoke true to many Ramp attendees, including sales operations professionals who are faced with changing customer buying cycles along with the business’s increased dependency for accurate sales forecasts.
Meeting or exceeding the quarterly expectations set at the start of a quarter builds confidence with companies’ investors. When forecasts are missed, confidence is lost and job security for the sales executive, and in turn the CEO, can be in jeopardy. In fact, “the life of a sales executive is often more about doing what you say you’re going to do and meet your commits to the business, than making the plan,” said Todd Abbott. A global “best in class” sales function will consistently produce a quarterly forecast with a margin of error within 3 points—1% on the downside and 2% on the upside. To accomplish this level of performance consistently, sales executives need an efficient sales management system to help them manage the roll-up of the forecasts against the funnel.
Getting each of the sales teams to a common execution level of funnel management and conversion rates are required for the global sales executive to consistently meet their forecast commitments. An organization will always have different levels of execution across the regional sales teams: variances in funnel coverage rates, deal competitive win rates, opportunity conversion rates, linearity performance within the quarter, and forecast accuracy, just to name just a few. This variation of performance levels needs to be taken into account for the sales executive to effectively interpret the forecast from the portfolio of businesses (regions) when consolidating the roll-up to the global forecast. The higher the variance of the regional performances is, the more challenging it is to consolidate the forecast accurately.
The objective of the SMS (sales management system) is to drive continuous improvement across the regional teams and in turn, narrow the band of performance variances between the teams. This is especially challenging in larger sales functions with many sales regions but equally difficult in newer higher-growth businesses with new sales teams. Whatever your situation, when the bands of performance variances are narrowed, the accuracy of the global forecast is significantly improved and the teams can focus more time on strategic growth initiatives versus the quarterly grind of meeting this quarter’s forecast.
Of course, narrowing the band of performance is a constant journey. Its success is very much dependent on a vibrant sales operations function that is focused on the tactical execution of the sales regions but within a strategic framework. That strategic framework starts with documenting the sales process. Knowing how your sales teams sell and identifying the friction points in the sales process is the critical starting point as it identifies where to put your focus on driving improvements. Remember, the role of sales operations is to improve the effectiveness of the sales reps, who are the most expensive resources in your company.
My talk with the attendees at this years Ramp was intended to briefly touch on a few key lessons learned on implementing an effective sales management system and the role of the sales operations function. Check out the full presentation and the subsequent slide deck here!