Sales Performance Optimization - - Salesforce.com

Sales Performance Optimization – 2006 Survey Results and Analysis 

Sales Performance Optimization - 

2006 Survey Results and Analysis


Other Publications by Jim Dickie & Barry Trailer 

Target Marketing Priorities – Executive Report 

! 

Insights into High Tech 

Sales and Marketing 

! 

Sales Mastery, a Novel 

! 

The Chief Sales Officer’s Guide to 

Customer Relationship Management 

! 

The Information Technology Challenge 

! 

The Sales & Marketing Excellence Challenge – 

Changing How the Game is Played


Sales Performance Optimization - 

2006 Survey Results and Analysis 

JIM DICKIE 

BARRY TRAILER 

Sales Mastery Press 

Mill Valley, California


Copyright © 2006 CSO Insights 

All Rights Reserved. 

Terms & Conditions 

Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, 

no part of this publication may be produced or distributed in any form or by any means, or stored in a 

database or retrieval systems, without the prior written permission of the publisher except in the cases of 

brief quotations embodied in critical articles and reviews. For additional information, contact CSO Insights, 

4524 Northfield Court, Boulder, CO 80301, Phone: (303) 530-6930, e-mail: jim.dickie@csoinsights.com. 

The reader understands that the information and data used in preparation of this report were as accurate as 

possible at the time of preparation by the publisher. The publisher assumes no responsibility to update the 

information or publication. The publisher assumes that the readers will use the information contained in this 

publication for the purpose of informing themselves on the matters which form the subject of this publication. 

It is sold with the understanding that neither the authors nor those individuals interviewed are engaged in 

rendering legal, accounting, or other professional service. If legal or other expert advice is required, the 

services of a competent professional person should be sought. The publisher assumes no responsibility for 

any use to which the purchaser puts this information. 

All views expressed in this report are those of the individuals interviewed and do not necessarily reflect 

those of the companies or organizations they may be affiliated with, CSO Insights, Insight Technology 

Group, or Sales Mastery. All trademarks are trademarks of their respective companies.


Acknowledgements 

First, we wish to thank all of the far-sighted industry executives who unselfishly contributed their 

time and insights to the development of the research database used in the creation of this 

publication. 

Next, we would like to thank the following sales effectiveness experts for their underwriting and 

thought leadership support for this project: Accenture, OneSource Information Systems, 

Pragmatech Software, Salesforce.com, and Sales Performance International (SPI). 

Finally, we owe a debt of gratitude to many colleagues, mentors, and advisors whose help made 

this report possible. To list them all would be impossible, but a few deserve special mention: Bob 

Thompson, Founder and Publisher of CRMGuru.com and Willis Turner, President and CEO of 

Sales & Marketing Executives International for their support in promoting this year’s project. 

Finally, we want to thank our editing team led by Dr. Diane Hodges.

Sales Performance Optimization – 2006 Survey Results and Analysis


Table of Contents 

2006 Sales Performance Optimization Survey Overview ........................................................1 

Executive Summary ..................................................................................................................5 

General Sales Force Demographics Introduction..................................................................11 

• Percentage of Sales Force Achieving Quota.............................................................12 

• Percentage of Company Revenues by Sales Channel Type.....................................14 

• Percentage of Company Revenues by Customer Type ............................................16 

• Primary Customer Sales Focus .................................................................................18 

• Position in the Marketplace........................................................................................20 

• Size of Average Annual Quota ...................................................................................22 

• Sales Rep Variable Compensation Package Breakdown..........................................24 

• Percentage of Inside vs. Outside Reps......................................................................26 

• Primary Sales Rep Work Location .............................................................................28 

• Tenure Breakdown of Sales Force.............................................................................30 

• Average Years of Industry/Sales Experience per Sales Rep ....................................32 

• Planned Sales Force Size Changes Over the Next 12 Months..................................34 

• Current Annual Sales Rep Turnover Rates................................................................36 

• Experience Profile of New Reps Hired.......................................................................38 

• Salesperson Ramp-up Period ....................................................................................40 

• Sales Rep Time Allocation .........................................................................................42 

• Sales Rep to Sales Support Personnel Ratio ............................................................44 

• Sales Rep to Sales Manager Ratio.............................................................................46 

Sell Cycle Analysis Introduction ............................................................................................51 

• Average Deal Size.......................................................................................................52 

• Length of Average Sales Cycle ..................................................................................54 

• Number of Calls Required to Close a Deal ................................................................56 

• Lead Generation Analysis ..........................................................................................58


• Percentage of Leads That Progress to an Initial Customer Meeting........................60 

• Percentage of Initial Meetings that Progress to a Presentation ...............................62 

• Percentage of Presentations Resulting in a Sale ......................................................64 

• Percentage of Proposals Resulting in a Sale ............................................................66 

• Percentage of Deals That Close as Forecasted.........................................................68 

• Outcome of Forecasted Deals....................................................................................70 

Detailed Sales Performance Assessment Introduction.........................................................75 

• Ability to Accurately Target Prospects......................................................................78 

• Ability to Generate New Leads...................................................................................80 

• Ability to Properly Qualify Prospects ........................................................................82 

• Ability to Clearly Understand Customer’s Buying Process......................................84 

• Ability to Deliver a Consistent Message....................................................................86 

• Ability to Effectively Present Features and Benefits.................................................88 

• Ability to Competitively Differentiate Products/Services..........................................90 

• Ability to Align Solution to Customer’s Needs..........................................................92 

• Ability to Generate Accurate Bid/Configuration/Proposal........................................94 

• Ability to Up-Sell and Cross-Sell................................................................................96 

• Ability to Sell Value/Avoid Excessive Discounting ...................................................98 

• Ability to Accurately Forecast Business ................................................................. 100 

• Ability to Gain Access to Decision Making Authority ............................................. 102 

• Ability to Accurately and Easily Submit Orders...................................................... 104 

• Ability to Conduct Win/Loss Reviews...................................................................... 106 

• Ability to Accurately and Easily Calculate Commissions....................................... 108 

• Ability to Implement Effective Customer Care Programs ...................................... 110 

• Ability to Renew Business with Existing Accounts ................................................ 112 

• Ability to Farm New Business from Existing Customers........................................ 114 

• Ability to Effectively Introduce New Products......................................................... 116


• Ability to Effectively Support Channel Partners...................................................... 118 

• Ability to Create/Maintain References/Case Studies............................................... 120 

• Ability to Communicate Effectively with Other Sales Teams.................................. 122 

• Ability to Communicate Effectively with Sales Management.................................. 124 

• Ability to Communicate Effectively with Other Departments ................................. 126 

• Ability to Share Best Practices Across the Sales Force ......................................... 128 

Rate of Change in the Marketplace Introduction ................................................................. 133 

• Rate of Change in Customer’s Marketplace ............................................................ 134 

• Rate of Change in Competitive Activity................................................................... 136 

• Rate of Change in Breadth of Product Line Offerings ............................................ 138 

• Rate of Change in Complexity of Product Offerings............................................... 140 

• Rate of New Product Introductions.......................................................................... 142 

• Rate of Entry into New Markets................................................................................ 144 

• Rate of Overall New Sales Rep Hiring...................................................................... 146 

Sales Methodology Introduction .......................................................................................... 151 

• Annual Investment in Training Per Sales Rep......................................................... 152 

• Amount of Sales Skills Training Conducted............................................................ 154 

• Amount of Product Training Being Conducted....................................................... 156 

• Amount of Customer’s Marketplace Training Being Conducted............................ 158 

• Amount of Purchase Justification Training Being Conducted ............................... 160 

• Amount of Sales Management Training Being Conducted..................................... 162 

• Adherence to Use of Sales Methodology Assessment........................................... 164 

• Impact of Sales Methodology on Performance ....................................................... 166 

• Type of Sales Methodology Deployed ..................................................................... 168 

• Sales Methodology Adherence Percentage............................................................. 170 

• Attitudes Toward Recommending Sales Methodology Vendor.............................. 172 

Customer Relationship Management (CRM) Introduction................................................... 177


• Organizations Formally Evaluating CRM Systems.................................................. 178 

• CRM Vendors Seriously Considered ....................................................................... 180 

• Organizations Implementing a CRM System........................................................... 182 

• Type of CRM System(s) Implemented...................................................................... 184 

• CRM Vendor(s) Applications Purchased ................................................................. 186 

• Length of Time CRM System Installed..................................................................... 188 

• CRM Project Implementation Time .......................................................................... 190 

• Amount of CRM User Training Being Conducted.................................................... 192 

• CRM Application Adoption Rate .............................................................................. 194 

• CRM Project Costs: Actual vs. Budget .................................................................... 196 

• Impact of CRM on Sales Performance ..................................................................... 198 

• Benefits Resulting from CRM Usage ....................................................................... 200 

• Overall Primary CRM Vendor Satisfaction Rating................................................... 202 

• Buy From Again/Recommend Primary CRM Vendor Rating................................... 204 

• Implementation Approach for CRM System(s)........................................................ 206 

• Systems Integration/Consulting Firms Used........................................................... 208 

• Attitudes Toward Recommending Systems Integrator/Consultant........................ 210 

• Toughest Challenges Encountered During CRM Initiative ..................................... 212 

• Sales Knowledge Management Challenges............................................................. 214 

In Closing............................................................................................................................... 217


2006 Sales Performance Optimization Project Overview 

The following report represents the summary findings of our twelfth annual survey into identifying 

and analyzing the challenges that are impacting sales performance today, and more importantly, 

examining how organizations are leveraging people, process, technology, and knowledge to 

successfully address those issues. 

To collect the data for this study, in partnership with CRMGuru.com and Sales and Marketing 

Executive International (SMEI), we solicited input from professionals directly involved in the 

management of their organization’s sales force regarding their sales teams’ performance across 

100+ different metrics. In total, 1,275 firms offered to participate in this study. 

As in the past, we sought to get study participation across multiple industries so that we could 

have the ability to analyze selling differences in various marketplaces such as manufacturing high 

tech, manufacturing non-high tech, financial services, business services, distribution, retail, and 

so on. Figure 1 highlights the industry mix from the highest level perspective. We received the 

most participation from manufacturing firms (both high tech and non-high tech), followed by 

services related organizations (financial, high tech, general business, advertising/PR, etc.), then 

“other” (including retail, government, non-profits, education, distribution). 

2006 Study Participation Industry Breakdown 

Other 

21.5% 

Manufacturing 

42.4% 

Services 

36.1% 

Figure 1 

In terms of geographic participation, 62.0% of the firms taking part in the study were from North 

America, 14.4% Europe, 12.2% PacRim, and 11.4% ROW. Regarding company size, 57.2% of 

the companies employed less than 50 salespeople, 21.2% employed 50 – 250 salespeople, and 

21.6% had sales organizations of >250 reps. 

To support the data gathering process, we continued to utilize a web-based survey approach for 

this research project. The candidates invited to take part in this study were initially prescreened 

based on their job function. These executives were then e-mailed an invitation to take part in the 

study. Those who accepted were e-mailed a link to a website at which they could take the actual 

survey. 

The survey instrument was designed to take approximately 30 minutes to complete. Participants 

had the option to signoff from the site, return, and take up where they left off if they needed to 

©CSO Insights 1 

No portion of this report may be reproduced or distributed In any form 

or by any means without the prior written permission of the authors.


stop to get more information or had a time constraint. Survey questions focused on obtaining 

feedback on sales performance metrics in relationship to six key areas: 

! Sales Force Demographics: Number of salespeople, percentage of sales reps making 

quota, average tenure of salespeople, percentage of revenues from various sales 

sources (field sales, telesales, channel, OEM), ratio of sales reps to sales support 

personnel and sales managers. 

! Sell Cycle Analysis: Average sell cycle length, number of calls required to close a deal, 

pipeline conversion rates (number of leads resulting in a meeting, meetings resulting in a 

presentation, presentations and proposals that close), average ultimate win/loss/no 

decision rates, percentage of deals that close as forecasted. 

! Detailed Performance Assessment: Ability to effectively generate leads, qualify 

prospects, cross-sell/up-sell, sell value/avoid discounting, close business, process 

orders, create customer loyalty, support channel partners, communicate with sales 

management and other functional areas within the company. 

! Change Analysis: Assessment of the amount of change sales organizations are seeing 

in competitive activity, their customer’s marketplace, the breadth and complexity of the 

product lines they sell, amount of new sales rep hiring, etc. In addition, we are assessing 

the ability to keep pace with those changes. 

! Utilization and Impact of Sales Methodology: Percentage of firms using a formal sales 

methodology, their adherence to that methodology, analysis of sales organizations that 

develop their own versus license a commercially available methodology, analysis of 

which commercial offerings they used, and the overall impact it is having on their sales 

performance. 

! Utilization and Impact of CRM Technology: Review of what percentage of 

organizations have evaluated/implemented a Customer Relationship Management (CRM) 

system, comparison of licensing a commercially available system versus building the 

application in-house, analysis of the impact CRM is having on a sales force’s ability to 

sell, and usage of outside resources to implement CRM systems. 

The following report summarizes the input we received from the participating firms for each of 

these areas. To help put the data into perspective in terms of potential relevance to your sales 

organization, we recommend that you take the survey either prior to or after reviewing this report. 

Using this approach, you will be able to compare your company’s performance to other sales 

forces and determine where it excels, equals, or lags behind your peers. You will also better 

understand the strengths that can be more fully leveraged and determine what weaknesses to 

address. 

If you are interested in taking the survey online, simply email jim.dickie@CSOinsights.com, and 

we will send you a link with instructions. By choosing this option, you will also receive all the ministudies 

we publish this year at no additional charge. 

We hope the information contained in this report will help you more effectively chart the course for 

your own sales effectiveness efforts. While we believe the issues raised have broad applicability, 

we encourage you only to use this information as the basis for brainstorming and goal planning 

sessions for identifying and prioritizing the operational challenges your organization faces. 

Everyone can benefit from understanding what strategies and tactics other companies are using, 

but in the end, you must implement solutions that fit your specific business needs and not those 

of other firms. 





If you would like to obtain a more focused analysis of the data or discuss in depth some of the 

best practices we surfaced this year for dealing with current sales effectiveness challenges, 

please contact: 

Jim Dickie, Partner 

CSO Insights 

(303) 530-6930 

jim.dickie@csoinsights.com 

Barry Trailer, Partner 

CSO Insights 

(415) 924-3500 

barry.trailer@csoinsights.com 









Executive Summary 

In numerous boardroom discussions we were invited to sit in on this past year, we have seen that 

optimizing sales performance is now a topic that is top-of-mind - not just to Chief Sales Officers 

(CSOs), but to the rest of the executive management team as well. Companies across all 

industries are experiencing major shifts in how customers are purchasing products and services 

and are rapidly trying to maximize their sales effectiveness to keep pace with those changes. 

One major trend we heard from several CSOs was that their client’s “buying cycle” was evolving. 

With so much information available via the Internet, the buying process can start long before the 

sales process as prospects are able to access product facts, pricing, reviews, existing customer 

feedback, etc. without ever talking to a salesperson. And when sales reps do get involved in the 

evaluation process, they are often finding themselves faced with convincing more stakeholders 

that their offering is the best fit to customer needs (as compared to the competition), and that the 

value is high enough to justify making the purchase now. 

The following report is designed to help executives more clearly understand the current world of 

sales from two perspectives. The first is the “what” of selling. Here we focus in on assessing the 

objectives sales organizations are trying to achieve. The second view looks at the “how” of selling 

- analyzing the strategies and tactics CSOs are implementing to achieve their goals. The study 

results and analysis are based on input we received from 1,275 companies worldwide. 

Looking first at the “what” of selling today at the highest level, we asked the firms participating in 

the 2006 study to identify the top three objectives they had for their sales operations for the 

coming year. It probably comes as no surprise to most executives that “increasing revenues” is 

the top priority, as seen in Figure 2. What is interesting to note is the jump in the number of sales 

executives who are focused on that objective (68% seen below compared to 58% reported last 

year). 

2006 Top Three Business Objectives for Sales 

Increase Revenues 

Increase Sales Effectiveness 

Increase Market Share 

Improve Customer Loyalty/Satisfaction 

Reduce Sell Cycle Time 

Improve Margins 

Increase Channel Sales Effectiveness 

Improve Team Selling 

Improve Communications 

Reduce Administrative Burden 

Decrease Discounting 

Other 

0% 10% 20% 30% 40% 50% 60% 70% 

Figure 2 





But getting more cash in the register is not the only challenge CSOs face. Looking further at the 

graphic, we see other issues that need to be dealt with: increasing market share, building loyalty 

within the customer base, avoiding erosions in margins, improving sales productivity, effectively 

leveraging alternative sales channels, streamlining cross-functional communications, etc. 

Add these on top of the ever-increasing revenue expectations being placed on the shoulders of 

sales forces, and you have the basis for many sleepless nights as CSOs and their sales 

management teams struggle to figure out what changes to make in how they sell. 

In accessing the “how” of optimizing sales performance, you will find we investigated over 100 

metrics related to sales effectiveness. In looking at these aspects of selling from the highest level, 

we see that companies have started to make major investments in their sales organizations in 

four key areas: 

! People: The rate of “net-new” hiring is increasing, in some cases dramatically; as the 

majority of companies are including expanding the number of people selling as part 

of their plans to hit their new revenue and growth targets. In addition, as you will see 

in the report details, some firms are seeing the significant advantages associated 

with minimizing sales rep turnover (both voluntary and involuntary). These 

organizations are changing compensation plans, restructuring support services, 

providing more tools, etc. as a means to make people successful, and keep them 

onboard longer. 

! Process: The adoption of more formalized approaches to selling is increasing 

noticeably and with it is the investment firms are making in training to optimize selling 

skills, increase product knowledge, improve competitiveness, and enhance customer 

relationships. Training for sales managers to improve their coaching effectiveness, 

communications skills, forecasting ability, etc., is also on the rise. Throughout the 

report you will find examples of the impact process optimization can have on 

performance. 

! Technology: A number of advances have taken place in the area of Customer 

Relationship Management (CRM) software. Existing users of these applications are 

reporting that these applications are easier to install and manage, and that end user 

adoption rates are improving. Based on these trends, we are seeing more firms are 

providing their salespeople with access to CRM systems as part of their strategy to 

help them sell more efficiently and effectively. 

! Knowledge: The final area we are seeing increased investment in is providing 

salespeople with access to the information and insights they need to sell more 

effectively. This is taking on a couple of different forms. The first is optimizing 

external information access. This includes providing salespeople with subscriptions to 

outside news services or providing them tools to help automatically surf the web for 

information on customers, competitors, the marketplace, etc. The second is mining 

internal information contained in information systems or less structured best practices 

gathering and sharing. 

Our review of hundreds of sales performance improvement initiatives shows that investments in 

each of the above areas can hold great promise. Our performance benchmarking reviews 

surfaced examples of companies improving revenues per rep by 42%, shortening the sell cycle 

by 27%, improving lead generation results by a mind-boggling 300%, increasing cross-selling and 

up-selling success by over 110%, decreasing sales rep turnover by half, decreasing the amount 

of time required to get a new rep fully productive from seven months down to less than four, and 

much more. 





But not all investments generate these levels of results. As you will see in this study, optimizing 

sales performance is not just an issue of spending more on supporting sales but spending wisely 

as well. For each success story we also found examples where funds spent yielded minimal or no 

results at all. 

Throughout the remainder of this report, in addition to reviewing the data findings, we will share 

strategies and tactics other firms have employed to effectively leverage people, process, 

technology, and knowledge to optimize the performance of their sales teams. We encourage you 

to leverage these insights as you formulate your plans to maximize the effectiveness of your 

sales force this year and beyond. 

Should you have any questions on any of the study findings or if you like would like to know more 

about the best practices your peers are implementing to effectively deal with the issues surfaced 

in this report, please feel free to contact us directly. 

Jim Dickie, Partner 

CSO Insights 

(303) 530-6930 


Barry Trailer, Partner 

CSO Insights 

(415) 924-3500 










General Sales Force Demographics 









General Sales Force Demographics 

This section looks at a number of metrics related to the sales force make-up: including the size of 

the sales team, how they are organized, their level of experience, where they work, how they 

spend their time, etc. 

• Percentage of Sales Force Achieving Quota.............................................................12 

• Percentage of Company Revenues by Sales Channel Type.....................................14 

• Percentage of Company Revenues by Customer Type ............................................16 

• Primary Customer Sales Focus .................................................................................18 

• Position in the Marketplace........................................................................................20 

• Size of Average Annual Quota ...................................................................................22 

• Sales Rep Variable Compensation Package Breakdown..........................................24 

• Percentage of Inside vs. Outside Reps......................................................................26 

• Primary Sales Rep Work Location .............................................................................28 

• Tenure Breakdown of Sales Force.............................................................................30 

• Average Years of Industry/Sales Experience per Sales Rep ....................................32 

• Planned Sales Force Size Changes Over the Next 12 Months..................................34 

• Current Annual Sales Rep Turnover Rates................................................................36 

• Experience Profile of New Reps Hired.......................................................................38 

• Salesperson Ramp-up Period ....................................................................................40 

• Sales Rep Time Allocation .........................................................................................42 

• Sales Rep to Sales Support Personnel Ratio ............................................................44 

• Sales Rep to Sales Manager Ratio.............................................................................46 




Sales Performance Optimization 2006 Survey Results and Analysis 


What percentage of your sales force achieved quota 

Sales Rep Quota Achievement 

Under Quota 

40.9% 

Met or Exceed 

Quota 

59.1% 

Key Findings 

! Quota attainment 

percentage is up 

for second year in 

a row, albeit 

marginally. 

! Real 

improvements in 

performance 

higher than 

perceived. 

! Ongoing debate 

over working 

“harder” or 

“smarter.” 

Observations 

For us, the litmus test for sales performance is the percentage of 

salespeople making quota. In the heydays of the late 90’s, this number 

approached 70%, and in selected industries the number was in the low 

80% range. 

Then the economic downturn hit, and this metric headed south for three 

straight years, bottoming out at 49.2% in our 2004 report. After bouncing 

back to 58.2% last year, we see another small gain in the 2006 study. 

However, this 59.1% number may actually be a more impressive 

accomplishment when one considers another factor. As you will see on 

page 22, quotas went up significantly for 2005, so the fact that the 

percentage of salespeople making quota held steady is actually a 

positive trend. 

So there are slightly more reps hitting, in some cases, much higher 

quotas. The question this begs (and one we will explore from a number 

of different angles throughout the remainder of the report) is what 

caused this improvement in performance Are salespeople really 

working smarter, and are they executing steps in the sales process more 

effectively Or, is it the case that they are working harder and more 

hours to accomplish more 

The answer this year is – some of both. As you will see in the 

Performance Assessment section, the ratings for how salespeople are 

performing specific sales tactics are garnering higher ratings than in the 

past few years. So, they “feel” they are working more effectively. 





However, the supporting performance metrics in Section 2 (conversion 

rates of leads to first calls, calls to presentations, presentations to sales, 

win rate of forecasted deals, etc.) don’t show much improvement from 

the past year. 

Based on this apparent paradox (feeling as if they are doing things more 

effectively but lacking the performance data to back up that assumption), 

we will be conducting best practices reviews to develop case studies on 

exactly “how” companies are producing world-class results. To ensure 

you receive these updates, send your current e-mail address to 

info@csoinsights.com. 

Notes: 






What percentage of your company’s revenues come from the following sources 

Revenues Per Sales Channel Type 

Channel Sales 

14.0% 

Other 

2.7% 

Telesales 

13.8% 

Direct/Field Rep 

Sales 

69.4% 

Key Findings 

! Reliance on direct 

field selling still 

the key for most 

firms. 

! Telesales still a 

key part of many 

firms’ strategies, 

even with tighter 

governmental 

regulations. 

! Channel seen as 

a way to augment 

direct efforts, and 

in some cases, 

replace them. 

Observations 

We modified a metric we began measuring last year to focus on 

quantifying the types of revenues firms are generating through the efforts 

of their own salespeople (both telesales and direct) and from channel 

partner sales reps. Above, we see that sales produced from internal 

employees account for over 83% of the revenues being achieved. 

The face-to-face contact of a field salesperson meeting with a customer 

or prospect is still the key method firms are using to promote selling. Still 

many tactics during the sales process are being executed remotely (e.g., 

conference calls/web-meetings, on-line demos, computer-based training 

courses, information sharing via sales portals, etc.). 

In this study and in two additional major efforts we conducted on target 

marketing and telesales/contact center effectiveness, we found that 

while firms are concerned with adhering to the new governmental 

regulations regarding telemarketing and telesales, they are planning to 

rely on these communications methods as a key part of their overall goto-market 

strategy. 

The key to making this work effectively for firms that use both selling 

models is to improve the communications between sales team members. 

As you will see in Section 3, this is occurring more regularly. 

Effectively leveraging channel reps remains an area of interest for many 

sales organizations. This is seen as a cost effective method for handling 

certain sized deals or servicing customers in geographies where the 

parent companies do not have an active presence. 





The challenge though is gaining mindshare of these channel 

salespeople. More investments are being made in tools to aid channel 

reps in conducting key pieces of the sell cycle, (e.g., needs analysis, 

education, solution configuration, proposal generation, order processing, 

etc.) as a means to motivate them to sell certain products or services 

over others. 

Notes: 






What percentage of your revenues comes from the following customers 

Source of Revenues by Customer Type 

% New Customers 

35.3% 

% Existing 

Customers 

64.7% 

Key Findings 

! Reliance on 

selling to existing 

customer base is 

holding steady. 

! Improvements 

being made in 

cross-selling and 

up-selling. 

! Generating 

qualified leads is 

key to acquiring 

new customers. 

! Innovative 

projects are being 

implemented to 

nurture both 

customers and 

prospects. 

Observations 

Last year, we began tracking the percentage of revenue coming from 

existing and new customers. Not surprisingly, during that economic 

downturn, relying on generating sales from current clients was a key 

priority. We were curious to see what would happen going forward. 

Looking at the numbers in the above chart, we find that purchases being 

made by existing customers are still accounting for approximately twothirds 

of the sales dollars (essentially flat from last year). 

As you will see in Section 3, many companies are making noticeable 

improvements in their ability to successfully rollout new offerings, crosssell 

and up-sell, and improve customer loyalty, all of which are helping 

companies maximize sales with current customers. 

We may well see the pendulum start to shift this year with increased 

investments in targeted marketing programs (e.g., direct mail, e-mail, 

web-based marketing, etc.) being reported by more companies. One of 

the issues these programs are being designed to address is to assist 

salespeople who have previously generated most of their own leads. 

A concept that seems to be generating interest is that of “lead 

incubation.” Marketing campaigns often generate interest that doesn’t 

necessarily turn into action. By that we mean the prospect expresses a 

desire to know more about a product or service but is not motivated to 

take a formal look at the offering. In those cases, you want a formalized 

follow-up communications process that leverages the insights gained 

regarding their level of interest from the response to the initial campaign 

and, to keep your company and product top of mind so that when the 





client is ready to look, they remember you. 

A technology firm shared that when they implemented their automated 

follow-up process program, they more than doubled the ROI for a 

marketing campaign. They nurtured the leads that were “interested/but 

not ready” and turned C leads into Bs and B leads into As. 

Notes: 






What is the primary selling focus of your sales force 

Primary Sales Focus 

Primarily B2C 

8.4% 

Blended B2B 

and B2C 

17.3% 

Primarily B2B 

74.4% 

Key Findings 

! Some key 

challenges 

encountered by 

B2B-focused 

firms differ from 

B2C. 

! B2C’s top goal is 

sales 

effectiveness 

versus revenues. 

! B2B making more 

investments in 

tools to support 

selling. 

! Some 

commonality 

exists regarding 

issues. 

Observations 

After beginning to differentiate firms by the type of focus they have 

(primarily business-to-business (B2B), primarily business-to-consumer 

(B2C), or a blended approach such as a bank offering both retail and 

commercial lending offerings), we began seeing that the challenges 

faced and the solutions to those issues could be very different. 

One trend evidenced in B2C is the desire to optimize the speed of selling 

– the goal is often to complete the sales process in a timely fashion to 

avoid having the cost of sale erode the margins. Also reported are 

turnover rates higher than B2B firms. As a result, getting new 

salespeople fully productive as soon as possible is of keen interest. 

Interesting is that B2C firms cited “increasing sales effectiveness” as 

their top goal for 2006 as opposed to “revenues” as seen on page 5 for 

the study group as a whole. 

B2B firms tend to be looking at more complexity during the sales 

process. They are often selling to multiple players who have influence on 

the final decision. Team selling is more prevalent, so they need to 

communicate with and manage the actions of players in other 

geographies or functional areas of their company. 

To accomplish this, B2B organizations make more investments in sales 

skills training and better leverage technology to support execution of the 

sales tactics and communications regarding the status of the opportunity. 





There are some areas of commonality that still exist. Building customer 

loyalty, maximizing margins, and effectively differentiating themselves in 

the marketplace versus the competition are shared challenges between 

the two groups. 

Notes: 






How is your company perceived in your marketplace 

Position in the Marketplace 

One of Many 

Players 

23.2% 

New Player 

(Start-up firm) 

10.9% 

Dominant 

Player 

16.4% 

One of the 

Lead Players 

49.6% 

Key Findings 

! Start-ups 

encountering the 

biggest 

challenges 

related to 

achieving quota. 

! On the other 

hand, “it is good 

to be King.” 

! The bigger you 

are, the more 

“religion” you 

have. 

! Options for 

smaller firms to 

provide tools for 

their teams are 

increasing. 

Observations 

As we began to document last year, where you are in the pecking order 

in your market space can have a significant impact on what challenges 

you need to contend with. For example, start-ups reported the lowest 

ratings for percentage of salespeople making quota, with attainment 

ratings in the 47% range. 

One factor that may be influencing this performance is that start-ups 

report higher “competitive loss” and “no decision” rates than the firms in 

the other categories. In addition to facing a product challenge compared 

to their competitors, they may also be facing a concern regarding their 

longevity. 

On the other hand, when we look at companies who are the dominant 

players in their marketplace, we find that benefits come to he who is 

King. For example, 67% of salespeople achieve quota. 

Noticeably higher for these players are their “win rates” for forecasted 

deals and the higher percentage of revenues they receive from their 

existing customer base. 

One of the items of interest is how dominant players sell. They adopt a 

more structured approach to selling than other firms, although they do 

not appear to spend any more on training than their counterparts. 

The percentage of firms that have implemented CRM tools did not vary 

widely between categories. With the increase in the quantity of ondemand 

options available, small and medium-sized businesses can now 





cost-effectively provide these tools to their salespeople. 

In looking at the end user adoption rates across classes of users, smaller 

firms tend to have a higher rate of system usage than larger players. We 

will explore the factors impacting system usage in the Customer 

Relationship Management (CRM) section of the report. 

Notes: 






What is the amount of your average rep sales quota 

Annual Quota Per Sales Rep 

>$2M 

18.3% 


directionally with the size of the revenue target salespeople are expected 

to hit. 

Of interest to several of our advisors was the apparent lack of impact 

that quota size has on overall win rates. Comparing the performance of 

sales reps based on their quota size, the win rate percentages are fairly 

consistently hovering in the 50% range. 

Notes: 






What percentage of a salesperson’s compensation package is variable pay 

Variable Component of Rep Pay Package 

60%+ 

23.3% 

0 - 15% 

15.9% 

16 - 25% 

13.2% 

40 - 60% 

27.3% 

26 - 40% 

20.4% 

Key Findings 

! Revised Metric: 

Starting to 

breakdown the 

percentage of 

variable vs. base 

pay in more 

detail. 

! Wide range in 

philosophies 

regarding how to 

structure pay 

plans. 

! Comparing the 

opposite ends of 

the spectrum, 

there is no 

noticeable 

difference is 

quota attainment. 

! There are 

variances in 

voluntary turnover 

rates. 

Observations 

Last year we started to track what percentage of a salesperson’s 

compensation package was variable versus base pay. The numbers 

though were reported at an aggregate level (56.4% base and 43.6% 

variable). Based on requests from our research clients, we changed the 

question to surface the ranges that firms are using when determining the 

extent to which a pay package should be variable versus base. 

Above, we see that there is a wide range of opinions on the topic. There 

is roughly a 50/50 split at the 40% pay target, with half of the 

organizations targeting a variable compensation rate above that 40% 

rate and the other half falling below. 

In talking to CSOs, we find different philosophies. One executive who 

has essentially all of his reps’ pay comprised of commissions and 

bonuses stated that his view was that you “feed eagles and starve 

pigeons.” You want to reward the superstars to stay and motivate the 

underperformers to get their act together or move on. 

On the opposite end of the spectrum were CSOs who feel that variable 

can motivate reps to do things that are not in the best interest of the 

client if the plans are not well designed. 

We started to do some analysis of what, if any, variable pay percentages 

have on quota attainment. Looking at the opposite ends of the variable 

pay curve; 60% plus and 15% or less, we found that the percentage of 

reps making quota was virtually identical – 61% in both cases. 





One trend we will explore later this year is the turnover rate in sales by 

percentage of their pay package – that is base versus variable. Again, 

looking at the opposite ends of the spectrum, the voluntary turnover 

rates for firms with 60% or more of their packages comprised of variable 

pay were 18% lower than firms with little or no variable pay component 

to their plans. 

Notes: 






What is your percentage of inside and outside sales reps 

Inside vs. Outside Reps 

Inside 

(Telesales) Reps 

25.5% 

Outside 

(Direct/Field) 

Reps 

74.5% 

Key Findings 

! Noticeable swing 

back to reliance 

on direct/field 

sales reps to sell. 

! Telesales still 

playing a key 

role, not being 

impacted 

significantly by 

regulatory 

changes. 

! Quota 

achievement 

numbers do not 

show advantage 

in one approach 

over the other. 

! Turnover is 

higher in 

predominantly 

telesales firms. 

! CRM adoption 

rate higher for 

telesales. 

Observations 

Comparing the percentage of outside (direct/field) sales reps from last 

year to this, we see that the pendulum continues to swing toward relying 

on field salespeople to carry most of the selling burden (74.5% of the 

sales force seen above compared to 64.1% in the 2005 study and 51.1% 

in 2004). 

Again, outsourcing is contributing to part of this shift. Leveraging onshore 

and offshore outside telesales firms to handle peak sales needs, 

providing coverage to smaller or geographically remote accounts, 

handling sales of products nearing the end of their life cycle more cost 

effectively, etc. are being considered by an increased number of firms. 

This is reducing the number of employees working inside the company 

on those tasks. 

In this study, the 2005 Target Marketing, and 2005 Telesales 

effectiveness research reports, we see evidence that governmental 

regulations are not negatively impacting the level of interest in using 

telesales as a means for working with customers. There are, however, 

more net new positions being given to the field sales side of the house 

when it comes to additional hiring. 

In looking at percentages of inside and outside salespeople making 

quota, the numbers are nearly identical; hovering in at the 58-59% rate. 

Both sets of sales reps face challenges in meeting their numbers. Also, 

win rates are not statistically different between these two groups. 

Turnover rates for sales organizations that rely more heavily on telesalespeople 

are noticeably higher than firms focusing on direct sales 





teams. For example, the overall turnover rate (voluntary and involuntary 

rep turnover) for firms with >75% of their sales force made up of telesalespeople 

is 48.2% compared to an overall rate of 32.8 % for sales 

organizations with 90% compared to only 27.6% of the 

predominantly direct firms. Based on this trend, new telesales reps 

would have access to more details on their accounts through the CRM 

systems than new outside reps would. 

Notes: 






Where is your sales reps’ primary work location 

Primary Sales Rep Work Location 

Home Office 

33.0% 

Customer 

Location 

2.5% 

Other 

3.4% 

Company Office 

61.1% 

Key Findings 

! Breakdown of 

where 

salespeople work 

is holding steady. 

! Where reps work 

is not impacting 

performance. 

! Better 

communications 

with sales 

management/ 

other functional 

areas reported for 

company officebased 

reps. 

! Seeing more 

blended 

approaches with 

reps working 

remotely part of 

the time. 

Observations 

After three years of increases in the percentage of salespeople working 

remotely compared to working in a company office, the trend seems to 

be leveling off this year. Part of this may be attributable to less pressure 

being placed on CSOs to cut costs and more focus on increasing 

revenues. 

In comparing the performance levels of reps (e.g., percentage of reps 

making quota, average win rate, amount of turnover, etc.), there are no 

major differences relative to the location of the salesperson’s office. 

However, communications between salespeople and their managers or 

sales and other functional areas are directionally better when reps work 

out of company offices versus their homes. To minimize the impact, 

more companies are investing in collaboration tools. 

Use of software to support web-based meetings, training classes, 

facilitating communications on the status of deals through CRM, etc. 

continues to rise. Adoption rates of technology by home office-based 

salespeople are higher than those of sales reps working in company 

locations. 

One interesting use of technology we observed was a software system 

to instantly allow people to connect with each other. The system tracks 

who is online and the method they are using to communicate. For 

example, let’s say a sales rep needs to contact a legal specialist to work 

out some terms in a contract. The system checks to see who is online 

that has that type of expertise. Once it locates someone who matches 





the desired profile, it issues an invitation to join a virtual meeting taking 

into account the best available way to facilitate that discussion (e.g., 

video conferencing, web meetings, IM chat, etc.). 

Using this technology, the firm found that the system increased the 

productivity and responsiveness of its salespeople by getting them 

directly in touch with those who could help with the task at hand. 

Based on feedback from several of our research clients that have 

adopted a blended approach to work (reps work in both company and 

home locations throughout the week), we will be modifying our survey 

tool next year to take these cases into consideration. 

Notes: 






What is the tenure breakdown of your sales force 

Tenure Breakdown of Sales Force 

4+ Years 

37.2% 


their career path progress. 

A third concept is the idea of not just motivating salespeople to stay in 

their jobs, but their sales support staff as well. During the course of 

conducting customer satisfaction reviews, a technology firm found the 

ratings from clients were often directly related to the tenure of technical 

support people working with that account. 

They implemented a financial incentive system to reward tech reps for 

continuing to work with the clients with which they have established 

relationships as opposed to seeking other jobs in the company such a 

development, technical marketing, training, etc. 

Notes: 






What are the average industry and sales experience levels of your sales force 

Average Experience Level of Reps 

18 

16 

16.9 

14 

12 

10 

8 

7.8 

6 

4 

2 

0 

Years in Industry 

Years in Sales 

Key Findings 

Observations 

! Seeing firms 

seeking to hire 

reps who have 

more experience 

in selling. 

! Performance 

improves as 

experience 

increases. 

! Turnover rates 

decrease as 

experience 

increases. 

Again, during the boom times of the 90’s, the ability to hire salespeople 

with extensive sales experience became a daunting task as demand 

exceeded supply. We started tracking the average tenure make-up of the 

sales force last year, and the experience levels continue to trend up. 

More experienced players often come with a higher price tag, and sales 

executives (and CFOs) may question whether they are worth the price. 

While the numbers vary from industry to industry, at the aggregated data 

level the performance levels (as measured by metrics including 

percentage of salespeople making quota, the ability of reps to sell value 

and avoid discounting, and overall win rates of forecasted deals) 

directionally improve as the experience levels of the sales team 

increase. 

An interesting corollary is that the turnover rates tend to decrease based 

on the experience levels of the salespeople. This is true for both 

voluntary and involuntary rates, as experienced reps change jobs less as 

their careers progress. If they survived the early learning years of selling, 

they are less likely to make the errors that cause their performance 

levels to fall to levels where they are let go. 

As you will see in the next three graphs, companies view the addition of 

net new salespeople as a key part of their growth plans, and the rate of 

new hiring is increasing. 

In addition, the reps being targeted are those who have previous selling 

experience in their industry. This should serve as a word of warning to 





CSOs to ensure that they are putting the programs and policies in place 

to keep experienced reps on board. 

If you calculate the impact on your performance caused by losing an 

experienced revenue producer and then waiting for his or her 

replacement to ramp-up to full productivity, you will see that an increase 

in turnover can severely impact your ability to meet your revenue goals. 

Notes: 






How will the size of your sales force change over the next 12 months 

Planned Changes in Sales Force Size - 2006 

Increase by >30% 

11.3% 

Increase 21-30% 

7.0% 

Decrease in size 

2.4% Remain the same 

26.6% 

Increase by 

11-20% 

20.0% 

Increase by 

10% or less 

34% 

Key Findings 

! There will be a 

significant jump in 

the number of 

salespeople hired 

in 2006. 

! Certain segments 

of the 

marketplace 

planning very 

aggressive 

growth. 

! Firms looking to 

optimize the 

hiring process. 

Observations 

After seeing firms pull back on aggressively adding net new staff in sales 

in 2002 and 2003, we see the continuation of a three-year trend to “put 

more feet on the street” as a key part of a CSO’s strategy to achieve 

growth objectives. 

Looking at the numbers above, some companies are planning significant 

growth in their sales organizations, as nearly 1 in 5 firms plan to increase 

the size of its sales organization by 21% or more. 

In further analyzing the metric, the growth trend is consistent for both 

B2B and B2C firms. There are differences when looking at the projected 

hiring plans by company type. Industries such as high tech hardware and 

software report plans for the highest level of growth in their sales teams. 

The hiring process for salespeople is one that many companies would 

like to improve. To ensure they make a good hire, some companies are 

employing techniques such as administering psychographic tests of 

potential candidates, contracting with recruiting firms specializing in 

assessing sales talent, increasing the extent of the interviewing process, 

etc. 

One tactic used by a financial services firm was found to be effective in 

helping to optimize the hiring process. In the past, this firm went through 

a process of reviewing hundreds of résumés, inviting in potential 

candidates, involving managers and reps in the interview process, and 

then performing detailed due diligence on the best candidates. 





The head of sales noted that the flaw in this approach is that résumés 

can be very misleading. Often, he found himself making a decision within 

5 minutes of meeting candidates that were not going to be a fit, even 

though they looked great on paper. 

Their answer to this challenge was simple, cheap, and effective. After a 

first pass at the various résumés, they invited the candidates they were 

interested in to take part in a virtual interview. The potential recruits were 

sent a DVD containing 18 questions and a web camera to plug into their 

PC. When ready, the interviewee started the program on the DVD which 

asked the questions, and the responses were captured and uploaded to 

a website for later review. 

By utilizing this service, the hiring managers were able to see and hear 

the candidates as opposed to just reading their résumés. The service 

also allowed them to compare how individuals answered specific 

questions. They found this change in their process greatly improved the 

quality of the candidates they invited for face-to-face interviews. 

Notes: 






What are your current annual sales rep turnover rates 

Sales Force Turnover Rates 

25% 

20% 

15% 

20.4% 

17.8% 

10% 

5% 

0% 

Key Findings 

Voluntary Turnover 

Observations 

Involuntary Turnover 

! On a positive 

note, involuntary 

turnover held 

steady from last 

year and 

voluntary turnover 

dropped. 

! Minimizing 

turnover can have 

significant impact 

on sales 

performance. 

! On a cautionary 

note, competition 

for talent may 

increase turnover 

numbers this 

year. 

Last year, we saw overall turnover rates in sales jump to nearly 50%. 

The biggest increase came in the area where companies can least afford 

it – voluntary turnover (defined as cases where a sales rep you want to 

keep decides to leave the company). That number peaked last year at 

31.6%. 

Part of that jump was the result of a pent-up desire on the part of some 

reps to change jobs. In the 2002-2004 time frame, hiring rates slowed 

dramatically, so many salespeople stayed in their current positions even 

though they were unhappy with their jobs. When hiring started to pick up 

two years ago, these people found opportunities that were more to their 

liking, and the voluntary turnover rates jumped accordingly. 

As can be seen above, the overall turnover rate dropped to 38.2% during 

the past year with voluntary turnover now at 20.4%. 

We were actually surprised by this trend. Last year, many companies 

stated they planned to increase the size of the sales forces, so we 

wondered if enough good talent was available to meet the demand or if 

companies would recruit good performers from other firms. That did not 

appear to happen. 

While lower turnover rates may cause CSOs to breathe a sigh of relief, 

the fact that 1 in 5 of the solid performers is choosing to leave each year 

should still be a major cause of concern. 





One CSO at a software firm made the observation that most companies 

have no idea as to the cost of losing a proven sales rep. He had his 

sales operations director go through an exercise of determining what the 

revenue contributions were for experienced reps compared to new reps. 

He also had him determine other financial impacts such as the average 

length of time a territory was open after a rep quit, the costs associated 

with recruiting and training a new hire, the wash out rate for 

replacements, etc. 

When all the numbers were added together, the total financial impact 

came to $1.2M each time an experienced rep quit. They further 

determined that if they were able to decrease their voluntary turnover 

rates by one-third and retain those dollars versus taking a financial hit, 

that all other things being equal their stock price should rise 7%. 

At the risk of crying wolf twice in a row, we feel the need to put out the 

warning that if companies hire at the rates seen on page 34, and if the 

majority of the people they hire are reps with experience selling in their 

industry as seen on the next page, voluntary turnover has to go up. 

Putting plans in place to minimize this may be time and money well 

spent. 

Notes: 






What percentage of the new reps hired have the following experience levels 

Experience Profile of New Reps Hired 

% Other 

5.3% 

Non-Selling 

Professionals 

12.8% 

Selling Within 

Industry 

56.5% 

Selling Outside 

Industry 

25.5% 

Key Findings 

! New Metric: 

Experienced 

sales talent is first 

choice. 

! Better if reps 

have experience 

in specific 

industry. 

! Developing new 

talent is attractive 

to certain 

industries. 

! More universities 

stepping in to 

train reps. 

Observations 

Whether adding net new reps or filling spots caused by turnover, 

companies predominately want to hire experienced salespeople. In 

looking at the performance metrics, as the years of sales experience go 

up, so, too, do factors such as the percentage of sales reps making 

quota, ability to sell value and avoid discounting, forecast accuracy, and 

ability to build customer loyalty. 

In addition, other metrics such as length of the sell cycle, the number of 

calls required to close a deal, and voluntary sales rep turnover all 

decrease as experience levels rise. 

Given the choice of hiring someone with general sales experience 

versus previous experience selling in the company’s specific industry, 

CSOs by a factor of over 2:1 opt to hire the rep with the most targeted 

experience. 

Of note, however, is that a cursory review of the data does not show any 

significant performance advantage in hiring industry experienced reps 

over general sales experienced reps. We will be doing more analysis of 

this area this year. 

Developing sales talent is attractive in certain types of industries such as 

services. We also found companies looking to hire telesales reps tend to 

be more open to hiring an inexperienced sales rep. One factor we do not 

see in these firms is that they invest more in sales training to get these 

inexperienced reps up to speed when compared to companies who 

target experienced talent. 





A trend we continue to watch is an increase in the number of universities 

that offer courses in sales to both undergraduates and postgraduates. 

There are now five universities offering four-year degree programs in 

sales and another 30 universities that have sales centers as part of their 

business schools. 

Some of these schools are beginning to track the performance of the 

students who graduate from their courses or programs and go onto 

careers in sales. Directionally, we are seeing these salespeople 

outperform their peers who have not taken sales courses as part of their 

academic training. 

Notes: 






What is the average ramp-up period for a new salesperson 

New Sales Rep Ramp-up Time 

> 1 Year 

25.5% 

Do Not Know 

3.4% 

< 3 Months 

6.7% 

3 - 6 Months 

28.0% 

7 - 12 Months 

36.5% 

Key Findings 

! Ramp-up time to 

full productivity 

continues to take 

longer. 

! Mentoring 

resources 

continue to be 

harder to find. 

! Finding increase 

use of CRM and 

Sales Knowledge 

Management 

(SKM) resources. 

! Unless ramp-up 

issue is dealt 

with, high 

turnover can hit 

performance 

hard. 

Observations 

For the fourth year in a row, the rep ramp-up time trend is heading in the 

wrong direction – it continues to take longer to get a new salesperson up 

to full productivity. Above, we see that 62% of the firms report their rampup 

period is in excess of seven months (compared to 50% a year ago.) 

Of that, One in four companies has a ramp-up period of over one year 

compared to roughly one in five the previous year. 

As a general observation, salespeople are being asked to represent 

more and increasingly complex products for which competitors are more 

aggressively marketing alternatives for buyers to consider. 

And as we will see on pages 44 and 46, reps have fewer support 

resources to mentor them on how to do this effectively, as the ratio of 

sales support personnel to sales reps and sales managers to sales reps 

both continue to widen. 

Two areas where additional investments are being made are in 

Customer Relationship Management (CRM) applications and Sales 

Knowledge Management (SKM) resources. 

As more firms implement CRM systems, and more reps adopt the usage 

of these programs, insights into customers, the marketplace, past buying 

trends, etc. are captured. When new salespeople have the ability to tap 

into that knowledge base, ramp-up times decrease accordingly. 

Similarly, giving reps access to SKM tools, either in the form of 

subscriptions to information mining services, internal best practices 





sharing tools, or internal document management portals, new sales reps 

become more productive. 

A final rising use of technology is collaboration technologies (e.g., webbased 

meetings, instant messaging chat capabilities, and computerdelivered 

training). Successes have been documented using each of 

these approaches. 

A metric all organizations should factually determine and rigorously track 

is their actual sales ramp-up period. A method to determine this is reconstructing 

the month-by-month revenue contributions of all first year 

reps for a 12 month period and comparing it to the month-by-month 

averages of the rest of the sales force. This will determine the true rampup 

curve. 

People who have gone through this exercise are frequently shocked as 

the results are often longer than they think – but the numbers don’t lie. 

Once you know what your curve really is, you can better determine what 

levels of investments in people and tools you should make to deal with 

this ever increasing challenge. 

Notes: 






How do your sales reps spend their time 

Sales Rep Time Allocation 

Account 

Servicing 

10.7% 

Admin 

Tasks/Meetings 

15.3% 

Training 

6.1% Other 

3.0% 

Phone Selling 

18.9% 

Prospecting/ 

Lead Gen 

18.8% 

Face-to-Face 

Selling 

27.3% 

Key Findings 

! Salespeople still 

not being given 

more time to sell. 

! Marketing taking 

a more active role 

in lead 

generation. 

! More time being 

dedicated to 

training. 

! Concern is how 

effectively selling 

time is being 

used. 

Observations 

After showing signs of improvement the past two years, there seems to 

be a leveling off again regarding the ability to give salespeople more time 

to sell. 

The above numbers show some improvement in reduced time that reps 

need to devote to non-selling tasks. For example, after seeing reps 

spend time generating their own leads, marketing is now picking up more 

of the heavy lifting in that area. 

In this year’s study and the Target Marketing Priorities study we 

published in the fall of 2005, we are seeing companies increase their 

spending on direct marketing, digital marketing, and telemarketing 

campaigns. All of this should start translating into more leads for 

salespeople, but they are still spending just under one-fifth of their time 

prospecting for new business. 

There is improvement when comparing the time spent on lead 

generation, handling account service requests, and administrative tasks, 

(44.8% cumulative above compared to 49.1% last year). 

However, that is not translating into more direct time selling, either faceto-face 

or over the phone, as this year firms report total selling time of 

36.2% cumulative versus 36.9% a year ago. 

Where are organizations spending the time that is being freed up A 

noticeable increase can be seen in the amount of training provided to 

salespeople. This is taking the form of sales skills training, product 





training, training on the customers needs, and additional training on 

competitors and their offerings. While more training can translate into 

more effective sales calls, companies need to find ways to make more of 

those calls. 

Can this be accomplished Yes, if resources are dedicated to the 

problem. A distribution firm increased the amount of time its salespeople 

spent selling from 18 to 26 hours a week by assessing their workflow 

and finding ways to automate tasks such as customer correspondence, 

internal reporting, order processing etc. 

Notes: 






What is your sales rep to sales support personnel ratio 

Sales Rep to Sales Support Personnel Ratio 

6+ to 1 

20.6% 

1 to 1 

12.1% 

2 to 1 

20.6% 

5 to 1 

10.5% 

4 to 1 

17.6% 

3 to 1 

18.7% 

Key Findings 

! Resources being 

allocated are in a 

state of flux. 

! At highest level 

review, sales 

support ratio is 

not always 

closely tied to 

performance. 

! Seeing more 

firms opt to 

leverage 

technology to fill 

sales support 

gap. 

Observations 

At the request of a number of our research clients, we began to track the 

ratio of sales reps to sales support personnel last year. The hypothesis 

that several CSOs proposed was that the economics of sales were 

causing many companies to cut back on the staffing levels in this area. 

In comparing the above data to the baseline of a year ago, directionally 

this appears to be true. 

Let’s first look at the low end of the curve. When focusing on the number 

of firms that have a 1:1 ratio between sales reps and sales support, there 

is a drop from 15.0% reported in the 2005 study to 12.1% reported by 

the participants this year. 

The trend holds true at the high end of the curve as well. Last year 

18.2% of the firms reported rep to support ratios of six or more as 

compared to 20.6% this year. 

The question this trend raises is whether or not the reduction in sales 

support personnel is a good or bad thing. Based on the review of other 

metrics in the report, we are seeing that selling is becoming more 

challenging. Are cut backs in sales support staff making it even more so 

An initial review of the data suggests that this may not be true in all 

circumstances. While we found examples where decreasing access to 

sales support personnel did result in a decrease in sales performance, 

we also found examples where it did not. 





The difference between the two sets of results appears to be linked to 

what other resources salespeople can access to get the help they need. 

An example of a firm successfully replacing “liveware” with “software” is 

a manufacturing firm we benchmarked. They did an analysis of the types 

of issues in which reps requested help and found that many of the calls 

were related to determining the questions they needed to ask prospects 

in order to select what products to propose and at what price. 

After understanding the majority of the FAQs sales support reps were 

handling, they developed a system that allowed salespeople to access 

the answers in real time by tapping into a Q&A knowledge base using a 

tablet PC. Not only were they able to reduce staff without impacting 

sales performance, they also found they were able to decrease the 

average number of calls required to conduct a comprehensive needs 

analysis from three down to just over one. 

Notes: 






What is your sales rep to sales manager ratio 

Sales Rep to Sales Manager Ratio 

13 or more 

4.9% 

Not Applicable 

15.1% 

1 to 3 

16.7% 

10 to 12 

11.2% 

7 to 9 

23.2% 

4 to 6 

29.0% 

Key Findings 

Observations 

! Modest shift in 

ratio of sales reps 

to sales 

managers to the 

center of the 

curve. 

! CRM technology 

making 


between reps and 

managers easier. 

! SKM applications 

used to share 

account 

strategies and 

best practices. 

A second staffing metric we began to re-track last year was the ratio of 

sales reps to sales managers. Comparing last year’s figures to those we 

collected in the mid 90’s, we saw an overall increase in the number of 

salespeople a sales manager is asked to supervise. 

Is this a continuing trend The answer is both “yes” and “no.” If we focus 

on the low end of the curve where there is a ratio of 1-3 reps per 

manager, we find a decrease from 20% last year to 16.7% in this year’s 

study. 

However, looking at the high end of the curve where firms have a ratio of 

10 or more reps per manager, the numbers are essentially flat from year 

to year. More firms seem to be opting for the range of 4-9 reps per 

manager but not higher. 

One factor that appears to be making the job of sales management 

easier is the continued adoption of CRM technology. As you will see in 

the CRM section of the report, when we asked firms to identify the 

benefits they are achieving through the use of CRM systems, the most 

frequently mentioned advantage was “improved communications 

between sales reps and sales management.” 

In addition, one of the key tasks that reps and managers need to 

collaborate on is forecast management. Technology is helping as this 

was the second most frequently mentioned benefit resulting from CRM 

system usage. 





SKM technology is also proving valuable in helping to improve the 

effectiveness of sales managers. A billion dollar plus technology firm 

shared that the key beneficiary of their SKM project was sales 

managers. 

Prior to implementing their SKM system in sales, managers reported 

spending up to 55% of their time answering sales reps’ questions (e.g., 

account strategy, product information, insights into competitors, etc.). 

As opposed to handling all these conversations via the phone, the 

system was designed so that reps could send the question in via e-mail. 

The SKM system parsed the question to see if it had been asked before, 

and if so, forwarded the answer back to the rep without manager 

intervention. 

Only if the question was unique was it sent by the SKM system to the 

sales manager. And then, after the manager answered the question, that 

new answer was integrated into the knowledge base for future reference. 

Notes: 









Sell Cycle Analysis 









Sell Cycle Analysis Introduction 

This section contains metrics related to the types of deals sales reps are pursuing in relationship 

to opportunity value, effort required to close a deal, and an analysis of the success rates sales 

reps experience converting prospects from one stage of the sales process to the next. 

• Average Deal Size.......................................................................................................52 

• Length of Average Sales Cycle ..................................................................................54 

• Number of Calls Required to Close a Deal ................................................................56 

• Lead Generation Analysis ..........................................................................................58 

• Percentage of Leads That Progress to an Initial Customer Meeting........................60 

• Percentage of Initial Meetings that Progress to a Presentation ...............................62 

• Percentage of Presentations Resulting in a Sale ......................................................64 

• Percentage of Proposals Resulting in a Sale ............................................................66 

• Percentage of Deals That Close as Forecasted.........................................................68 

• Outcome of Forecasted Deals....................................................................................70 






What is your average deal size 

Average Deal Size 

>$250K 

17.1% 


The investments appear to be paying off. In addition to more salespeople 

making quota, voluntary sales rep turnover rates are lower for firms 

targeting larger deals. 

As deal size increases, salespeople rely less on technology to support 

their efforts. While the percentage of firms using CRM holds steady 

across deal size, the adoption rates on the part of salespeople is 

noticeably lower by reps targeting larger sized sales. 

Notes: 






What is the length of your average sales cycle 

Average Sell Cycle Length 

Do Not Know 

2.2% 

6 - 12 Months 

19.7% 

> 1 Year 

5.2% 


The more formal the sales approach, the shorter the cycle; the less 

formal the methodology, the longer the cycle. 

Another question we explored, “Does the final decision outcome change 

based on how long an opportunity takes to close In general, we are 

seeing that the longer the sell cycle, the greater the chance the deal will 

end in a “no decision.” 

Notes: 






On average, how many calls does it take to close a deal 

Number of Calls to Close a Deal 

45% 

40% 

40.5% 

35% 

30% 

25% 

25.2% 

20% 

15% 

10% 

10.5% 

12.8% 

5% 

0% 

Key Findings 

1 to 2 3 to 5 6 to 9 10 to 15 > 15 

Observations 

4.3% 

! Number of calls 

required to close 

deals edging up 

again. 

! Trend continues 

for more than one 

stakeholder to be 

involved in a 

decision. 

! Rep tenure does 

not have a 

significant impact 

on reducing calls, 

nor does adoption 

of a formal sales 

process. 

A key contributor to sell cycles taking longer to close is that salespeople 

have to complete more calls to get to an ultimate decision. While this 

metric held steady last year after increasing the previous three years, the 

numbers now show that the need for increased sales effort is on the rise. 

The calls-to-close factor appears to be directionally influenced by the 

size of the opportunity. For example, in looking at deal sizes >$250K, 

29.8% of the firms said their sell cycles involved 10 or more calls. When 

the deal amount was $100 - $250K, that number dropped to 19.5%. 

When the opportunity amount was under $100K, only 9.5% of the firms 

reported making 10 or more calls. 

The trend that we are hearing from the sales community is that the issue 

is not as much about making more calls on the same people to get to a 

decision as it is about making more calls on more people. Sales reps are 

finding that bigger deals may need more levels of sign-off, thus calling on 

multiple stakeholders to get support. 

While we saw on the previous chart that the tenure of the sales force 

could have an impact on the length of a sell cycle, we do not see that 

same trend regarding the number of calls required. Experienced reps still 

appear to need to complete the same amount of work to close a deal, 

although their knowledge of the sales process may allow them to do it in 

less time. 

Another factor explored was the impact of adopting a formal sales 

process on the amount of effort required to close deals. In comparing 





firms who have adopted a structured approach to selling to those who 

have not, we are not seeing a difference in the number of calls required 

during the sales process. 

We have identified a few firms who have made significant progress in 

this area including a high tech firm that reduced the number of calls 

required to close business by 31%. Look for case studies on this topic 

later this year. 

Notes: 






How are your sales leads generated 

Lead Generation Analysis 

Customer Referrals 

15.2% 

Generated by 

Partners 

10.3% 

Other 

4.6% 

Marketing 

Campaigns 

17.1% 

Telemarketing 

Efforts 

11.0% 

Self-Generated by 

Sales Reps 

42.0% 

Key Findings 

! Need for repgenerated 

leads 

decreasing 

slightly as other 

sources are being 

leveraged. 

! Marketing 

spending going 

up for direct and 

digital campaigns. 

! More partnering 

efforts to 

generate leads. 

! Seeing more 

interest in and 

success from 

lead incubation 

programs. 

Observations 

With leads being the lifeblood of sales, we were curious to see how the 

breakdown of the sources of these introductions to prospects would be. 

Looking at the chart above, the majority of the heavy lifting, while down 

from the 46.6% figure reported in the 2005 study, is still being placed on 

the backs of the sales teams. 

We had hoped that rep-generated leads would have decreased more 

significantly. The input we received to the Target Marketing Priorities 

study (2005) showed companies were increasing the investments they 

were making in direct marketing, digital marketing, and telemarketing 

campaigns. 

We will be monitoring the impact of these additional investments as part 

of our new Target Marketing Priorities study which we will be conducting 

in the second quarter of 2006. 

(Note: if you have not seen a copy of the Target Marketing Priorities 

Executive Report, send an e-mail request for a complimentary copy of 

the 2005 report to info@csoinsights.com. (You may also request an 

invitation to participate in this year’s study.) 

There is a positive increase in the number of leads being generated by 

partnering. One non-profit organization increased its donor lead flow by 

46% as a result of implementing a cause-related marketing campaign. 

This campaign focused on having corporations include information about 

the work the foundation did in the direct mail campaigns regularly sent to 

their customers. 





Regardless of where the leads come from, companies are focusing on 

how to more effectively deal with prospects that are interested in their 

products or services (or should be interested based on their profile) but 

are not yet ready to do a formal buy evaluation. 

A computer manufacturing firm provided us with metrics they collected 

after implementing a lead incubation campaign. Under this program, A 

leads (deemed as having a current need and budget and started an 

evaluation process) were distributed immediately to the sales force. The 

remainder of the leads were reviewed by marketing and assigned as 

either B (having a current need, but no budget), C (not having a current 

need, but anticipating the need in the next 12 months), or NA (no current 

or future fit). 

B and C leads were entered into a marketing campaign management 

system to create/maintain top-of-mind awareness. Based on a 

predefined set of rules that varied by prospect type and product involved, 

the system would ensure that regular direct mail or e-mail messaging 

was sent to each prospect. 

The firm found that over a 12-month period, they were able to advance 

enough B and C leads to A status to more than double the revenues that 

closed per campaign. 

Notes: 






What percentage of leads progress to an initial meeting 

Leads Resulting in Initial Meeting 

30% 

25% 

27.6% 

20% 

15% 

21.3% 

18.3% 

17.0% 

15.7% 

10% 

5% 

0% 

75% Do Not Know 

Key Findings 

! Getting a lead 

and getting an 

appointment are 

two different 

things. 

! Continuing 

debate over what 

constitutes a 

“qualified lead.” 

! With more 

information 

available to 

buyers, the need 

to meet with reps 

is changing. 

! Lack of 

knowledge on 

lead conversion 

rates is a 

concern. 

Observations 

While the time and effort invested in generating more leads is on the 

rise, the ability of sales and marketing personnel to convert “interest” into 

“action” is becoming more of a challenge versus less. Last year, 42.8% 

of the organizations taking part in the study reported conversion rates of 

leads to meetings of 51% or more. This year, the number dropped to 

36.5%. 

The debate over what constitutes a “qualified lead” continues. One e- 

commerce company surveyed its direct marketing, telemarketing, field 

sales, and channel sales teams asking each for its definition of a 

“qualified lead.” 

The characterizations not only differed between groups, but within those 

groups as well. This demonstrates the need for companies to invest the 

time to get cross-functional agreement on what real lead generation 

success looks like so that all parties are pursuing the same goal. 

One observation a CSO from a plastics manufacturing company is worth 

considering. To determine why their lead conversion rate was dropping, 

they had an outside firm interview prospects. Specifically, this firm 

investigated why prospects (e.g., leads) didn’t take the time to talk to a 

sales person from the company. What they found was a surprise. 

A number of the prospects who rejected the offer for a first meeting 

(either in person or on the phone) stated that they didn’t need to talk to 

the rep because they were able to get enough information off the 

vendor’s web site to meet their needs. 





The plastics firm had made a major investment in their Internet site and 

provided access to over 10,000 pages of product information for both 

customers and prospects. Ease of access to this data had actually 

turned into a barrier for salespeople. 

The firm created individual, password protected information portals. 

Prospects now have to talk to a rep to get the authorization code for the 

site, and their conversion rates are back to previous levels. 

One last comment on the chart. We still see that over 15% of the 

companies don’t know what their conversion rates are. With the 

integration of marketing campaigns and opportunity management 

capabilities within CRM systems, this type of analysis is becoming more 

manageable. CSOs and CMOs should make sure they are leveraging 

these capabilities to more effectively monitor the ROI of their marketing 

campaigns. 

Notes: 






What percentage of initial meetings progress to a presentation 

Initial Meetings Progressing to a Presentation 

35% 

30% 

31.9% 

25% 

25.4% 

20% 

15% 

10% 

13.1% 

16.7% 

13.0% 

5% 

0% 


Key Findings 

! The performance 

numbers continue 

to drop. 

! Higher 

conversion rates 

are directionally 

linked to more 

reps on plan. 

! Introduction of 

“references” 

earlier in the 

process being 

tested. 

! Seeing a few 

firms lowering 

early “trials” 

through more 

rigorous 

qualification. 

Observations 

Moving further down the sell cycle path, what percentage of the 

prospects that agree to a first meeting move forward to a presentation 

When it is time to learn more about a company’s products or services, 

we see a noticeable deterioration. In a year-to-year comparison, firms 

achieving a >75% conversion rate slipped to 16.7% from 20.0% reported 

in the 2005 study. 

This appears to be a key metric for sales executives to be evaluating. 

Organizations with higher conversion rates that move prospects to the 

“education” phase in the sales process experience a higher percentage 

of reps making their full year quota. 

Looking at the extreme ends of the performance curve, sales 

organizations with a meeting-to-presentation conversion rate of >75% 

have salesperson quota attainment figures that are 8.5% higher than 

those reported by firms with conversion success of


cycle. This company recorded detailed interviews with satisfied 

customers and made them available to prospects via the Internet. 

At the education phase in the sales process, the sales rep gives the 

prospect access to a password-protected site that has interviews with 

customers with similar characteristics. When the prospect accesses the 

site, they find the full interview has been meta-tagged so they can listen 

to the specific feedback in which they have interest. 

The CSO reported that this has accomplished two objectives. First, it 

motivates more prospects to proceed with a full evaluation. Second, it 

helps surface objections or questions that might delay the sale earlier in 

the process. 

One last item worth mentioning: CSOs told us they are intentionally 

trying to lower the number of prospects they take forward in the sales 

process. One telecom services firm noted that offering to do a “proof-ofconcept” 

trial for a prospect has become a common practice for sales 

reps. They hoped that the numbers would be compelling enough for the 

prospect to generate a sense of urgency to move forward. 

As the cost of doing these trials increased, the sales management team 

instituted a series of requirements that reps had to achieve with the 

prospect before they could offer this service. This forced the reps to do a 

more detailed job of qualifying the need and obtaining agreement to buy 

based on specific, pre-established metrics. While the number of proof-ofconcepts 

went down by 22%, the overall close rate increased by 39%. 

Notes: 






What percentage of presentations result in a sale 

Presentations Resulting in a Sale 

35% 

30% 

31.1% 

25% 

27.3% 

20% 

15% 

17.9% 

13.5% 

10% 

10.4% 

5% 

0% 


Key Findings Observations 

! Conversion rate 

trending in the 

wrong direction. 

! “Perception” of 

how well firms are 

doing is out of 

synch with facts. 

! Adoption of 

formal 

methodology 

increasing 

conversions in 

this metric. 

After notable progress in 2005, the percentage of prospects to which 

salespeople make formal presentations and subsequently close has 

slipped in 2006. The numbers show more organizations are reporting 

lower effectiveness ratings at this stage in the sales process. 

In our previous report, we found that 36.3% of the firms reported they 

were able to close 25% or less of prospects presented to. This year, the 

number has climbed 41.5%. These numbers are out of synch with the 

ratings seen in the Performance Assessment section of this report. On 

page 88, 62.4% of the firms stated they are “very good” or “world class” 

at effectively presenting the features and benefits of their offerings (up 

from 52.0% the previous year). Yet, here we see that those 

presentations are yielding poorer results. 

So which assessment is correct When you compare the ultimate win 

rates from year to year, we find that performance has not improved. 

Companies are not winning a higher percentage of forecasted deals, 

which we would expect to be the case if they were getting better at 

presenting the full value of their offers. 

In analyzing the factors that can influence the conversion rate of 

presentations-to-sales, one trend emerges. Companies that have 

implemented a formal sales process experience higher levels of success 

at moving the prospect from a presentation to a purchase decision. 

Close rates of >50% are being achieved by 29.1% of those organizations 

compared to the 17.9% figure seen above. 





The use of “rich media” is also having a positive impact on the results 

firms are achieving through their presentations. One computer 

manufacturer removed the burden of full product presentations from its 

sales reps. 

As part of their presentation library, reps were given access to video clip 

modules that profiled R&D engineers explaining the functioning of their 

devices, customers detailing how they used the systems, support 

experts answering FAQs, etc. While these modules increased the 

effectiveness of all reps, they are also valuable in assisting new reps to 

conduct presentations on their own and for introducing new products. 

Notes: 






What percentage of proposals results in a sale 

Proposals Resulting in a Sale 

35% 

30% 

25% 

32.0% 

27.3% 

20% 

15% 

18.3% 

10% 

11.0% 11.4% 

5% 

0% 



! Baby steps 

continue to be 

made at the end 

of the sell cycle. 

! Not correlating 

with marked jump 

in ability to 

generate 

proposals. 

! Formalizing the 

process improves 

success and 

minimizes effort. 

Last year, companies reporting proposal to close conversion rates 

greater than half of the time jumped to 36.3% (up 20.0% in 2004). This 

year, we see a continued but modest improvement to 38.3%. 

As with the previous metric, these numbers do not support the reported 

increase in effectiveness in generating comprehensive proposals (see 

page 66). In the Performance Assessment section, 57.1% of the survey 

participants stated that their salespeople were “very good” or “world 

class” at providing prospects with effective proposals (up from 48.0% 

reported a year ago). 

Clearly more firms are “feeling better” regarding the quality and 

effectiveness of their proposals. Some firms are, in fact, getting better at 

optimizing their efforts at this stage in the sales process. 

We benchmarked a health industry services provider. In the past it had 

provided reps with access to an on-line library of previously generated 

proposals. 

Over time, that approach went from being an asset to the sales teams to 

an annoyance. Without controls in place, the library grew in excess of 30 

folders of information. Each folder contained hundreds of pages of text 

with statements and facts which were not monitored for accuracy. 

Two years ago the firm assigned a team to redesign the process. They 

implemented a Request for Proposal (RFP) response system that 

organized content into an easily searchable data model and also 





managed information updates. 

Proposals that were taking 2-26 hours to create are now completed in 

less that eight. The company has also experienced a 53% increase in 

win rates. As successes such as this become more common, we expect 

to see metrics that reflect increased proposal effectiveness resulting in 

more deals closing. 

Notes: 






What percentage of deals close as originally forecasted 

Deals Closing as Forecasted 

35.0% 

30.0% 

30.8% 

25.0% 

25.6% 

20.0% 

18.5% 

15.0% 

10.0% 

11.9% 

13.2% 

5.0% 

0.0% 


buying. Routinely they generate reports on what the closing percentages 

are for individual products based on buyer types, how long it takes to 

complete each step in the sell cycle, and what type of product mix and 

quantities are likely to be included in a new versus repeat order. 

The result of this initiative is that their forecast accuracy has improved 

from approximately 62% to over 88%, giving them a higher comfort level 

and ability to make decisions. 

Notes: 






What are your average win/loss/no decision rates for forecasted deals 

Outcome of Forecasted Deals 

No Decisions 

19.6% 

Losses 

30.3% 

Wins 

50.1% 

Key Findings 

! Win rates 

continue to crawl 

in the right 

direction. 

! Higher ability to 

differentiate 

offerings vs. 

competition. 

! Most noticeable 

drop in “no 

decisions.” 

! Costs associated 

with low win rates 

are dramatic. 

Observations 

Win rate is defined as the percentage of forecasted deals a company 

ultimately closes. This metric hit a low of 45.9% in 2004, then rebounded 

to 49% in 2005. This year, wins continue to inch up and are now over 

50%. While this represents an improvement, by the time a deal makes it 

into the forecast, significant amounts of time and effort have been 

expended in pursuing that deal. Few CEOs would tell a CSO that closing 

half of forecast opportunities is a performance level worth celebrating. 

The majority of the gains in win rates are coming from avoiding losses to 

competitors. In the Performance Assessment section on page 90, we 

began to formally track how well companies are at differentiating their 

offerings versus competition. This is an area for which companies are 

giving themselves high marks, and their actual close rates seem to 

support their ratings. 

What we continue to see as the bane to many companies is “no 

decision” – a client completing its evaluation of a product and/or service 

then electing not to buy from anyone. One trend we are directionally 

seeing is the poorer a firm is at qualifying the opportunity, the higher its 

“no decision” rate. 

One technology industry CSO shared the cost of “no decisions.” For 

purposes of the explanation we have modified the actual numbers, but 

not her logic. 

Assume you have 100 salespeople, each with a $1M quota, selling deals 

that average $50,000 in size. Assume you have a win rate of 50%, a loss 





rate of 30%, and a “no decision” rate of 20%. The CSO asked, “What 

would be the value to your organization of reducing the ‘no decision’ rate 

to 15%” 

Her calculations were as follows: 

• To make quota, a rep needs to close 20 deals ($1M quota 

divided by a $50,000 average deal size). 

• To close 20 deals, the rep needs 40 forecastable deals (20 deals 

times a close rate of .5). 

• A decrease in the “no decision” rate from 20% to 15% means 

that each rep would close two more forecasted deals in a year 

(40 forecasted deals times 5% reduction in “no decision” rate). 

• 2 deals per rep at $50,000 per deal, times 100 reps would add 

$10M in revenues. 

One best practice we have seen several firms implement is conducting 

buy cycle interviews – talking to prospects for deals whether the 

outcome is win, loss, or “no decision.” One software firm increased its 

win rate from less than 40% to over 81%. The majority of improvement 

was attributed to fewer “no decisions.” This occurred within nine months 

as a result of changing their account penetration strategies based on the 

information gained from the interviews. 

Notes: 









Detailed Sales Performance Assessment 









Detailed Sales Performance Assessment 

This section looks at metrics regarding how sales forces perform specific selling tasks. Since few 

organizations have detailed numbers on all of these areas, survey participants were asked to grade 

their performance using the following ranges; Dismal, Poor, Average, Very Good, and World Class. In 

cases where respondents could not provide an accurate assessment of their performance, they were 

allowed to select “Do Not Know” as a valid answer to the questions, which is the reason that the total 

of the numbers may not always add up to 100% in the following charts. 

• Ability to Accurately Target Prospects......................................................................78 

• Ability to Generate New Leads...................................................................................80 

• Ability to Properly Qualify Prospects ........................................................................82 

• Ability to Clearly Understand Customer’s Buying Process......................................84 

• Ability to Deliver a Consistent Message....................................................................86 

• Ability to Effectively Present Features and Benefits.................................................88 

• Ability to Competitively Differentiate Products/Services..........................................90 

• Ability to Align Solution to Customer’s Needs..........................................................92 

• Ability to Generate Accurate Bid/Configuration/Proposal........................................94 

• Ability to Up-Sell and Cross-Sell................................................................................96 

• Ability to Sell Value/Avoid Excessive Discounting ...................................................98 

• Ability to Accurately Forecast Business ................................................................. 100 

• Ability to Gain Access to Decision Making Authority ............................................. 102 

• Ability to Accurately and Easily Submit Orders...................................................... 104 

• Ability to Conduct Win/Loss Reviews...................................................................... 106 

• Ability to Accurately and Easily Calculate Commissions....................................... 108 

• Ability to Implement Effective Customer Care Programs ...................................... 110 

• Ability to Renew Business with Existing Accounts ................................................ 112 

• Ability to Farm New Business from Existing Customers........................................ 114 

• Ability to Effectively Introduce New Products......................................................... 116 

• Ability to Effectively Support Channel Partners...................................................... 118 

• Ability to Create/Maintain References/Case Studies............................................... 120 





• Ability to Communicate Effectively with Other Sales Teams.................................. 122 

• Ability to Communicate Effectively with Sales Management.................................. 124 

• Ability to Communicate Effectively with Other Departments ................................. 126 

• Ability to Share Best Practices Across the Sales Force ......................................... 128 










What is your ability to accurately target new prospects 

Accurately Target New Prospects 

45% 

44.9% 

40% 

35% 

30% 

33.1% 

25% 

20% 

15% 

15.3% 

10% 

5% 

0% 

2.1% 

3.0% 

Dismal Poor Average Very Good World Class 

Key Findings 

! Significant 

improvement in 

this area over the 

past year. 

! Less than 20% of 

firms reporting 

see themselves 

as below 

average. 

! Major up-tick in 

this metric may 

reflect closer 

alignment 

between sales 

and marketing. 

Observations 

This is the perfect metric to begin the Performance Assessment section. 

After all, if you aren’t targeting correctly, it is all downhill onward. After 

backsliding last year, the numbers have improved to approximately 2004 

study levels. 

Does this mean firms have learned that not everything that moves is a 

good lead The firms that rated themselves as “world class” have an 

amazing 82% quota attainment to show for maintaining their focus! 

At the other end of the spectrum, those rating “dismal” sank to 44%. 

This is an important and fundamental notion to get straight, because it 

begins either a virtuous or vicious cycle depending on which way you 

turn. 

Companies that don’t focus – or continue to check and refine their focus 

– may find themselves spreading their marketing and sales dollars and 

resources haphazardly across the board. They realize little and/or 

sporadic competitive advantage and are wasting precious resources 

pursuing “opportunities” that drag down their win percentage and often 

result in hassle-ridden accounts even when they are successful. 

The Business Development Manager (BDM) of an engineering firm 

struggled to make this point by introducing discipline to the firm’s various 

department heads. Previously, each department was autonomous in its 

efforts to win business and most sent out boilerplate-laden proposals at 

every posting sited. The new BDM took an alternate course of rifle-shot 

detailed proposals but only on projects for which the firm seemed well 





suited. After a year, the results were impressively different. 

It was at a management committee meeting when the BDM was 

reviewing these numbers that the head of the Hydrology Department 

spoke up. “You know, you keep talking about how great your numbers 

are, but you only go after work you know you can win!” This engineer 

viewed such an approach as cheating or unfair. 

Well, as Scott Peck noted, life is unfair. In this case, use it to your 

advantage. Identify your firm’s areas of competitive advantage and 

leverage them. 

But…don’t be too quick to rest on your laurels. The “very good” and 

“average” rated companies had the same 61% quota attainment – only 

slightly better than the overall population’s 59%. 

Finally, for years we have been making this bet to CSOs – We’ll bet our 

houses that right now you have people working hard trying to get 

business you don’t want. 

We still have our houses. 

This is the exact opposite of accurately targeting. We are not making this 

bet with you, but we do invite you to consider your own wager: Would 

you bet your house that you are not going after business your company 

doesn’t want 

Consider your answer and appropriate actions carefully because you 

are, in fact, betting the house everyday. 

Notes: 






What is your ability to generate new leads 

Generate New Leads 

50% 

45% 

45.9% 

40% 

35% 

35.9% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

12.5% 

2.0% 

2.9% 


Key Findings 

! Increased ability 

to generate new 

leads may reflect 

increased focus 

in this area. 

! Even with this 

improvement, we 

predict lead gen 

will be a major 

area of 

investment in 

2006. 

! More rigorous 

definition of a 

“qualified lead” 

may emerge this 

year. 

Observations 

You read it here first: 2006 will be the “Year of the Lead.” We do not 

have to read tea leaves to make this prediction; rather, all the needles 

are pointing in the same direction and lead generation is number one. 

CSOs responding to the survey rate the top priority in the coming year as 

“optimize lead generation program” (see page 218). The top priority for 

Chief Marketing Officers (CMO) responding to our 2005 Target 

Marketing Priorities study was to “acquire new customers” (83%), 

followed by “increase program response rates” (53%), and “improve 

target marketing ROI” (48%). 

And, in our recently published (2005) Benchmarking Inside 

Sales/Telesales Performance research project, the primary responsibility 

for 58% of responding companies was “generating leads for 

direct/channel sales reps.” [Note: Of the 42% of respondents for which 

this was not true, their inside salespeople sold directly, so they were 

generating leads for themselves and spending 30% of their time doing 

so.] 

As in no other time, generating and increasing leads are getting serious 

attention. With this attention should also come funding and exploration of 

new ways to address this ongoing challenge. As noted in our prior 

reviews, creating a steady stream of well qualified, sales worthy leads is 

practically sales nirvana. 

The 20% of selling time routinely spent on prospecting is freed up for 

pursuing opportunities already roughly defined. Also, with a more robust 





flow of leads, qualifying tends to be more rigorous (see prior metric on 

targeting), Those candidates that do make it into the sales pipeline will 

tend to have shorter sales cycles, higher contributions to profits, fewer 

issues, and higher customer satisfaction ratings – all because they are a 

better fit. 

This raises the question: What makes a “qualified lead” In too many 

cases, the answer has been: “Anyone who can fog a mirror.” The good 

news is that times and technologies are changing and evolving. 

We believe sales and marketing portals will come into their own this 

year. Replacing e-mail blasts and avalanches of information from 

corporate web sites will be portals or “micro-sites” providing tailored 

messaging. These sites will also provide a means to modulate the flow of 

information, provide a richer experience (with PowerPoint presentations, 

video clips, relevant and sophisticated documents, etc.) than e-mails with 

HTML restrictions and SPAM filters would allow. 

Also available are “lead enrichment” technologies that can search both 

internal and external information/data sources to automatically provide a 

level of detail formerly available only through researching the web, 

calling the firm, and attempting to connect with someone. 

Companies are utilizing these technologies to quickly boost their lead 

volume and quality, leverage the analytic capabilities to understand and 

refine their messaging (e.g., what’s working and not working), and 

focus on targets that have an active interest and need. 

If your company is in the “average” or below categories and you do not 

actively pursue these and other ways to improve your lead generation 

efforts, you will be seriously disadvantaged. 

Notes: 






What is your ability to properly qualify and prioritize prospects 

Properly Qualify & Prioritize Prospects 

50% 

45% 

45.9% 

40% 

35% 

35.9% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

12.5% 

2.0% 

2.9% 


Key Findings 

! “Dismal” ratings 

doubled but 

remain a small 

percentage. 

! “Poor” and 

“average” both 

decreased 

contributing to 

20% increase in 

“very good.” 

! Nearly 40% of 

responding firms 

now rate 

themselves as 

above average. 

Observations 

Hard on the heels of targeting and generating leads comes the critical task 

of qualifying them. If the first two steps are done well, this becomes less of 

a burden but remains as critical. However, the qualification process has 

become more complicated, and in extended sales cycles can carry on 

through more than just the initial steps of the sales process (see diagram 

below). 

LEADS 

Step 

- 

Step 

0 

Step 

1 

PIPELINE 

SELLING PROCESS STEPS 

Step 

2 

Step 

3 

Step 

4 

Step 

5 

Step 

n 

Step 

n+ 

Step 

n+ 

ORDERS 

Sales Cycle Length 

M A R K E T I N G 

S A L E S 

C U S T O M E R 

S U P P O R T 

Where a clear boundary formerly existed between marketing (pre-pipeline) 

and sales, today things are more blurred as telemarketing, marketing 

portals, and other approaches are utilized to both inform and qualify 





prospects. This blurring reflects another phenomenon taking place as the 

Internet has become a pervasive and powerful research tool. 

Historically, many “buying cycles” were initiated by the seller. Cold calls, 

direct mail campaigns, and telemarketing were aimed at either showing up 

at the right time when a purchase was first being considered or planting the 

seeds that a solution might exist to a problem that may or may not have 

been previously recognized. In either event, the buying and selling cycles 

were largely synched up because they usually commenced with the seller 

showing up. 

Today, it is common for buy cycles to begin first and be initiated solely by 

the buyer – without a seller’s awareness. We spoke at an e-business 

conference where we conducted a poll of attendees. About one-third of the 

delegates indicated they had purchased a new car in the past two years. 

We then asked them to leave their hands up if they went to the Web for 

information on cars before they communicated with the dealership. Nearly 

all in the room had done this. 

This dynamic is being played out thousands of times daily. Web marketing, 

data based marketing, branding – all typically the purview of marketing – 

play a key role in this brave new world. Equally dramatic is a mental model 

a sales executive provided us regarding the cost of following up early 

leads: 

Field-based call by a direct salesperson $1000 

Phone call by an inside salesperson $100 

Qualifying call by a telemarketing person $10 

Self-qualification responding to direct mail $1 

Internet-based lead follow-up 10¢ 

All of this points to the need for closer coordination between marketing and 

sales and constant monitoring of performance metrics. 

You don’t have a clearly defined lead generation, qualifying, and sales 

process Your CRM system doesn’t provide web analytics or insight into 

which prospects have been actively opening/reading materials sent to 

them You haven’t (re)defined your Perfect Prospect Profile in the past 18 

months 

You may be among the 46% of firms that rated their ability in this area as 

“average,” but you are also working too hard and misallocating precious 

resources to do so. 

Notes: 






How would you rate your ability to clearly understand customer’s buying process 

Clearly Understand Customer's Buying Process 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

40.4% 

36.6% 

15% 

10% 

5% 

0% 

14.6% 

5.8% 

1.4% 


Key Findings 

! New Metric: 

Majority of firms 

feel they do an 

adequate to good 

job of 

understanding 

their customers. 

! This may be an 

overly optimistic 

assumption on 

these sellers’ 

part. 

! “World class” 

responses 

outnumber 

“dismal” by 3:1. 

Observations 

With all the talk these days of firms becoming customer-centric, adding a 

metric gauging this ability seems like a good idea. We have been 

running workshops on the selling process and synchronizing it with the 

buying process for more than 10 years. There are several good reasons 

for doing so, but first, let’s take a look at the numbers. 

The respondents were consistent in their answers to this question. The 

“world class” group averaged 66% quota attainment while “average” 

came in at 54%, and “dismal” at 38%. Being in that last group has to hurt 

and provides fuel for the argument that creating customers gets off to a 

better start if the seller pays attention to the buyer’s process. 

The pipeline graphic presented earlier (see page 82) shows “n” number 

of steps from the beginning to the end of the sales pipeline. A surprising 

number of companies still have not defined these milestone steps, but 

many have. Typically, those that have go on to define specific actions 

executed at each of these steps. 

In our workshops there is often an “Aha!” moment when we suggest 

doing the same thing for the buying side of the equation. 

Why bother The answer is that as a seller, you can do virtually all of the 

actions from step 1 through step “n” by yourself. In fact, you can do 

everything by yourself except close the opportunity! However, the true 

test of the progress you are making toward successfully closing the 

opportunity is what the seller is doing to advance the sale. Knowing what 

specific actions translate into forward motion is worth defining and 





tracking. 

Here is one of our favorite tests. Were you ever involved in a large deal 

where you brought in major resources to, say, do a custom 

presentation You brought together the sales rep, a technical presalesperson, 

possibly someone from your management team (to show 

commitment), etc. Probably you all flew in the night before, developed a 

detailed agenda, and rehearsed for the next day. 

At the prospect’s offices the next morning, your primary contact met you 

outside the conference room and said, “Great to see you! I see you have 

your team here ready to go. You will be great! Come in and get set up 

while we take a short break.” (Pause) “Oh, one more thing. So-and-So 

couldn’t make it today – but you will be GREAT!” 

Of course, So-and-So is the reason you brought this entire team. Has it 

ever happened to you 

If so, you did what you were supposed to do, but your buying influence 

didn’t do their part. It is likely that you even had suspicions before you 

got on the plane that this was not teed up properly. In this scenario, 

typical buyer actions would be to identify and converse with the key 

players by phone before the meeting allowing you to tailor your 

comments to their concerns. If there was not a discussion with So-and- 

So in advance, then there should at least have been phone meetings 

with his/her direct reports outlining the key needs and objectives for the 

meeting. And so on… 

Consider again your team’s ability to clearly understand the customer’s 

buying process. Have you mapped out the buyer actions that are true 

indicators that they are going to do something – Compelling event 

Strategic initiative Budget Priority Key players Process owner 

This is fundamental in establishing a solid relationship and 

understanding the buying process is a great place to begin. 

Notes: 






What is your ability to deliver a consistent message 

Deliver a Consistent Message 

50% 

45% 

40% 

43.3% 

35% 

30% 

34.0% 

25% 

20% 

15% 

10% 

5% 

0% 

11.7% 

8.7% 

1.5% 


Key Findings 

! More than half of 

the firms rate 


! Improved ratings 

may reflect that 

marketing is 

moving 

“upstream” in the 

sales process. 

! Application of 

new technologies 

could be part of 

significant 

increases. 

Observations 

The upper end of this metric has increased approximately 10% while the 

lower end has remained essentially fixed. It appears some average 

performers have moved up in their ability or the assessment of their 

ability to deliver a consistent message. 

Are the poorer performers unconcerned about improving Or are the 

upper end companies spending too much time concerning themselves 

with consistency when the challenge is just getting the word out 

From a marketing perspective, there are many reasons to pay attention 

in this area. In fact, the American Marketing Association (AMA) 

established a Customer Message Management (CMM) Forum 

presenting best practices, customer examples, solution providers, and 

more in its web casts (www.marketingpower.com). 

CMM aims to positively impact sales teams by providing clear and 

compelling customer communication and avoid reinventing the wheel in 

the process. The argument is that prospecting is more effective with 

increased consistency and quality. But is it 

Given this is the “Year of the Lead,” how leads are generated and who 

generates them are of special interest. For the entire survey population, 

rep-generated leads totaled 42%. The number of leads generated by 

direct marketing and telemarketing are just below the 30% mark. 

However, we see divergence in the early disposition of these leads, 

either self- or marketing-generated. The percentage of qualified leads 





that led to an initial meeting more than 25% of the time is 41% in 

companies that rated themselves “very good” or “world class” in CMM 

(VG&WC) compared to 26% for the “poor” and “dismal” (P&D) CMM 

companies. 

The percentage of initial meetings progressing to a presentation more 

than half of the time is 49% (VG&WC) compared to 25% (P&D). 

So, we see better than a 50% better track record in reaching a first 

meeting and nearly a 100% better hit rate progressing to presentation. It 

might be fair to stop here. There is a limit to how far marketing can 

extend influence through the sales cycle, but CMM also provides 

consistent, clear, and compelling messaging for sales, rather than sales 

reps constantly adlibbing or diverting time to create custom messages. 

Quota attainment for the two groups is 61% (VG&WC) versus 52% 

(P&D). Sales cycle length is virtually identical. 

Beyond these numbers there are “soft” benefits to CMM. While 

“improving lead generation” is the first priority of CSOs this year, the third 

priority is “closer alignment between sales and marketing.” We recently 

participated in a panel for the CEOs of a venture firm’s portfolio 

companies. Two panel members, both CEOs currently running 

companies, said they wished they had worked harder during their days 

as CSOs to understand and leverage the efforts of their marketing 

counterparts. 

There is a new breed of applications that deliver sales-ready messaging 

and meaningful analytics on the impact of customer messaging. These 

applications can provide greater consistency, easier/quicker access to 

appropriate and relevant messages, and generally integrate with a 

company’s CRM system. With cooperation and commitment between 

CSOs and CMOs, these applications could boost the return on your 

marketing and CRM investments 

Notes: 






What is your ability to effectively present features and benefits 

Effectively Present Features & Benefits 

50% 

53.3% 

45% 

40% 

35% 

30% 

25% 

29.2% 

20% 

15% 

10% 

5% 

0% 

9.1% 

6.6% 

0.7% 


Key Findings 

! Highest rated of 

all the abilities in 

Performance 

Assessment. 

! Consistent with 

product training 

investment that 

was expected in 

2005. 

! Continued 

emphasis on 

“product 

knowledge” 

versus other 

possible 

orientations. 

Observations 

Building upon past experience and reinforcing the notion that “product 

knowledge is a sales rep’s strongest weapon,” the ability to present 

product features and benefits continues to score high. This is not 

surprising given both the traditional emphasis in this area as well as the 

increased investment in product training. For the second year in a row, 

58% of firms plan to increase product training. 

The numbers also support product knowledge. Quota attainment is 

directly aligned with this ability: “dismal” 31%, “poor” 52%, “average” 

56%, “very good” 62%, and “world class” 67%. [Note: the “dismal” 

sample size was too small to be statistically significant.] 

There are two cautions regarding this particular ability. The first 

(discussed in greater detail on page 83), is that buyers are increasingly 

accessing product information to a detailed level and often before 

contacting the selling company. Given this, we feel the role of successful 

sales reps will be less tied to providing product information (e.g., 

demonstrating specific features) and more to discovering and aligning 

products to the customer’s needs. 

The second insight involves the growing momentum toward selling 

“solutions.” Since the bursting of the tech bubble and the pronounced 

end of buyers rushing headlong to buy (especially technology), there is a 

growing shift in emphasis from sales teams selling products to selling 

solutions. 





However, “solution” in many sales settings is equated with selling a “total 

solution.” If we use CRM as an example, it means not only providing an 

application but providing a complete bundle – application, integration and 

implementation services, ongoing support, etc. This is important: from 

the buyer’s perspective this “solution” is still a “product.” 

Let’s take a specific example. A company has difficulty “accurately 

generating bids and/or configurations.” In this example, it is taking five 

days to do what should take two hours, and they are losing out on 

opportunities because of this. They also experience high levels of 

customer dissatisfaction and lower margins due to returns, rework, and 

billing problems. These specifics define their business pain. 

Implementing a full-blown CRM system is one way to address this pain. 

Another is to hire a cadre of clerks to check orders. Another is to revisit 

all internal processes and identify causes of errors. Another is to train 

sales reps to a higher level of competence. Another...well, you get the 

idea. 

All of these “alternative fixes” can address the pain. The “solution” will be 

the one that does this within budget, within a real or imagined deadline, 

and without creating an even bigger pain (e.g., increased costs and labor 

problems because the order-checking clerks now want to unionize). 

To sell a “solution” the buyer has two tasks. First, understanding the full 

extent of the pain, its cause, and the ramifications of the possible 

alternatives to make it go away. And, second, reconciling this 

understanding and the seller’s alternative solution with the company’s 

internal movie. Simply presenting a bundle of applications and services 

with clearly articulated features and benefit statements is still pushing a 

product. 

For more on this, send an e-mail to info@csoinsights.com and request a 

reading list. 

Notes: 






What is your ability to competitively differentiate your products/services 

Competitively Differentiate Products/Services 

50% 

45% 

40% 

42.3% 

35% 

30% 

34.0% 

25% 

20% 

15% 

10% 

11.4% 

10.2% 

5% 

0% 

1.0% 


Key Findings 

! New Metric: 

Very strong 

performance 

reported in 

differentiating 

from competitive 

offerings. 

! Likely a reflection 

of increased 

product training 

projected in 2005 

responses. 

! These figures 

may also reflect 

the response to 

increased 

competitive 

activity during the 

past few years. 

Observations 

Separate from presenting your features and benefits is the challenge of 

differentiating your offer from the competition’s. This is key for more 

reasons than you might realize. Earlier we discussed the ability to 

understand the customer’s buying process, and this metric relates to 

understanding the buyer’s needs. Historically, the largest complaint of 

economic buyers (i.e., decision makers) was the seller’s lack of 

understanding of the buyer’s business, issues, and needs. 

Do you know what the economic buyer’s number two complaint is The 

seller not knowing its own competition and being able to explain the 

differences. 

This metric speaks directly to this complaint, and companies have been 

investing in improving in this critical area. Does it payoff 

Companies rating themselves as “dismal” or “poor” (again the sample 

size for “dismal” alone was too small to be conclusive) realized 55% 

quota attainment essentially matching the 56% of “average” firms. “Very 

good” (62%), and “world class” (66%) suggest that competence in 

differentiating continues to have value. 

There are other areas of possible reward. The outcome of forecasted 

deals for WC respondents is somewhat better than for P&D, 57% won- 

28% lost to 43% won-36% lost, respectively. Properly qualifying and 

prioritizing, adjuncts to positioning and differentiating your company, are 

different between the two groups. Half (51%) of the P&D firms rated 

themselves as “average” in qualifying and prioritizing opportunities, with 





an additional 34% below average. 39% of “very good” and “world class” 

differentiators rated “average” with an additional 52% above average. 

Having competitive knock-offs readily available is important, and the 

need for competitive analysis remains high. Beyond the fact that 

knowledge is power, what companies fear is the unknown. Having 

detailed competitive intelligence just makes your competition less 

formidable or scary. And having the information, presenting it cogently, 

and differentiating the offer specifically as it relates to buyer needs 

elevate your position while potentially shortening the sales cycle. 

Realize that, in the end, buying is an exercise in decision making (i.e., 

differentiating), and buyers have a need and obligation to explore 

alternatives. They will do this with or without you – or with somebody 

else (i.e., your competitor). Clearly it is in your best interest to be a 

knowledgeable and honest seller. Know how your product differs 

positively and negatively from alternatives and be prepared to deal with 

them. 

Notes: 






What is your ability to align your solution to customer’s needs 

Align Solution to Customer's Needs 

50% 

45% 

40% 

44.2% 

35% 

30% 

31.5% 

25% 

20% 

15% 

10% 

5% 

0% 

14.5% 

8.1% 

0.9% 


Key Findings 

! New Metric: 

Second highest 

rated ability this 

year. 

! Lowest 

underachieving 

figures of any 

performance 

metric. 

! Solution selling 

may be gaining 

traction after 

years of 

movement in this 

direction. 

Observations 

This is both a new metric we began tracking this year and a high scoring 

one. There is a 10-point spread between the “poor” (54%) and “world 

class” (64%) respondents’ quota attainment. Potentially a breakout 

difference. 

Further, this is the metric with the fewest low ratings with only 9% 

reporting below average performance. Could it be that companies are 

over estimating their abilities As with each measure, we want to search 

for other indicators to substantiate or refute the responses we gather. 

As noted earlier, CSOs have been working to shift their sales teams’ 

emphasis away from “product” toward “solution” selling for the past 

several years. This shift, if successful, would show up in this metric more 

than any other. Still, “average” and “very good” performers yielded 

average results in quota attainment. Are there other specific 

performance differences that reward aligning with buyer needs 

One possible relationship would be the outcome of forecasted deals. 

Our postulate is that the better you are aligning your solution with the 

buyer’s needs, the better is your understanding of the opportunity. Let’s 

look at the outcome of forecasted deals. The average over the past two 

years and overall in this year’s survey is: won: 50%, lost: 30%, no 

decision: 20%. 

In line with our postulate, combined “poor” and “dismal” companies 

scored, won: 42%, lost: 36%, and no decision: 22%. However, “world 

class” and “very good” companies won: 54% of forecasted deals, lost: 





27%, and 19% went to “no decision.” This is somewhat better than the 

running average. It appears there may be some correlation between 

aligning your solution with the customer’s need and the understanding of 

how you are really doing in any given opportunity, though the strength of 

this is not overwhelming. 

We will be watching this area with interest as a possible leading indicator 

and interviewing some of the “world class” respondents to learn more. 

Look for upcoming case studies at www.csoinsights.com. 

Notes: 






What is your ability to generate accurate bid/configuration/proposal 

Generate Accurate Bid/Configuration/Proposal 

50% 

45% 

46.5% 

40% 

35% 

30% 

33.0% 

25% 

20% 

15% 

10% 

5% 

0% 

9.6% 

6.2% 

1.6% 


Key Findings 

! Overall gains in 

this area over 

past year. 

! Automated 

systems appear 

to be making a 

contribution. 

! Correlation 

between this 

ability and 

improved sales 

results remains 

less clear. 

Observations 

This metric has made an impressive shift to the right in the past year with 

56% of firms ranking above average versus 46% last year. If we look at 

quota attainment, we see “dismal” performers coming in at 43% while 

“world class” report 67% attainment. This is breakout performance if the 

correlation can be supported. 

We feel that, at least in part, it can be. There are three time components 

outlined below that relate directly to solid performance and overall sales 

productivity. The first is simply the time it takes to turn out the document 

in question (e.g., bid, configuration, and/or proposal). 

In January 2006, we learned of a global hi-tech company with several 

hundred sales reps in a division that was taking up to three weeks to 

generate proposals that are projected to take (according to their own 

workflow schedule) two hours. 

Even if you are not disqualified/dismissed for simply taking too long, the 

costs associated with dragging this process out over days mount up – as 

do the expectations. Recipients tend to expect more the longer the 

delivery time and, conversely, tend to be more impressed with the same 

deliverable if it is produced with a short turnaround time. 

The second cost is the lost or, a term we prefer, “corrupted” selling time 

that usually accompanies protracted processing times. The same 

company previously mentioned found nearly half of its reps’ total time 

was spent shepherding – or more likely, babysitting – processes to 

completion. There is no “value-add” in this but a significant “value- 





deduct” because of the opportunity cost for deals not being pursued 

during this time. 

Third, if the document is not accurate (often an accompaniment to 

inefficient processes), two more costs arise – rework and customer 

dissatisfaction. The first is a direct cost equal to the additional labor 

compounded by missed opportunities. The second is an indirect cost 

equal to dealing with customer complaints, granting discounts, 

processing returns, etc. 

Systems with significant potential to contribute in this area are point 

solutions that complement the CRM system. Before worrying about 

integrated versus best of breed or buy versus build, get an accurate 

reading of your actual turnaround time. Where are the bottlenecks and 

strategic value points, and what is just boilerplate 

In the proposal/bid process of one firm we studied was the required 

review and sign-off of a particular individual. It took an average of three 

days to receive the approval. However, in hundreds of proposals 

submitted, this individual rejected or corrected less than 1% of the 

documents. His inclusion in the process was a holdover from earlier 

times and methods, and no one had initiated a procedure that would take 

him out of the loop. When this was finally achieved, he was relieved to 

not have the pressure of the proposals for which he felt personal 

responsibility. 

If you are inclined to minimize these costs and/or impact on your sales 

team’s productivity, take one more look at the chart. If you are not 

already “very good” or better, you are trailing edge. Like manufacturing 

firms that scoffed at the notion of higher quality and lower costs, you may 

find your competition eating your lunch and your customers enjoying it 

with them. 

Notes: 






What is your ability to up-sell and cross-sell 

Up-Sell & Cross-Sell 

50% 

45% 

45.1% 

40% 

35% 

30% 

25% 

27.3% 

20% 

15% 

17.3% 

10% 

5% 

0% 

2.3% 

2.4% 


Key Findings 

! Improvement in 

this metric over 


! Less than onethird 

of firms rate 

themselves 


! This continues to 

be both an area 

of keen interest 

and challenge. 

Observations 

“Average” and “very good” respondents are up 15% while “poor” 

performers are down. This metric has hovered in the same neighborhood 

the past three years and after shifting to the left last year has slightly 

improved in 2006. This is both surprising and disappointing given the 

high level of interest and potential up-selling and cross-selling promise. 

If this is so promising, why isn’t more progress being made And who is 

succeeding It appears mid-range firms are doing better than either 

small or very large ones in expanding sales opportunities within their 

existing customer base. With sales force sizes of 51-250 reps, these 

firms make up 21% of our survey population, but 37% of those 

companies rate themselves as “world class” in this category. Are there 

certain structural or size conditions that favor or restrict up-selling and 

cross-selling success 

Somewhat surprisingly, just under two-thirds of the “world class” 

respondents have implemented CRM systems. However, another area 

that is higher for this group is their commitment to training. Threequarters 

of the companies spend $1,500 to more than $7,500/rep each 

year. It may be that consistent training and reinforcement are returning 

dividends in expanding opportunities. 

Two other areas that distinguished this group are their ability to build 

customer loyalty (74% rated themselves as “world class”) and 

implementing an effective customer care program (47% “world class”). 

These figures tower over the general population’s scores of 13% and 

6%, respectively. 





This suggests, though not entirely surprising, that what happens after the 

initial sale contributes in a significant way to follow-on sales. Smoother 

transitions between sales and customer service/support, closer 

coordination and communication between these two groups when 

problems arise, and an overall orientation that focuses on relationships 

to build revenues rather than the reverse appear to contribute. 

One personal care products company found that three-quarters of the 

time allotted to routine (and scheduled) customer sales appointments 

was spent resolving service and billing issues. Approximately 10-12 

minutes of every 15-minute appointment was spent checking returns and 

billing adjustments, back orders, credits, etc. Little time was left to add 

anything to the regular order or to explain the benefits of new or related 

products that were available. The customers were unaware of or ignoring 

80% of the product line. 

When the company shifted to having Customer Service Reps call a day 

or two in advance of the sales appointments to inquire about and answer 

existing billing questions, selling time during the sales calls expanded to 

nearly the full 15 minutes. The company achieved a 52% increase in 

revenues per rep in the following 18-month period. 

The company’s CRM system supported this revised approach, but it was 

not central to it. The real breakthrough came from recognizing the 

leverage that sales and customer service could provide one another – 

and the customer. 

This orientation is central to increased success in this area. And by way 

of introduction of the next metric, increasing average deal size is a major 

contributor to overall profitability! 

Notes: 






What is your ability to sell value/avoid excessive discounting 

Sell Value/Avoid Discounting 

50% 

45% 

40% 

43.3% 

35% 

30% 

30.9% 

25% 

20% 

15% 

10% 

5% 

0% 

14.1% 

6.5% 

2.8% 


Key Findings 

! The middle 

performers 

moved up, but the 

extreme ranks 

modestly 

declined. 

! Discounting may 

have diminished 

somewhat with an 

improved 

economy and 

some pent up 

demand. 

! Most companies 

do not have clear 

strategies in 

place to avoid or 

implement 

discounting. 

Observations 

Steady progress continues to be made in the middle ranges of this 

metric, while “world class” performance dipped slightly and “dismal” 

moved up – still both relatively small numbers. How has the general 

population improved 

Without taking anything away from anyone, 2005 was a good year for 

the U.S. and global economies. This does not mean that pressure to 

discount went away entirely, but buyers were a little less sunburned 

about price issues. In addition, operational improvements and 

productivity gains made in the past few years added to the bottom line 

while sales maintained the top line. 

Still, discounting is often the lever sales reps instinctively reach for when 

buyer resistance is encountered. Are there alternatives to put in place to 

make discounting less convenient/attractive The answer is “yes,” and 

each relies on process, not price cutting to help close business. 

Because buyers are able to gather data from the Internet, including 

pricing information, they often bring preconceived ideas to any 

discussion. Back on their heels, sales reps often find themselves 

responding with a defensive, “I’ll see what I can do and get back to you.” 

This is setting the expectation for a discount or other concession without 

obtaining any quid pro quo for the seller’s company. 

Reps can also do work in advance of each call to help redirect the 

energy and course of many sales appointments. Again referring to the 

buy/sell process model (see page 82), there is qualification and 





discovery work to be done before accurate pricing can be provided. A 

legitimate response is to review the buyer’s actions at each step and see 

which have been accomplished. Have they articulated why this purchase 

is needed now and the compelling event driving it Have they identified 

the key buying influences and facilitated meetings/discussions with 

them Have they availed themselves of resources (e.g., technical presales, 

opened relevant material on a personal sales portal, etc.) 

A second approach to avoid discounting is to sell value. Many 

companies bundle product and/or service offerings. The bundle will 

either avoid/eliminate direct price comparison or include some low-cost 

components that either won’t be used or don’t cost much if they are. This 

can backfire if the buyer does not perceive extra value. 

In a recent case study, a printing and advertising company’s installed 

base was being fiercely attacked by a competitor willing to buy the 

business. In an effort to ward off these advances, the company offered a 

premium bundle. In the seller’s view, the bundle represented 115% of 

value at a 100% price. However, the buyer viewed it more as a “Happy 

Meal” and expected to pay only 85% – in effect, a double discount! 

The case study describes what the printing/advertising company came to 

realize that a) all customers, even within the same segment and 

circumstance, are NOT the same, b) it is not possible and may not even 

be desirable to achieve “trusted advisor” relationships with all customers, 

and c) it is okay to be categorized in the “commodity bucket” as a 

solution provider. 

These realizations may seem self-evident and/or obvious, but each 

challenged the “Do All and Be All” culture that had evolved and 

contributed to the firm’s success over decades. Understanding these 

distinctions is important. Changes in the way they now sell their printing 

and advertising services and execute their sales process has proven 

essential to this seller over the past two years. 

Today their sales reps understand that their job is to align the way they 

sell with how their customers buy. They follow the sales process road 

map to optimize the offers they present in light of and in a manner 

consistent with maximizing the benefit to the buyer’s business – where 

that business is in its maturity, market stage (e.g., innovator, early 

adopter, early majority, late majority, or pragmatist), buying style 

preference, etc. 

Notes: 






What is your ability to accurately forecast business 

Accurately Forecast Business 

50% 

45% 

40% 

43.4% 

35% 

30% 

25% 

20% 

15% 

10% 

27.8% 

21.5% 

5% 

0% 

3.6% 

1.4% 


Key Findings 

! Ratings 

somewhat 

improved over the 

past few years. 

! Actual forecast 

results have 

changed little. 

! Forecasting is no 

longer the lowest 

ranked 

performance area 

assessed. 

Observations 

Coming off a good year, overall performance measures improved, 

including forecasting – forecast ability and accuracy. For the first time in 

several years, forecast accuracy is not the lowest ranked metric, though 

this is partly due to new metrics scoring lower than forecast metrics 

scoring significantly higher. 

Still, we want to celebrate progress. The “very good” rated companies 

increased by more than one-third (up from 15%) while “world class” held 

steady, and “average” declined slightly (from 45%). The low end also 

improved with “dismal” down by 25% and “poor” ratings down by 10%. 

It is unclear if Sarbanes-Oxley (SOX) has made any difference, but it 

would also be unfair not to give credit to the positive pressure the Act 

has put on transparency and increased reliability in companies reporting 

their numbers – including forward looking projections. 

Enter forecasting. There has always been a premium for accurate 

forecasts (e.g., better resource allocation, less overtime or expediting, 

reduced buffer inventory, etc.) and a penalty for missing the number, but 

this metric continued to linger at the bottom. This appears to be 

changing, and the better performers are cashing in. 

“World class” respondents averaged 75% quota attainment, winning 71% 

of forecasted deals, losing 17%, with 12% going to “no decision.” The 

numbers for the general survey were 59%, 50%, 30% (lost to 

competition), and 20%, respectively. 





Even the “very good” firms, of which there are many more this year, did 

better in quota attainment (71%) though their hit rates were not as far 

above average (56%, 28%, and 16%). 

These percentages and the positive impression they give are only part of 

the forecast story. What these percentages reveal is that this year these 

firms did a better job of making the projected numbers. They closed 

enough deals to hit their revenue targets, but these deals only roughly 

resembled their forecast descriptions. 

If you have a quarterly quota of, say, $300,000 and your forecast 

contains deals A, B, C, and D totaling $500,000 with 60% probability, it 

appears you are on track. We will leave what “60%” probability means 

(or doesn’t) for another time. 

In the end, what closes are D for $75,000 and from out of left field, 

mega-deal H for $225,000. Ta-dah! Bringing in $300,000, you made your 

quota – but completely missed your forecast. As it turns out, this is 

happening on a wide-scale basis. Other than for “world class” firms, 

roughly one-half of what sales says will come in actually does. 

The details are even less compelling. Of the deals that do close (these 

numbers are for the general survey population), the deals’ specifics 

(what, how much, by when) are accurate 75% or more of the time for 

less than one firm in eight. The specifics are accurate between 51%-75% 

for one firm in four. Closing as originally forecast between 25%-50% is 

true for nearly one-third of firms (31%) and less than are 25% accurate 

for nearly one in five (18%). 

What does all this mean When sales reps say, “It’ll close, and I give it 

80% probability,” that means the most likely scenario is less than a 50/50 

shot at a deal that has a 1:3 chance of looking like what they said. It is 

hard to base business decisions on that level of accuracy. 

Notes: 






What is your ability to gain access to decision making authority 

Gain Access to Decision Making Authority 

50% 

45% 

40% 

43.8% 

35% 

35.4% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

11.9% 

5.9% 

1.5% 


Key Findings 

! New Metric: 

Most companies 

feel they are 

doing a 

reasonable job of 

accessing the 

decision maker. 

! 40% rate 

themselves as 

“very good” or 

“world class.” 

! “No decision” 

rates suggest 

these ratings are 

somewhat 

inflated. 

Observations 

In this case, overall quota attainment may not be a true measure of this 

metric’s impact; after all, other companies might make up the difference 

in achieving quota by working harder and longer. However, would a 

reasonable indicator of success be greater predictability in deals 

forecast 

Apparently not. The respondents rating their teams as “world class” or 

“very good” had only slightly better numbers in their win/loss/no decision 

percentages than the general survey population (54/29/17 versus 

50/30/20). Either getting to the decision maker is overrated or these 

companies are overrating their ability to do so. The former may be 

disappointing but not altogether surprising. 

We worked with a sales team with which we had previously conducted a 

formal sales training. The course included several concepts that came 

together on a summary form. The form would then quickly reveal the 

relative strengths and weaknesses for a specific sales opportunity. And 

like many other programs, the use of this form was, ahem, not rigorous. 

Still, rather than simply rehash the concepts again, we requested that the 

sales reps go back through client files, desk drawers, and anywhere else 

they could find the forms that had been completed during campaigns that 

year. The CSO expressed some concern saying, “We’re not exactly 

religious about using that form. I mean, we tend to use it on bigger deals, 

and some reps use it more than others.” 





No doubt you can relate to this CSO’s caution, but we said to bring what 

they could find. At the meeting, the 30 reps each produced roughly three 

or four forms. 

Our instructions were simple: “These forms represent the game films of 

nearly a hundred deals you pursued this year. As a group, divide your 

forms into those deals won and lost. Now look at them. These films 

(forms) are trying to tell you some things. Figure out what those things 

are.” 

We share this exercise in detail because one of their findings was 

directly relevant to this metric. Between deals won and lost there was no 

difference in the frequency or success rate getting to the decision maker. 

However, in those deals won, they had early and continuously made 

clear they wanted and were trying to get to the decision maker and 

articulated their reasons for wanting to meet this person and why it was 

important. 

It appeared that their clear and ongoing efforts to get to the decision 

maker produced positive pressure on the outcome of those deals even 

though, in many cases, they never actually got to that key individual. 

We will track this metric with interest. This may be one of those 

counterintuitive areas that makes sales both unique and challenging. 

Selling is becoming automated, process oriented, measured, and 

continuously improved. Selling is science except when it is art. 

Notes: 






What is your ability to accurately and easily submit orders 

Accurately & Easily Submit Orders 

50% 

45% 

49.2% 

40% 

35% 

30% 

32.9% 

25% 

20% 

15% 

10% 

5% 

0% 

0.8% 2.6% 

7.5% 


Key Findings 

! Significant 

improvement in 


! Another area 

where technology 

could be 

contributing. 

! Half of companies 

listed as “very 

good.” 

Observations 

For the second year in a row, there is solid improvement in sales’ ability 

to easily and accurately submit orders. How solid “Poor” ratings as 

shown above declined by almost two-thirds (from 7%), and “very good” 

increased nearly 25% (from 40%) a year ago. 

It appears that the investments in IT and infrastructure are continuing to 

pay dividends, speeding orders, minimizing rework and/or returns, and 

freeing time for individuals all along the process including sales reps’ 

selling time. This is a direct contributor to hard benefits such as margin 

and profitability and soft benefits including customer satisfaction. All 

good things. 

While sales and marketing went virtually unscathed by the quality 

movement of the 80’s and 90’s, attention to process and supporting 

technology have been increasingly part of sales operations the past five 

years. Inertia works in both directions and now, as systems share 

information, applications incorporate business rules and logic, 

employees become increasingly comfortable working within systems, 

and a momentum begins that results in a productivity shift. 

Look at the chart again. With more than half (57%) of companies at “very 

good” or “world class,” the threshold has been raised for the minimum 

acceptable standard. Systems that facilitate the easy and accurate 

submission of orders become the price of admission. 

As the pace of improvement continues to increase, even “average” firms 

will find themselves disadvantaged. In addition to the incremental 





contributions noted (e.g., margin on deals, customer satisfaction, etc.) is 

the fact that sales talent flows to companies where they believe the best 

opportunity for success exists. 

The job market has strengthened with the economy and once again, the 

potential is rising for sales reps to jump ship. You may scoff at the notion 

of reps staying or leaving for lack of support in this area, but consider 

this. How much do sales reps like administrative work Answer: Not 

much. 

When we look at the percentage of sales reps’ time spent on 

administrative tasks (see pg. 42), we find the following when we sort by 

their ability to submit orders easily and accurately: 

World Class 14.7% 

Very Good 15.6% 

Average 17.3% 

Poor 18.9% 

Dismal 22.5% 

This means the lowest performers spend nearly 50% more time on 

administrative tasks than the highest. In an 8-hour day that is nearly 40 

minutes of selling time difference each day! 

Where do you think top performers would rather be 

Notes: 






What is your ability to conduct detailed win/loss reviews 

Conduct Win/Loss Reviews 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

33.0% 

34.2% 

15% 

10% 

5% 

0% 

15.3% 

8.1% 

2.9% 


Key Findings 

! New Metric: 

Dramatic 

departure from 

previous metrics 

and surprise 

lowest rating 

among all 

performance 

assessments. 

! Tuition being paid 

but few lessons 

being learned. 

! Below average 

outnumber above 

average by more 

than 2:1. 

Observations 

This is a new metric and one that has earned its place at the bottom of 

the ability charts, even though it does not deserve to be there. 

If you have not already done so, review the metric on page 102 

regarding the reps’ ability to gain access to the decision making 

authority. In that earlier metric, we reported an experience that 

suggested getting to the decision maker was not as important as 

persistently and openly trying to, whether successful or not. 

As with this earlier metric, the “very good” and “world class” rated 

companies did not exhibit breakthrough performance. Overall quota 

attainment is 5% better than the general survey population, and their 

win/loss/no decision rates are almost identical. Could the value of 

win/loss reviews be overrated 

An old maxim in skiing is that, “If you’re not falling, you’re not learning.” 

When sales reps lose a deal it is as though they cannot get away from 

that experience fast enough. “Well, yes, I’m sorry to hear you’ve decided 

to go with our competitor. Can you tell me what factors helped you 

decide to go in their direction They did a better job of presenting 

Hmm. Yeah, okay, thanks.” 

And yet, you have paid the tuition. Why not dig to learn the lesson 

There is such an urgent forward pressure to get on with the next 

opportunity that companies are missing the boat by not applying best 

efforts in “post mortems” of losses – and wins. Too frequently the 





win/loss reporting is simply a check box item in the CRM system with 

drop downs and pick lists. This is better than nothing but well short of 

what is available today. And, well short of real usefulness when done 

properly. 

A medical products company reviewed its situation in mid-June following 

a slow first-half and realized they were behind plan and not looking good 

heading into the summer months. The CSO and his team reviewed their 

win/loss reports and stats and identified products which had abnormally 

high or low win rates and with which buyers. 

For example, with one product the company’s win rate was 85% when 

nursing staff were involved. They also identified all products that had win 

rates >70% and sales cycles



What is your ability to accurately and easily calculate commissions 

Accurately & Easily Calculate Commissions 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

34.2% 

37.5% 

10% 

5% 

0% 

8.4% 

7.6% 

3.0% 


Key Findings 

! Essentially no 

movement in this 

area in the past 

year. 

! “Hidden costs” in 

doing this poorly 

can have an 

adverse impact 

on selling time. 

! “World class” 

performance may 

still have plenty of 

upside. 

Observations 

This metric has been stuck at these levels for three straight years. The 

economy continues to show strength, companies continue to increase 

their quotas, and hiring activity is heating up. Because compensation 

issues are a primary reason for turnover in sales, we want to again flag 

this as an area needing attention. 

Last year, we suggested companies “get transparent” with respect to 

their compensation plans. This doesn’t mean posting everyone’s 

earnings on a white board in the hallway (although some companies do 

this), but it does mean having clear rules and easy methods for everyone 

to know that the rules are being followed. 

Today, 90% of compensation plans are calculated using Microsoft Excel 

software, typically in a series of complex spreadsheets. The results of 

these numeric gymnastics are then uploaded to the payroll system, and 

then on to the sales force on payday. That’s when the fun really begins. 

Estimates range from four hours per pay period to four hours per week 

per rep of lost selling time as sales reps analyze their pay. In truth, this 

time is spent attempting to reconcile or argue the pay received using 

their figures. 

This “shadow accounting” is ongoing and runs in parallel to the 

company’s system – both are aimed at ensuring that accurate and 

appropriate amounts are paid. Unfortunately, neither the company’s 

formal (but hidden from current view) nor the reps’ personal (also 

hidden) system display current selling behavior. 





As an old business acquaintance was fond of saying, “The bottom line is 

the bottom line.” True enough. How much you make and how much you 

keep are important to both the company and the individual. If you are 

hoping, for example, that the compensation plan should not only “tell the 

sales force what is important” but be clearly tied to business goals and 

able to flex with changing business conditions, you have to make this 

easier. 

There are new systems that can provide greater flexibility, more current 

(close to real time) performance feedback, and “what if” capabilities to 

test various pay scenarios. 

All of this costs money and takes time, but remember your company’s 

spreadsheet based system and the reps’ shadow accounting tend to be 

arcane and difficult or overly simplistic due to their organic development. 

All of this has a cost as well – much of it hidden. If you don’t think so, ask 

your Sales Ops Director for an explanation of how to calculate pay at the 

end of each period. 

Then for laughs, float the suggestion of reassigning some accounts or 

territories. The compensation plan is supposed to be motivating 

performance and driving it in the direction you want – not trailing. And if 

things change, you want to be able to flex without a three month lag. 

Notes: 






What is your ability to implement effective customer care programs 

Implement Effective Customer Care Programs 

50% 

45% 

40% 

40.5% 

35% 

30% 

31.0% 

25% 

20% 

15% 

15.5% 

10% 

5% 

0% 

1.9% 

6.1% 


Key Findings 

! General 

improvement 

suggests more 

companies now 

“get it.” 

! “World class” and 

“very good” 

performance 

showed up in 

several improved 

results. 

! Sub-par 

performance is 

costly. 

Observations 

If you were playing “Buzzword Bingo” and could count multiple instances 

of an expression, “customer-centric” might get you an early win. With all 

the talk of becoming customer-centric, one has to ask, what does being 

customer-centric mean And does it pay tangible benefits 

Volumes have been written on this subject, so we will leave the definition 

to others. For our purposes, we will submit that implementing an 

effective customer care program is one component. Given this 

assumption, we can offer some measurable benefits. Comparing 

companies that rate “world class” or “very good” (WC&VG) to the subpar 

performers, “dismal” and “poor” (D&P) highlights some significant 

differences. 

Quota attainment is among these differences, 64% WC&VG versus 53% 

D&P, but is not necessarily the most telling. Where this revenue comes 

from might be an indicator and, in fact, the higher scoring companies 

also enjoy a higher percentage of business from existing customers 

(67%) over new (33%). The ratio for D&P companies is 62/38. 

Since typically gaining a new customer is more costly than retaining an 

existing one, the contribution to margin between these two results is not 

5% but some multiple of this. 

We have outlined the benefits of increased predictability as reflected in 

more accurate forecasts. Remember the average performance across 

the entire survey population and multiple years remains 50/30/20, 

won/lost/no decision. Again, the top-end performers, WC&VG, are doing 





better, 53/29/18, versus the low-end’s 47/35/18. These numbers mean 

that not only are more dollars being expended by the D&P group to win 

customers, they are winning at a lower rate. 

D&P firms have fewer happy customers and renew/expand their 

relationships less often. They have to scrap more for new customers, 

and lose more than they win. Doesn’t sound like much fun Apparently 

the sales reps for these companies agree. Voluntary turnover, that is 

sales reps voting with their feet, is 29%. This is half again higher than the 

general population’s 18% and twice as high as the WC&VG’s 14% 

voluntary turnover rate. 

Now we’re talking real money. Does this offset the cost of implementing 

and maintaining an effective customer care program You would have to 

look at specific program costs, but it would be fair to say it buys a lot of 

runway. 

Notes: 






What is your ability to effectively renew business with existing customers 

Renew Business with Existing Customers 

50% 

45% 

45.8% 

40% 

35% 

35.2% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

9.7% 

6.2% 

0.8% 


Key Findings 

! Very high ratings 

in this area for a 

second year. 

! Results are better 

across the board 

in this category. 

! “Winner takes 

most” future may 

be shaping up. 

Observations 

As noted in the prior metric, there is the possibility of a direct link 

between this ability and companies’ ability to implement effective 

customer care programs. Still, a higher percentage of respondents rated 

themselves above average than in the earlier metric, and their results 

support these higher ratings. 

“World class” and “very good” (WC&VG) firms have two-thirds of their 

total revenues coming from existing clients while “poor” and “dismal” 

(P&D) respondents report 59% of revenues are from existing clients. 

These same firms also see higher percentages in the maturity of their 

sales teams with 42% of sales reps employed for 4+ years versus 29% 

for the poorly performing companies. 

This stability telegraphs into other areas, the benefits of which we have 

talked about elsewhere. For example, the WC&VG firms report 

understanding the customer’s buying process (see page 84) two-thirds of 

the time and their performance numbers suggest they are not mistaken. 

Quota attainment is 68% for WC&VG firms versus 49% for P&D 

respondents. 

This 20-point spread is significant, and it is important, no matter what 

size the company. As it turns out, this ability to renew business with 

existing customers is evenly spread across all segments of the 

population (e.g., Dominant, One of Lead Players, One of Many, 

New/Start Up) with similar representation in this ability as overall 

participation in the study. 





This means, if you are not one of the above-par achievers that comprise 

two-thirds of the mix, your competition very likely is. And it also means 

that the 20-point spread is working against you. 

What do you do 

For starters, you need to do a reality check. If your renewal rates or the 

percentage of total revenues gained from existing customers is closer to 

70% than 50%, you may be judging your team’s performance too 

harshly. If your existing customers do represent this lower figure, your 

cost of sales will be higher – a true competitive disadvantage and a key 

variable in the “going out of business” formula. 

Second, do you have a clear program/process in place to renew, extend, 

and expand business relationships A cartoon accompanying an article 

on this subject showed a fisherman casting his line to a fish out in the 

waves while the fish he had already caught was diving back in the water 

from the bucket the fisherman had carelessly kicked over. 

CARE is an acronym we coined years ago: Customer Acquisition, 

Retention, and Expansion. Too many companies forget about the 

second half, taking the “hunter” model to an extreme and leaving the 

“farmer” designates to figure it out. The model of ignoring existing 

customers will not serve you well. 

Notes: 






What is your ability to farm new business from existing customers 

Farm New Business from Existing Customers 

50% 

45% 

45.8% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

19.9% 

23.5% 

5% 

0% 

3.0% 

3.4% 


Key Findings 

! New Metric: 

Much less 

success in 

expanding than 

renewing 

relationships. 

! Significant 

number of subpar 

performers. 

! Possible 

contradiction with 

high customer 

care ratings. 

Observations 

This is similar to, but different than the preceding ability and also 

revealing in the different ratings. While two-thirds of respondents are 

above average in their ability to renew current customer business at 

existing levels, less than one-third rate above average in their ability to 

use this base business as a springboard to greater opportunities. 

Because many of the higher rated performers appear to have slipped 

down a notch between the prior rating and this one, revenue splits 

between existing and new customers are not very different for “very 

good” and “poor” performers. However, we do have representative 

sample sets at the extremes (“world class” versus “dismal”), and the 

results are eye-opening. 

If you have been questioning the value of your experienced reps staying 

in the field and providing a parallel career path for them there versus 

moving into management and out of the field, read on. For starters, 68% 

of the “world class” group has two or more years in the field with their 

current employer. 62% of the “dismal” group has less than two years with 

their current company. The average quota attainment between the two 

groups is 64% versus 42%, respectively. 

Whichever group you are part of, there is momentum pushing these 

extremes even further apart. Voluntary turnover for “world class” is 20% 

compared with “dismal” reporting 45%! WC companies see one-third the 

involuntary turnover at 11% versus 32%. At these rates the “dismal” 





group has a new sales force every 16 months. Hardly a formula for 

success. 

Having a shared history, going through fat and lean times together, and 

staying the course all give meaning to relationships. Reps that have 

been in their territories and working with the same clients for a length of 

time are able to navigate more easily. 

Knowing “who’s who,” that is, having a working knowledge of a client’s 

needs and plans is a huge advantage. It does not mean your current 

contacts will give you business because you have a good rapport, but 

they are more likely to wrap their cloak of credibility around and refer you 

to colleagues within their company. 

If you are interested in receiving an article on “Levels of Relationships,” 

e-mail us at info@csoinsights.com. 

Notes: 






What is your ability to effectively introduce new products 

Effectively Introduce New Products 

50% 

45% 

40% 

44.1% 

35% 

30% 

30.4% 

25% 

20% 

15% 

10% 

5% 

0% 

14.5% 

1.9% 

3.9% 


Key Findings 

! Biggest single 

area of 

improvement is 

50% reduction in 

“poor” 

performers. 

! Still, only onethird 

of 

companies are 

leveraging their 

new products. 

! This is a 

continuing area of 

need with shorter 

and more 

frequent product 

releases. 

Observations 

Last year’s performance in this area shifted to the left; this year the 

figures have moved back toward the right indicating improvement. “Poor” 

performance is half of last year’s figure of 28% and “very good” is up by 

one-third from 23% last year. Both “world class” and “dismal” are up, but 

both groups are relatively small. Good news – the “world class” group is 

twice the size of the “dismal” group. This is all to the good, and it is 

important to celebrate progress. 

Still, there is room for improvement with only one in three firms reporting 

above average performance. A time management axiom is, “Urgent 

matters are seldom important, and important matters are seldom urgent.” 

Developing skills for introducing new products may not be urgent, but it 

is shaping up to be increasingly important. 

The rate at which companies are expanding their product lines is 

increasing for 84% of the companies surveyed (see page 138). This 

trend is likely to continue as product life cycles are compressed, periods 

of product exclusivity are dramatically shortened, and competitive activity 

continues to increase. And products are becoming more complex as 

well. 

To meet these challenges, companies are turning to new technologies to 

lessen their reliance on the product knowledge reps need to carry in their 

heads and to ensure that complete and current detailed information is 

readily accessible. 





One company addressed this huge knowledge need while leveraging 

common technology by providing product information on a CD that is 

updated via the Internet. The CD provides details, specific applications, 

customer success stories, marketing approved PowerPoint 

presentations, and much more. Not everyone has the latest WIFI 

enabled laptop or ubiquitous Internet access, particularly at customer 

locations. Yet, today every laptop/pc has a CD reader and periodic 

Internet access which is enough to take advantage of this solution. 

This is a complex challenge with few clear-cut distinctions. For example, 

levels of CRM adoption are the same for both “world class” and “poor” 

performers. The level of training investment is slightly higher for “world 

class” firms, but a significant number of “poor” performers actually invest 

more in sales rep training than their “world class” counterparts. How they 

implement the training is a possible indicator – Level 4 firms (see pg. 

164) were present four times more (35% to 9%) in the highest 

performing group. 

We are updating our Sales Knowledge Management study (2004) and 

will have more examples in this specific area in the coming months. 

Notes: 






What is your ability to effectively support channel partners 

Effectively Support Channel Partners 

50% 

45% 

40% 

35% 

35.3% 

30% 

25% 

20% 

20.7% 

15% 

10% 

5% 

0% 

14.5% 

2.6% 

3.8% 


Key Findings 

! Slight decline 

from last year’s 

already low 

ratings. 

! Biggest gains 

made at the low 

end of the scale 

in “poor” and 

“dismal” ratings. 

! Channels still trail 

in attracting solid 

support from their 

suppliers. 

Observations 

Companies continue to struggle with their channel strategies. Nearly 

one-quarter of respondents indicated “not applicable” or “do not know” in 

responding to this particular metric, but we are unable to determine the 

ratio of these two choices that make up this number. 

What we can say is that the companies that did respond have some 

interesting comparisons. The “world class” group indicates channel sales 

comprise 30% of their total revenues to 20% for the companies rated 

“poor” and “dismal.” Coincidentally, for these same groups, there is also 

a 10-point difference in overall quota attainment at 62% and 52%, 

respectively. 

One CSO we’ve interviewed sells exclusively through partners and 

would not have it any other way. He feels that U.S. based businesses 

tend to begin with a direct sales force, then consider channel partners 

when they look to expand overseas and/or into domestic markets where 

they cannot justify direct coverage. 

By contrast, his company was founded overseas – Israel, a market too 

small to support their growth plans – so going direct was a fait accompli. 

Started 13 years ago, the company now has revenues in excess of half a 

billion dollars through more than 2200 reseller partners in 88 countries. 

Their revenue stream enjoys a smoothing effect from so many partners, 

since they operate on their own fiscal years and in economic cycles 

which tend to offset each other’s highs and lows. 





The biggest challenge for this and many other companies working to 

develop a channel model is channel enablement – getting the word out 

to partners and maintaining top of mind awareness with them. 

Historically, companies have abused their channel partners by “stuffing 

the channel,” most often at the end of an accounting period. Think of this 

as a corporate version of a multi-level marketing plan. In these schemes, 

short-term success is realized by selling to the new downline members. 

Whether they ever resell these goods is really secondary. 

Longer term, however, the manufacturer’s success at selling into the 

channel is tied directly to the partners’ success at selling out. With this in 

mind, companies are recognizing they can no longer look to their 

channel, as one executive put it, as a “flushing mechanism” – a dumping 

ground to unload end of life or lower spec products. 

She says they now have moved to viewing their channel partners as an 

important “go to market function.” In this light, she is preoccupied with 

understanding “which variables of the business proposition can be 

managed to entice partners to work with them.” These variables include 

fit to each partner’s product/services mix, market opportunity, investment 

required, brand value, and 80 others (we’re not making this up). 

Our conclusion is that your channel strategy will not be successful as an 

afterthought or a partially committed endeavor. There are many 

companies that are finding sales success through indirect means, but 

they are not doing so with average effort. The companies that think they 

can get a quick hit with little effort really “do not know.” 

Notes: 






What is your ability to create/maintain references/case studies 

Create & Maintain References/Case Studies 

50% 

45% 

40% 

35% 

38.5% 

30% 

25% 

20% 

15% 

10% 

22.5% 

26.1% 

5% 

0% 

3.7% 

6.4% 


Key Findings 

! Modest gains for 

an area seen as 

both valuable and 

critical to sales 

success. 

! One-quarter of 

reporting firms 

still rate 

themselves as 

“poor” or “dismal.” 

! “Average” ratings 

have a strength 

that could support 

them developing 

more references 

and case studies. 

Observations 

References and case studies are among the top ranked sales aids in our 

2004 Sales Knowledge Management (SKM) study. Yet, they were 

among the most difficult resources to access and were often incomplete 

and/or outdated when they were accessed. With this general recognition 

as background, there has been only modest improvement overall. 

Analyzing the data raises a few interesting items. For example, 

companies rating themselves as “average” are the largest group, and 

their performance and performance assessments are generally right 

down the middle. Quota attainment: 59%. Outcome of forecasted deals: 

won: 50%/lost:30%/no decision:20%. One departure from strictly 

average relates to this metric: a majority of average firms rate 

themselves “very good” in building customer loyalty. 

This suggests there is fertile ground to pursue both references and case 

studies, but it raises the question as to whether there is a process in 

place to do so. Somewhere in the sales cycle, perhaps during delivery, 

or later during customer care, you have an opportunity to ask for 

references and/or explore each customer’s willingness to be the subject 

of a case study. 

Supporting the SKM study’s attributed value, the “very good” and “world 

class” companies are 10% higher in their quota attainment and in the 

outcome (accuracy) of their forecasted deals. 

There is an ancillary benefit to requesting customers’ participation in 





cases or to be references. If they are unwilling to do so, there may be a 

basic issue involved. This can be an early warning signal that everything 

is not unfolding according to the buyer’s expectations. Use the buyer’s 

balking at being a reference as a signal to probe further and ensure that 

they are in fact satisfied with your company’s performance. 

How many times have you heard solution providers say, “Our best 

customers won’t let us talk about their success,” as the reason why they 

can’t do a case study Answer: too often. 

We do case studies and most often the companies we are interviewing 

want to know what they are getting into: How long will it take Will they 

be able to review the case before it is published Who will read it Can 

they control how it is used 

Take a hint: If you were selling, these would be “implementation 

questions” (i.e., buying signals). We have an outline we send to 

prospective case study companies in advance outlining areas we will be 

investigating, providing answers to the most frequent questions (see 

above), and assuring them nothing will be finalized/published without 

their approval. [Note: Often the biggest delay is getting the company’s 

legal department to sign-off so allow plenty of lead time.] 

You have begun a business relationship, and you are good at building 

loyalty. Go one step further and leverage both of these to everyone’s 

benefit. 

One final note, which is a bit of a plug for CSO Insights’ case study 

service but is also true. Often, client/customer companies are more 

willing to share information and work with a third party rather than work 

directly with the service provider. If you are having difficulty getting 

clients to agree to participate in a case study, you might want to retain an 

outside company to write the case. 

Notes: 




Sales Performance Sales Performance Optimization – 2006 Survey Survey Results Results and Analysis and Analysis 

What is your ability to communicate effectively with other sales teams 

Communicate Effectively with Other Sales Teams 

50% 

45% 

40% 

41.7% 

35% 

30% 

25% 

26.9% 

20% 

15% 

10% 

5% 

0% 

13.4% 

2.5% 

2.9% 


Key Findings 

! Some movement 

in this area but 

little ground 

gained. 

! For all the 

promise of 

“increased 

communication 

and teamwork,” 

there has been 

little 

improvement. 

! There may be 

little synergy in 

improving this 

area if “world 

class” firms are 

indicative. 

Observations 

This metric has seen very little movement over the past three years 

suggesting that it is a lower priority than other issues. There may be 

some merit in this view. While companies rating themselves “very good” 

did better than average (66% quota attainment), “world class” performers 

(51%) did only slightly better than their “dismal” counterparts (49%) and 

worse than the “poor” ones (54%). Yikes! 

Communicating with other sales teams is not the same as sharing best 

practices, though that might be a component. We deal with that specific 

aspect of intra-sales communication separately (see pg. 128). This 

metric has to do with keeping everyone on the same page. For example, 

very large companies could have several different reps calling on the 

same account nationally and/or internationally. 

In this instance, conforming to global pricing (to avoid “gray market” 

transactions), leveraging key wins, or coordinating call activities so that 

reps don’t bump into each other in the lobby are reasons to do this. Then 

how do you accomplish this communication without taking away more 

selling time than it’s worth 

For companies that have implemented CRM systems, this task should 

be much easier. Team members can see who their peers have 

previously sold to worldwide and what sales opportunities they are 

currently pursuing. Proposals, letters, collateral materials, business case 

justifications, presentations, and more can all be reviewed in this way. 

Essential to the system supporting this level of sharing are a few 





fundamentals. First, the system needs to enjoy a high adoption/use rate; 

that is, for this approach to work everyone has to be on board. Second, 

certain standard practices regarding data entry and filing need to be 

employed by the users or the system to make certain everyone can find 

the information they need when they look for it. Third, access security 

down to the field level is required to make certain only the right people 

(e.g., team members) are seeing these details. 

Another technology that is easier is the notion of opening a sales and 

marketing portal for a specific account or opportunity. Some companies 

are using this tool as an internal communication device as well as to 

reach out to prospects and customers. The system can alert appropriate 

parties when updates have been posted, provide analytics and reporting 

capabilities, and more. 

On-line collaboration is still another technology to support sales and 

other team members communicating with each other. For those parties 

able to participate in the on-line session, they can meet in a “virtual” 

room sharing their computer desktops and talking to one another live 

regardless of their geographic location. Since these meetings can also 

be recorded, those unable to attend the session can catch up by 

listening to the archived recording. 

Despite the somewhat anomalous results of the “world class” group, the 

other segments support the notion that fostering communication among 

other sales teams is worthwhile. 

Notes: 






Ability to communicate effectively with sales management 

Communicate Effectively with Sales Management 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

43.4% 

39.3% 

10% 

5% 

0% 

7.4% 

1.5% 

3.7% 


Key Findings 

! Some 

improvement over 

past years. 

! Technology may 

be contributing as 

the users become 

more comfortable 

and embrace it. 

! Manager’s 

coaching is key to 

improved results 

and may be an 

area for 

investment. 

Observations 

Even if sales teams are not consistently talking to one another, they are 

communicating better with their management. “Very good” responses 

are up in this area while “average” and below responses are all down. 

“Very good” respondents record 64% quota attainment while “dismals,” a 

small group to be sure, register 36%. Not surprisingly, turnover rates are 

equally dramatic: 18% voluntary and 15% involuntary versus 42% and 

22%, respectively. 

These two metrics have close correlation to communication with sales 

management. The primary reason cited by employees for leaving 

companies in all functional areas is a poor relationship with their 

immediate supervisor/manager. This situation is compounded in sales 

where 90% of departures have some compensation issue as well. The 

bottom line: When you are not making your number, nobody is happy. 

But does “communicating” help make the number If the communication 

is merely status and activity reporting, it may be somewhat useful, but it 

isn’t likely to be either priority or high payoff. And this isn’t the type of 

communication either the rep or manager should necessarily be planning 

their time around. 

This is a perfect fit for CRM. Sales reps can record their call notes, 

progress of sales opportunities and current location in the process, next 

actions, and other routine but non-urgent details. Managers can (and 

should) review these entries on a regular basis and prior to regularly 

scheduled conference calls or meetings. 





Further, if reps are consistently entering required data into the system, it 

is inappropriate for their manager to call for a “briefing.” “What’s 

happening with XYZ account” What’s happening! Read the file. That’s 

what’s happening! 

On the other hand, coaching is rare and is still key to improved 

performance (actually it’s the #1 key). If the manager is reviewing 

ongoing performance she’ll be able to spot trends, certain habits where a 

rep avoids certain high payoff activities in favor of activities in the rep’s 

comfort zone. Pointing out these behaviors and developing an action 

plan to pursue during a quarter will pay real dividends. 

Finally, we have a surprising insight from our recently completed 

Inside/Telesales benchmarking study. 

For every sales rep (inside or otherwise) that has ever lamented, “If my 

manager would just leave me alone and let me do my job…” there are 

now data to support them. Quota attainment and span of control were 

directly proportional! Note that 13+ had relatively fewer responses than 

the other groups, and that overall average quota attainment was 58.2%. 

These are the quota attainment figures by number of direct reports: 

1-3 reps to manager ─ 42% made quota 




13+ reps to manager ─ 65% made quota 

While companies appropriately continue to invest in training for inside 

sale reps, it appears there may be strong reason to consider training for 

inside sales managers. We are reasonably confident the same 

suggestion can be made to the field. 

Notes: 






What is your ability to communicate effectively with other departments 

Communicate Effectively with Other Departments 

50% 

45% 

47.0% 

40% 

35% 

30% 

25% 

29.1% 

20% 

15% 

10% 

5% 

0% 

14.2% 

2.3% 

2.5% 


Key Findings 

! Similar gains 

between 

departments as 

with sales 

management. 

! Similar sales 

results suggest 

there is still 

upside potential. 

! On-line 

collaboration is 

an area for firms 

to investigate for 

gains in 

productivity, 

workflow, etc. 

Observations 

A school superintendent asked a question of her students that was so 

compelling it bears repeating. “Do you know how little effort it takes to be 

above average” What we see is nearly half of all survey respondents 

judging their sales team’s communication with other departments as 

“average,” which suggests there may be little effort going into these 

communications. Is this warranted 

For this particular metric, “average” and “poor” performances have the 

same sales results (57%) by the most general measure of quota 

attainment. “Very good” is more than 10% better (64%). The defensive 

posture would be to ask how much effort it took to achieve this rating, but 

there is a more pressing imperative in business today. 

With buyers demanding that companies communicate with them when 

they want (24/7) and how they want (in person calls, web chat, e-mail, 

micro-sites, etc.), not keeping everyone in the loop means falling short of 

customer expectations. This is hardly a formula for success. 

And multiple touch points are to be expected with your best customers 

as the level of investment and involvement both companies make 

increases. Fortunately, technology is providing hi-tech solutions to this 

high-touch need. For example, there may be a rep working an 

opportunity with a major account and purchasing is grinding him for an 

additional discount. 

Typically, the discount has to go to the rep’s manager who then must 

negotiate the internal labyrinth to obtain the appropriate approvals. This 





is a time sink for everyone involved but necessary to maintain some 

standards and ensure that appropriate discounts are given when earned 

or approved. Unfortunately, many of these scenarios play out at the end 

of a quarter or year, and the logjam can eat up more time and resources 

than usual. Still, it needs to go through the process. 

One solution is an on-line form the rep fills out that is both tied into 

various internal systems (e.g., finance, legal, shipping, etc.) and has 

workflow and business intelligence built into it. Rather than a single 

paper copy winding its way through (or being hand carried at the 11 th 

hour) the various departments in serial fashion, the electronic form is 

routed in parallel to everyone that needs to sign-off. 

Normally, the regional manager can approve discounts, but if they 

exceed 15%, the request has to go to the CFO for approval. This 

intelligence is automatically applied and no time is lost with the form 

sitting on the wrong desk. The workflow engine recognizes that the 

account’s credit standing has to be reviewed before the CFO can rule 

either way – this is done before the form appears to the CFO for 

consideration. 

Another challenge for sales is simply identifying who they can call to 

approach a new account for the first time. A form of social networking 

application now looks inside companies to see who knows who outside 

the company and whether they have given blanket, limited, or restricted 

access to their contacts. This is proving especially useful following 

mergers and acquisitions where the combined company colleagues are 

willing to share but, heretofore, have had no way of doing so. 

Business is moving at Internet speed and, yet, there remains a human 

and business need for crisp, clear, and concise communication. In a 

highly competitive, professional, high payoff environment, “average” isn’t 

good enough. 

Notes: 






What is your ability to share best practices across the sales force 

Share Best Practices Across the Sales Force 

50% 

45% 

40% 

35% 

39.1% 

30% 

25% 

20% 

15% 

10% 

21.6% 

26.2% 

5% 

0% 

3.9% 

4.4% 


Key Findings 

! No longer among 

the worst 

performance 

metrics. 

! Gains translate 

into improved 

sales results. 

! High-tech, lowtech, 

and even 

no-tech solutions 

are out there but 

“do nothing” is no 

longer an option. 

Observations 

Last year, “sharing best practices” was second only to “forecasting” as 

the worst performance metric, and the year prior it won the race to the 

bottom. Times are changing and firms are cashing in on the nuggets of 

knowledge held somewhere within their organization – often in the heads 

of individuals. 

Senior execs in all functional areas have recognized that the answer to 

most questions and the solution to every problem are somewhere within 

their team’s reach. The challenges have been how to access the 

knowledge in a reasonably efficient manner and capture it before it leaks 

out of the corporate memory through departures (e.g., retirement, remote 

assignment, etc.) or defections (to the competition). 

Like many initiatives, corporate will and culture play a huge role in the 

ultimate success of sharing best practices. Do team members feel 

rewarded, recognized, or valued for sharing what they know Or do they 

feel vulnerable, ripped off, or replaceable having let others in on their 

personal “secret sauce” 

If the answer is unclear, the message to get going in this area isn’t. 

Quota attainment isn’t the only success measure, but it is obviously a 

key one, and it correlates directly here. While the average quota 

attainment across this survey’s entire population is 59% as it is for those 

who rate themselves “average” in this regard, it is 64% for those who 

rate “very good,” 54% for the “poor,” and 48% for “dismal.” 





The pattern is broken at “world class,” again averaging 59% but raising 

the question of whether at least some of these companies did not 

overrate their progress in this area over the past year. 

Regardless, we feel it is safe to say the “the jury is in.” Capture, store, 

and share knowledge/best practices or fall behind. 

As noted, we have seen companies take a variety of approaches to 

gathering and disseminating “best practices.” These include new hires 

shadowing experienced reps, recording what they say and their 

responses to challenges and/or questions, and consolidating all this 

information into aids (e.g., plastic laminated cards). 

Other companies have gone the sales portal route including this 

information in their intranet site. This approach often runs into the 

complaint that sales reps cannot readily find what they are after or being 

unable to access the company network from a remote location. 

The best of breed in this area is web-based solutions that continuously 

build a knowledge base, can be accessed from anywhere there is an 

Internet connection, and provide relevancy and user ratings (e.g., Was 

this answer useful). High-tech solutions also have the advantage of 

building in alerts, always having the most current version available, being 

more comprehensive (how many plastic cards can you really handle), 

and doing quick sorts/finds. 

Some systems have a viral success pattern where internal successes 

lead to higher and rapid rates of user adoption. Remember, even the 

best of these systems will not work in a culture that is closed, too fiercely 

contentious, or fails to motivate broad sharing of knowledge. 

Notes: 









Rate of Change in the Marketplace 









Rate of Change in the Marketplace Introduction 

This section explores the rate of change that is occurring in the marketplace from a number of 

perspectives: changes in the customer’s world, competitive activity, advances in the product line, 

etc. In addition, we assess the ability to keep sales teams current with the rate of change they are 

being forced to deal with. 

• Rate of Change in Customer’s Marketplace ............................................................ 134 

• Rate of Change in Competitive Activity................................................................... 136 

• Rate of Change in Breadth of Product Line Offerings ............................................ 138 

• Rate of Change in Complexity of Product Offerings............................................... 140 

• Rate of New Product Introductions.......................................................................... 142 

• Rate of Entry into New Markets................................................................................ 144 

• Rate of Overall New Sales Rep Hiring...................................................................... 146 






How would you rate the amount of change in your customer’s marketplace 

Change in Customer's Marketplace 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

33.8% 

37.0% 

15% 

10% 

5% 

0% 

Key Findings 

1.2% 

9.2% 

Decreasing No Change Increasing 

Modestly 

Observations 

Increasing 

Noticeably 

14.9% 

Increasing 

Significantly 

! Nearly identical 

numbers as in the 

past year. 

! This metric 

represents the 

area of second 

most significant 

change. 

! Companies are 

increasingly 

turning to 

technology to 

help keep pace 

with rampant 

change. 

Nothing is as constant as change, and that proves to be true in looking at 

the marketplace. 10% of reporting companies see things remaining 

steady or decreasing in their customers’ markets. The remainder see 

change continuing to increase. 

For sellers, change is generally positive as No Change equals No Sale. 

However, to know whether change is working for or against you, you 

need to know how you are positioned and how to position your offer 

relative to the changes impacting the buyer. 

Things start to get tricky when there is rampant and rapid change 

occurring. First, it takes a lot of time and energy to keep abreast of the 

change that is taking place. Second, this difficulty is compounded when 

trying to determine your value proposition in explaining where/how your 

solution helps the buyer deal with the change. 

To address the first challenge, companies are increasingly relying on 

technology and information providers to keep current. On-line 

information aggregators offer subscription services that integrate with 

CRM systems. These services typically scour thousands of sources 

(e.g., web postings, financial filings, press releases, etc.), store the 

information, and make it available based on user preferences. 

A major account manager may want to know everything about the 

account for which he/she is responsible. News items, stock movements 

and analyses, competitor briefs (both competitors of the account and 

competitors of the seller), and company announcements are just some of 





the items that might be flagged and appear daily on the rep’s home 

page. 

At the other end of the selling spectrum, an inside sales rep might be 

charged with following up and/or generating leads into hundreds of 

accounts. In our Inside Sales/Telesales study, companies reported reps 

spent 12% of their time researching prospects. This is significant when 

you consider it translates into one-hour in every eight-hour day! 

To offset this need, to stay abreast of current events, and reclaim a 

portion of this “corrupted” selling time, subscription services are 

providing information on demand. New in this area is “lead enrichment.” 

It not only works with information subscription services but also searches 

internal documents (both structured and unstructured) and saves this 

information for future reference. Without this last step, the work to gather 

profile and other information is lost. 

Notes: 






How would you rate the change in competitive activity 

Competitive Activity in the Marketplace 

50% 

45% 

40% 

35% 

30% 

25% 

34.6% 

33.4% 

20% 

15% 

10% 

5% 

0% 

Key Findings 

2.3% 

8.6% 


Modestly 

Observations 

Increasing 

Noticeably 

19.6% 

Increasing 

Significantly 

! “Significant” 

increases are 

down but 

“modest” and 

“noticeable” 

increases are up. 

! No apparent 

slackening of 

competitive 

activity overall. 

! Competitive 

knowledge and 

differentiation 

remain ongoing 

challenges. 

It’s a three-peat for Competitive Activity. For the third year in a row, this 

is the front runner among all of the change rates and, perhaps 

alarmingly, the rates of increase are still quite significant. 

“Significantly increasing” is down slightly from 22% last year, but this 

2.5% decrease did not move far down the scale. “Modest” and 

“noticeable” increases make up the difference while “no change” and 

“decreasing” remain constant. 

Here is the bad news: “Competition isn’t going away anytime soon. The 

good news is racing improves the breed.” Years ago, Enzo Ferrari said 

this and then built a world-class reputation of doing things better and 

attracting the best people to deal with competition. You can do the same. 

What you sell is becoming less a differentiator, and how you sell is 

becoming more important. In today’s global marketplace, product life 

cycles are compressing and price pressure is increasing as product 

exclusivity decreases (e.g., competitive knock-offs are becoming 

available more quickly than was historically true). This is not to say that 

innovative products and new releases are not essential, but they do not 

provide a sustainable competitive advantage. 

On the other hand, the data continue to support the fact that companies 

that execute well do well. Companies certainly can’t control their 

competitors, particularly if they make irrational moves such as initiating 

price wars, buying business, etc. They can, however, control their sales 

team’s focus, quality of process execution, level of activity, and 





communication with other team members – notably marketing. 

They also need systems and tools that support this high level of play. 

You will see in both the CRM and Sales Process/Methodology sections 

of this report that there are a myriad of vendors and multiple solutions 

that can be investigated. 

Your job is not to have your team do everything incrementally better. 

Your job is to determine the one or two high leverage points to do an 

order of magnitude and get these going. The competition is keeping 

busy, and all indications are they will continue to do so. 

Start your engines! 

Notes: 






How would you rate the amount of change in the breadth of your product line 

Breadth of Product Line Offerings 

50% 

45% 

40% 

43.0% 

35% 

30% 

25% 

29.1% 

20% 

15% 

10% 

11.8% 

12.0% 

5% 

0% 

Key Findings 

1.7% 


Modestly 

Observations 

Increasing 

Noticeably 

Increasing 

Significantly 

! Even greater 

increases in 

product line 

breadth. 

! Every category 

points toward 

greater need for 

sales to keep up. 

! “No change” and 

“decreasing” 

categories both 

down by onethird. 

You can now ignore everything we just said in the prior section about 

what you sell not being the key to success. Apparently, companies have 

been doing just that. Increases in product line breadth over the past two 

years (everything greater than “no change”) totaled 73% and 78% in 

2004 and 2005, respectively. This year “increasing” categories are 84%! 

At the same time, the status quo, doing what you have been doing, has 

decreased by one-third (down from 17% to 12%). This puts a burden on 

other groups (e.g., product marketing and training) to get practical, 

tactical information into the sellers’ hands and heads. This year, product 

training budgets are largely in synch in an effort to keep up. 

At the same time, companies are exploring new technologies to deliver 

product training and information in exciting ways. One example is a 

company that focuses on call center and inside sales reps. The 

traditional approach to training these teams is to block out an hour to a 

half-day to deliver the training. 

This approach has restrictions including taking all (depending on the 

team size) or portions of the staff away from the phones to attend the 

training. If conducted via the Internet, the session may be recorded and 

archived for review/refresher later, but this often means sifting through 

the entire one-to-four hour session. 

A novel approach is technology based and ties training into the call 

director system. Training can be delivered to inside personnel in one-tofour 

minute bites. This can be implemented between calls or during brief 





periods of 10-15 minutes when the reps go off-line for training. They 

never have to leave their desk/system environments and can pause the 

training and/or repeat it as the workload dictates. 

Non-traditional approaches to training field-based personnel are also 

being explored including distance learning, webinars with pre- and posttesting 

capabilities, and others. 

A national real estate company with 6,600 licensed offices worldwide 

uses webinars for agent/associate training. They offer 120 programs 

each month and are not concerned with the number of attendees. 

Previously, a minimum number of registrants were required to justify the 

facility cost, travel expense, instructor time, etc. to schedule a program. 

Last minute dropouts often translated into last minute class 

cancellations, and agents planning to attend or needing continuing 

education credits had to scramble to find other solutions. 

Today, if only one or two people register, the class is still run with a good 

deal of one-to-one attention. The instruction is recorded, and other 

students may view the recorded class and benefit from receiving nearly 

the same personal and detailed instruction. The company now delivers 

this diverse and comprehensive schedule of classes with a half-dozen 

full-time trainers instead of offering fewer classes with five trainers and 

125 training associates. 

These programs are available 24/7 and can be viewed at the individual’s 

convenience. In an increasingly global and connected business world 

and when reaching out to train/support channel partners has increased 

importance, the ability to transcend time zones and complete scheduled 

trainings are of high value. 

Notes: 






How would you rate the amount of change in the complexity of your products 

Complexity of Product Line Offerings 

50% 

45% 

40% 

35% 

37.0% 

30% 

25% 

27.1% 

20% 

15% 

10% 

17.7% 

12.4% 

5% 

0% 

Key Findings 

3.5% 


Modestly 

Observations 

Increasing 

Noticeably 

Increasing 

Significantly 

! Product line 

complexity 

continuing to 

increase. 

! The biggest 

movement in any 

category is “no 

change.” 

! Product training is 

up, but other 

methods are also 

being employed 

to help fill 

increasing 

demand on 

product 

knowledge. 

As noted in the previous section, product line breadth and complexity 

continue to grow unabated. Sales training investment is up in all areas – 

sales skills, product, etc. (see page 152). Given the expenditures in 

product training, things look reasonably synched up with the product line 

growth (see chart below). 

Product 

Training for 

Sales 

Breadth of 

Product Line 

Complexity of 

Product Line 

Still, in addition to companies’ clear commitment to training, they are 

exploring other ways to educate not only the sales force but the buyers. 

One technology we believe will gather substantial momentum in 2006 is 





the individual sales and marketing portal. It is of particular value for 

companies with broad product lines, complex products, and/or protracted 

sales cycles. It serves as a mechanism for helping them get to interested 

parties (both sellers and partners as well as prospects and customers) 

the information they need/want when they are ready to receive it. 

A software company in the healthcare industry has multi-million dollar 

opportunities that typically span several months to more than two years. 

In an effort to educate buyers, frame their thinking, and properly position 

the company’s offer(s), this vendor turned to individual portals. 

Says the company’s Vice President of Marketing, “We want to create a 

dialogue, add value so the prospect’s understanding of the category, and 

modulate the flow of information.” With long lead incubation periods and 

a broadening yet immature space, this software solution provider is 

leveraging technology to frame-up the early thinking about this complex 

product. 

At the same time, they use the same vehicle and much of the same 

content to get their salespeople and channel partners up to speed. 

Notes: 






How would you rate the amount of change in new product introductions 

Rate of New Product Introductions 

50% 

45% 

40% 

43.4% 

35% 

30% 

25% 

20% 

15% 

17.5% 

23.8% 

10% 

5% 

0% 

3.1% 


Modestly 

Increasing 

Noticeably 

8.7% 

Increasing 

Significantly 

Key Findings 

! Rate of new 

product 

introductions has 

not let up. 

! Combined with 

breadth and 

complexity 

increases, getting 

the word out on 

new products 

remains a 

significant issue. 

! Other means of 

successfully 

launching 

products continue 

to be explored. 

Observations 

The rate of new product introductions is up this year over last year. Firms 

seeing “no change” in rate are down 4.5% from last year while those 

seeing “noticeable” increases are up by that same amount. Companies 

are launching new products at an accelerating rate to grab market and 

wallet share, but creating new products is not enough. When Lou 

Gerstner was brought in to get IBM moving again, he said, “We (IBM) 

don’t launch products – they escape.” 

Looking at companies’ abilities to launch new products (see page 116), 

44% of the respondents rate themselves as “average” in ability to launch 

new products, 31% as “very good,” and 4% as “world class.” 

But are they Does it matter whether they are competent in launching 

products or are they merely incompetent and let them “escape” If we 

look at quota attainment as one key indicator and recognize that quotas 

are up substantially this year over last (see page 22), there are some 

dramatic differences. 

Firms that report “noticeable” or “significant” increases in the chart above 

but also rate their ability to launch products as “dismal” or “poor” 

averaged 56% quota attainment – slightly below the general population’s 

59% this year. 

Firms with the same introduction rates (e.g., “noticeable” or “significant”) 

but “world class” in their launches averaged 20 points higher with 76% 

quota attainment. 





This clearly refutes the engineering-driven argument that “our products 

speak for themselves.” This can be true, but in an increasingly noisy and 

crowded marketplace (see Rate of Competitive Activity on page 136), 

those products will not be heard. What is often referred to as the Field of 

Dreams approach, “Build it, and they will come,” is not panning out for 

the companies that do not effectively get the word out. 

An impressive number of companies are not only getting “ignition” but 

also achieving “launch.” Over the next several months we will be 

interviewing many of these companies to better understand what they do 

to be “world class” with their new product introductions. If you are 

interested in receiving these in-depth case studies, make sure we have 

your current e-mail address by sending it to info@csoinsights.com. 

Notes: 






How would you rate the amount of change in entry into new markets 

Rate of Entry into New Markets 

50% 

45% 

40% 

41.1% 

35% 

30% 

25% 

20% 

15% 

23.4% 

21.1% 

10% 

5% 

0% 

Key Findings 

2.7% 


Modestly 

Observations 

Increasing 

Noticeably 

7.2% 

Increasing 

Significantly 

! Again, no let up in 

the demand to 

stay current as 

companies 

expand into new 

markets. 

! Companies not 

seeing an 

increase in this 

area are down 

5% to below a 

quarter. 

! This continuing 

movement likely 

means continuing 

emphasis in 

channel 

development. 

Jack Welch made headlines in many ways while at the helm of GE, but 

two seem especially apropos. The first was his dictum that whatever 

businesses GE was in, it had to be number one or two in the market. If it 

ranked lower, it would abandon that area for one in which it could more 

successfully compete. 

Second was the charter to Find More, Win More, Keep More. Companies 

seem to be taking to heart the “Find More” part of this philosophy with 

their moves into new markets. The chart above is referring to the rate of 

entry which means even those companies experiencing “no change” in 

rate (down to 23% this year from 28% last year) could still be entering 

new markets as frequently as they were a year ago. 

Beyond the challenges outlined in the previous metrics of keeping the 

sales force up to speed, creating dialogue with prospects, and not 

overwhelming buyers with product information, entering new markets 

also require market expertise. Specifically, what are the challenges in 

this space, who are the thought and opinion leaders, and how do 

companies add value as the new kid on the block 

Since these are not typically questions with pat answers, the approach 

that continues to exhibit growing momentum is developing channel 

partners that have relationships and/or expertise already in place. 

The key to success in growing, whether organically with your own direct 

salespeople, with partners, or through acquisition (e.g., Oracle buying 

Siebel for $6B and Google buying 5% of AOL-Time Warner for $20B) is 





to shift gears without too much grinding. In this case, sooner is better 

than later, although later is more often the case. 

And key to getting things functioning smoothly is having infrastructure in 

place. Cisco was a marvel at this in the 90’s, but it got so big it is hard to 

tell how well it is working the process today. Another successful, but little 

heralded company in this regard is Danaher Corporation which owns 

60+ operating companies including Fluke Corporation, Craftsman Tools, 

Pacific Scientific, etc. 

Every company in the Danaher portfolio is run according to the Danaher 

Business System (DBS). It is a clear recipe for how they expect the 

company’s continuous improvement philosophy of Kaizen to be 

implemented and accountably reported. With these processes fully in 

place and operational for years, they are introducing new technology 

systems to support and enhance the processes. 

Another area to consider is web-based systems that allow enhanced 

information sharing among otherwise disparate systems. Partners can 

participate and access information via an extranet, and Partner 

Relationship Management (PRM) has continued to be one of the 

significant areas under the ever growing CRM umbrella. 

As you explore new markets or as they are thrust upon you, be open for 

the synergies, but stay focused on leveraging processes that support 

sales, marketing, and customer communications and invest in 

technologies that sustain these. 

Notes: 






How would you rate the overall rate of new rep hiring 

Rate of Overall New Rep Hiring 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

32.4% 

38.8% 

15% 

15.0% 

10% 

5% 

0% 

Key Findings 

3.2% 


Modestly 

Observations 

Increasing 

Noticeably 

5.5% 

Increasing 

Significantly 

! Firms expecting 

“no change” in 

this area have 

decreased 10%. 

! In general, the 

market for top 

sales talent will 

remain robust 

throughout the 

year. 

! Continued 

strength in the 

economy can 

only put 

increased 

pressure on 

identifying and 

attracting new 

reps. 

Last year we warned CSOs of their impending Perfect Storm: bullish 

competitive hiring, increased competitive activity, and long ramp-up 

times for full rep productivity. Here is this year’s warning: Take a lesson 

from Hurricane Katrina. 

Every dimension of last year’s projection has elevated this year. 

Companies are looking to grow their sales forces even more in the next 

12 months than they anticipated in the past year (e.g., planning to grow 

by more than 30% in size, 11.3% this year vs. 10% last year), 

competitive activity has not let up, and ramp-up times are longer. Oh, 

and if you haven’t read that part of the report yet, quotas are up – way 

up. 

What’s a CSO to do The New Orleans disaster taught that $85M in 

prevention is worth $400B in cure. Now is the time to assess your team’s 

strengths and areas for improvement. Identify the top three barriers to 

their success and put a 90-day plan in place to remove each of these. If 

you haven’t completed them in three months, revise the plan, and renew 

your efforts. When you have cleared each of the top three, repeat. 

This is about identifying clear priorities and initiating measurable action 

plans. Doing this will endear you to your sales force and show them you 

really are worth walking through walls for. 

Concurrently, start an ongoing program to identify and groom potential 

new hire candidates. Don’t look for the next person who can walk on 

water. There are very few of them around, and they seldom are able to 





replicate this feat when they join a new team. Instead, look for individuals 

who have enthusiasm for their customers and passion about their own 

growth and development. 

Looking forward, the first area CSOs plan to address is improving and/or 

revising their lead generation programs (see page 218). Second is 

revising their sales process. 

Okay, you have assessed and shored up your existing team and 

infrastructure and still need more good troops. In addition to your own 

networking, trusted headhunters, and websites, there are new 

approaches to cast your net further, wider, and quicker. 

Companies are increasingly adding psychological profiling to their 

recruiting regimen. Think Myers-Briggs for sales reps. Profiles are built 

from your existing successful reps and then applied as a template in the 

consideration of new hires. 

Technology is allowing distance interviewing and screening, but why wait 

until you are under the gun You can use these same systems to create 

the dialogue with prospective candidates now and have a little breathing 

room. 

Finally, if you are currently under pressure, there are new recruitment 

firms that guarantee 10 candidates within 10 days for a fixed and 

surprisingly low fee. The key is to have very clear specs of what you 

want them shopping for. 

One final caution – Hurricane Rita followed Katrina, and there’s another 

hurricane season right around the corner. 

Notes: 









Sales Methodology Introduction 









Sales Methodology Introduction 

This section focuses on how much companies are investing in training their sales reps, how many 

companies have adopted a formalized method for selling, how the sales methodology was developed, 

and what impact that approach is having on the performance of their salespeople. 

• Annual Investment in Training Per Sales Rep......................................................... 152 

• Amount of Sales Skills Training Conducted............................................................ 154 

• Amount of Product Training Being Conducted....................................................... 156 

• Amount of Customer’s Marketplace Training Being Conducted............................ 158 

• Amount of Purchase Justification Training Being Conducted ............................... 160 

• Amount of Sales Management Training Being Conducted..................................... 162 

• Adherence to Use of Sales Methodology Assessment........................................... 164 

• Impact of Sales Methodology on Performance ....................................................... 166 

• Type of Sales Methodology Deployed ..................................................................... 168 

• Sales Methodology Adherence Percentage............................................................. 170 

• Attitudes Toward Recommending Sales Methodology Vendor.............................. 172 






How much do you invest annually in training per sales rep 

Annual Investment in Training per Sales Rep 

>$5,000 

11.7% 

Do Not Train 

4.5% 


More sophisticated support systems become out of reach for the same 

reason. If reps are barely staying long enough to become familiar with 

the basic sales tools, how will they be able to take advantage of a 

proposal system that generates detailed and compelling business 

arguments, a configurator that juggles hundreds of product variables to 

produce the most accurate bid, or higher level CRM functions beyond 

basic contact management 

Think of this analogy from flying. A student pilot flies the most bare 

bones aircraft possible. There are few aids and only the most essential 

gauges. A 20-year commercial airline captain flies a plane with so many 

systems and built-in redundancies that today’s modern airliners can 

literally takeoff and land by themselves. 

The inexperienced pilot who needs the help is stuck with little while the 

experienced veteran has every possible assistance available. Yet, if you 

put the student pilot in the cockpit of a new Boeing 777, he would be 

lucky to find the switch to turn on the taxi lights. 

This is the situation for the firms investing little in their sales personnel 

while turning over plenty of staff. Meanwhile, across town (or halfway 

around the globe), a competitor’s reps are taking advantage of all these 

aids. 

As CSO, you are head of the Pilots’ Union. 

Notes: 






How is your current level of sales skills training changing 

Amount of Sales Skills Training 

50% 

45% 

40% 

40.0% 39.9% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

Key Findings 

2.7% 

Decreasing 

Significantly 

! “Increasing” 

category is up 

nearly 20%. 

! Companies see 

the need to invest 

in human capital. 

! Systems can 

provide a “closed 

loop” to increase 

training’s 

effectiveness. 

5.4% 

9.9% 

Decreasing No Change Increasing Increasing 

Significantly 

Observations 

How much is invested in sales training was the prior metric; how much of 

training is directed at sales skills is dealt with here. Half of the companies 

are increasing their skills training – an important step in the right 

direction. In the past, sales skills were trumped by product training. 

As you will see in the next metric, this is still an area of continued 

investment. Companies are increasing their training efforts on a broader 

basis to include more skills training. A balance between skills and 

product training reinforces the shift to solution selling while maintaining 

product knowledge. 

Reinforcing the use of skills training is another important area to 

consider. Having conducted hundreds of training sessions, we often 

hear, “If our reps pick up one new idea from this course, it will be worth 

it.” The problem is not that reps do not pick up a good idea. The problem 

is that they put it down within a week or two. 

Actually implementing new ideas and approaches into day-to-day selling 

activities requires a much greater effort. Fortunately, CRM and other 

systems can support this work and companies’ growth toward Level 4 

implementation (see page 164 for definition). In addition to scheduling 

reps for training, companies are conducting pre- and post-training 

testing. These are not grueling exams but do help calibrate skill levels 

upon entering a program and retention levels following. 

This testing is analogous to writing a book report. If you finish a book and 

go on to the next, you will remember some points but also forget many. If 





you write a book report, you may summarize what the author was saying 

and one or two ideas that had the most significance to you and why. By 

completing this exercise, you will remember more over time and have a 

resource to reference as a quick reminder. 

Integrating concepts and content into your CRM system can operate in 

much the same way. Sales process steps are a common field in most 

CRM applications. Being able click on a step to bring up specific actions 

(on both the part of the seller and the buyer) is useful. Clicking on a 

specific step and having relevant samples or best practices shown is 

even more helpful. 

For example, Step 3 in Company Y’s sales process is Discovery. 

Clicking on this step brings up: Determine business pain, project 

timeline, and budget. As is usually the case, the process tells the rep 

what to do but not how to do it. The assumption is that they are 

professionals and already know how to do this and/or they do this 

consistently and correctly anyway. Of course, neither is generally true. 

Instead, a rep could click on the action itself and the following come up: 

There are four question types to employ in Discovery: 

Confirming – A client of ours was experiencing problems with (state the 

problem: account churn, high cost of sales, etc). Is this a challenge for 

your company right now 

Informing – Can you help me understand in more detail, your biggest 

current challenges and what difficulties they are causing 

Feeling – How do you feel (state the business problem) is effecting you 

or others in overall performance 

Acting – If (state the problem) could be addressed with our solution, 

would you introduce me to others to help move this solution forward 

This type of integration and reinforcement can be applied throughout the 

sales process and within the application a rep “lives in” to increase the 

use of concepts from training. Behind the scenes, the system should 

also be able to capture metrics to further enable individual coaching and 

provide a closed loop system for ongoing improvement. 

Notes: 






How is your current level of product training changing 

Amount of Product Training 

50% 

45% 

49.0% 

40% 

35% 

34.8% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

Key Findings 

Decreasing 

Significantly 

1.1% 4.4% 

9.0% 


Significantly 

Observations 

! Product training 

increasing for the 

third straight year. 

! Product training 

still receiving 

more attention 

than sales skills. 

! Training is 

challenged to 

keep pace with 

rates of change. 

As noted in the Rate of Change section, product training seems well 

timed to accommodate increased product complexities and product line 

breadth. As these thresholds continue to move up and out, the quantity 

of details to master increases exponentially. Training can address a 

portion of this, but systems and other support services are increasingly 

being used to fill the widening gap. 

In many cases, product changes are evolutionary – built upon existing 

technologies rather than entirely new approaches. Training sessions 

focus on updates and enhancements, often developed in response to 

customer comments and suggestions brought forward by the sales force. 

Keeping pace is a serious challenge but typically doesn’t require starting 

from ground zero. 

The head of training for a specialty chemical company described her 

view of this challenge. “Our reps call on everyone including Ph.D.s in 

customer labs, product managers, and purchasing. We don’t want them 

to get into detailed discussions with chemists, but they have to be able to 

answer basic questions to earn and maintain their credibility. In these 

situations, we are seeking a balance for our reps between getting in the 

door and getting in over their heads.” 

With large territories and diverse customers, it isn’t possible for the sales 

rep to know everything everyone is going to ask. The company 

segments the world by types of business such as pharmaceuticals, food, 

personal care, etc. They then look for common themes to focus their 

training upon – How do customers use their products and/or determine 





this use When do they appropriately call in more product specific or 

technical resources and what does the rep need to know before doing 

so What differentiates the company’s offerings or capabilities from 

those of competitors 

With these kinds of disparities, product training tends to specialize from 

group to group and provides a level of skill that equips the reps to 

recognize opportunities from non-starters. Beyond this, there is more 

business training to help reps recognize solid potential from possible 

promise. We look at this in the next metric. 

Notes: 






How is your level of customer’s marketplace training changing 

Amount of Customer's Marketplace Training 

50% 

45% 

48.7% 

40% 

35% 

30% 

33.6% 

25% 

20% 

15% 

10% 

5% 

0% 

Key Findings 

1.9% 

Decreasing 

Significantly 

! Marketplace 

training mostly 

unchanged from 

last year. 

! “Significant” 

category reduced 

by nearly half 

from prior year. 

! Other 

approaches, 

namely channels, 

may be relied 

upon to address 

marketplace 

knowledge. 

6.0% 

4.7% 


Significantly 

Observations 

Rate of change in the customer’s marketplace (see page 134) ran a 

close second for highest/most change overall. Keeping current in a 

constantly morphing space is its own challenge. The effort is 

compounded when charged with favorably positioning a company’s 

products/services relative to the changing scene. 

The chart reveals macro views while hiding specifics. For example, it is 

clear that companies “increasing” their investment in customer 

marketplace training outnumber those “decreasing” their investment by 

more than five to one. What is not known is what this means for a 

particular company. 

For example, Company A may have invested heavily the past year or 

two in increasing the capabilities of its sales reps regarding marketplace 

issues and changes. This year it is shifting resources to a higher priority 

area resulting in a decrease in customer market place training 

investment and placing it far to the left in the chart above. 

Conversely, Company B, which has been competitively behind Company 

A for the past year or more, is now investing in this area which puts it to 

the right of center in this metric’s chart. 

What we can say is that the race is on and every indication is that there 

will be no let up in the changes occurring or the pressure to stay abreast 

of these. 





How you decide to address this issue must be weighed against your past 

expenditures in this area and current high priority initiatives. Whether this 

will be an area deserving attention is not really a question. 

However, another way to approach this challenge is to partner with firms 

already up to speed. Rather than trying to be all things to all parties at all 

times, many firms are looking to channel partners to address specific 

and volatile markets. Think manufacturing in China, personal computers 

in Eastern Europe, or consulting services in India, and you will need 

more than a program to keep up with the players. In fact, any program 

you might have will be out of date by the time it is printed. 

There are many examples in your own part of the world. Rather than 

investing in becoming an expert, you may elect to identify experts and 

explore partnering discussions. 

Notes: 






How is your level of purchase justification training changing 

Amount of Purchase Justification Training 

50% 

50.6% 

45% 

40% 

35% 

30% 

25% 

28.5% 

20% 

15% 

10% 

5% 

0% 

1.7% 

Decreasing 

Significantly 

7.1% 

5.5% 


Significantly 

Key Findings 

! New Metric: 

With increased 

scrutiny of 

purchases, onethird 

of 

companies are 

investing in this 

area. 

! One-half of 


anticipate “no 

change” in their 

level of training in 

this area. 

! Companies 

“decreasing” in 

this metric may 

already have 

seen return on 

their investment. 

Observations 

As with the prior metric, this chart may be a trailing rather than a leading 

indicator. When we look at firms that are “increasing” or “significantly 

increasing” their training in purchase justification ability, we see a 

cumulative 59% quota attainment. This matches the survey’s overall 

quota attainment of 59% as well as those indicating “no change” in the 

chart above. 

Companies to the left, “decreasing” or “significantly decreasing” their 

investment, attained 62% quota achievement. It is our sense that these 

firms are not so much giving up in this area but, rather, that they have 

already invested and are reaping the rewards of having done so. 

Two years ago an on-line learning company had a “Business Case 

Toolkit” for its sales reps. The rep filled in specific data fields, and the 

application did much of the heavy lifting associated with building a 

justification including an ROI analysis, references, relevant business 

issues, and their solution’s value proposition relative to these. The 

creation of this tool was in direct response to the sales force being 

repeatedly requested to generate meaningful business arguments and 

not simply feature/benefit data dumps. 

As stated in last year’s report, unless you are working for Google or 

another leading edge firm whose technology has gained widespread 

market acceptance, you are more likely to need to justify the purchase of 

your company’s goods/services. These justifications will be little swayed 

by whiz bang performance claims and largely influenced by documented 





case studies or similar reference materials. Industry specific, equal 

magnitude and complexity, and proven results are typical criteria. 

If you are with a start-up company, you already know the value of your 

beta sites and the importance of making your early customers 

successful. Also, start-ups tend to be in areas where product innovation 

carries more weight. 

If you are in a more established company and/or market, the Innovators 

and Early Adopters are well in your past and the Majorities (both early 

and late) and Pragmatists will be pressing you and your competitors for 

price and other concessions. If you haven’t already stepped up to this 

reality and begun to leverage other market-relevant value propositions, it 

would be good to be among those respondents on the right side of the 

chart. 

Notes: 






How is your level of sales management training changing 

Amount of Sales Management Training 

50% 

45% 

47.4% 

40% 

35% 

30% 

25% 

28.5% 

20% 

15% 

10% 

5% 

0% 

2.6% 

Decreasing 

Significantly 

7.0% 

5.2% 


Significantly 

Key Findings 

! New Metric: 

One-half of firms 

see “no change” 

while one-third 

expect to 

increase training 

for sales 

managers. 

! Other data 

suggest this is an 

area that may 

warrant 

significant 

attention and 

investment. 

! This should be a 

priority and a high 

leverage area of 

improvement for 

all companies. 

Observations 

This is among the most exciting new measures this year and will likely 

provide some provocative insights. First-line sales management is where 

the “rubber meets the road” in implementing the corporate and 

management initiatives that can be full of sound bytes but empty on 

putting them into action. It is also a place that has received little fanfare 

and less investment. 

Back in the years when reps were clumped in big company offices, they 

had a chance to be mentored and learn from the experiences (i.e., 

mistakes) of veterans. The same was true of new sales managers. Often 

there were entire management training programs to which new 

managers would be sent – sometimes for several weeks (we’re not 

making this up!). 

Fast forward to today’s sales reps who are likely to be operating from 

their homes or shared executive office suites in cities far removed from 

their direct manager. This long-distance relationship can be 

overwhelmed by administrative details and reporting, countless 

conference calls, and more focus on compliance than performance. 

Unless they are carefully managed when face-to-face days are arranged, 

the schedule can be jammed from picking up the manager at the airport, 

racing through joint calls, and returning to the airport. While everyone 

can benefit from coaching, if it is done haphazardly, the value can be 





minimal. 

Unlike the prior metric where decreased investment in the coming year 

appears to have followed years of reasonable levels of investment, this 

does not appear to be the case with sales management training. 

Companies anticipating “no change” in their amount of sales 

management training averaged 58% quota attainment with 36% total rep 

turnover. The most common manager (34%) manages 4-6 reps followed 

by 7-9 reps for 19% of companies in this segment. 

Companies “decreasing” or “significantly decreasing” sales management 

training may realize a false economy. Their numbers coming into the 

year are 56% quota attainment, 51% combined turnover, and an average 

span of control (33%) of 7-9 reps followed by 29% managing 4-6 reps. 

The “increasing” and “increasing significantly” segments attained 64% of 

quota with 36% turnover, and similarly, 32% of these companies average 

7-9 reps per manager followed by 28% with 4-6 reps. 

CRM systems, e-mail, on-line collaboration, distance learning, cell 

phones, instant messaging, PDAs, etc. are tools that can be used in 

support of but not replacements for meaningful coaching/feedback. 

This isn’t just cheerleading. The effective sales manager will leverage all 

of the technology available but will also be process oriented, operate 

within a mutually understood framework (e.g., clearly communicated 

expectations), and coach behaviors while monitoring results and other 

performance metrics. 

Notes: 






How would you describe your adherence to the use of a sales methodology 

Adherence to Use of Sales Methodology 

Level 4 - 

Optimized 

13.8% 

Level 1 - None, Ad 

Hoc 

16.0% 

Level 3 - 

Structured 

24.3% 

Level 2- Informal 

45.9% 

Key Findings 

! Every level has 

improved at the 

expense of Level 

1. 

! Companies are 

getting past 

simply giving “lip 

service” to 

process. 

! Sales process 

and CRM are 

continuing to 

combine to 

provide a potent 

combination. 

Observations 

Briefly, Level 1 firms are anti-process, though what they really lack is a 

single standard process. They are strictly ad hoc with everyone doing 

their own thing their own way and often have as many sales processes 

as sales reps. Being Level 1 does not mean a company is not 

successful, but it does mean it is unpredictable. 

Level 2 firms have defined a sales process and even exposed their 

sales reps to it, but the implementation stops there. Sales reps are 

expected to use the process, but its use is neither monitored nor 

measured. As can be seen above, this describes nearly half of all firms. 

Level 3 firms have gone in the opposite direction and strictly enforce the 

company’s sales process even if it is old and has not been updated to 

reflect current or recently changed market conditions. Level 3 firms 

typically do monitor use of the process, sometimes religiously so, but fail 

to adapt or modify it with market and/or sales rep feedback – an 

approach increasingly susceptible to miscues and missteps in a 

constantly changing market. 

Level 4 firms have a process, monitor, and provide feedback on reps’ 

use of it, and proactively modify it to changing market conditions. As you 

can see above, Level 4 firms are few. When combined with CRM, these 

firms become formidable competitors. The extent to which this 

combination distances this group from the others was detailed in a white 

paper we published in 2005, and it will be updated this year. For a free 

copy send your request to info@csoinsights.com. 

Even without CRM, looking at these levels is instructive. As every CSO 

knows, putting a sales team through training is not the same as a sales 





team putting sales training to work. Pfeffer and Sutton made a big splash 

in 2000 when they wrote The Knowing-Doing Gap. They chronicled what 

CSOs have said for years, “It’s not that my people don’t know what to do. 

It’s that they don’t do what they know!” 

Why 

Unfortunately, the answer lies more at the senior than at the rep level. 

Have you ever seen this happen At a sales kickoff meeting or sales 

training event held early in the year, the CXO gives a stirring speech, 

talks about sales process, going the “extra mile” to meet the customer, 

etc. Nine to 10 months later the company is behind plan, and people are 

worried. The same CXO gets up and offers this incredible piece of 

coaching: “Make it happen.” 

Two simultaneous messages are transmitted in this brief command. 

First, never mind what was said before, here is what matters. Second, 

sales process, the training program, and going the “extra mile” must not 

make it happen. If they did, the CXO would be reinforcing all of the items 

covered in January. 

And so it goes. Veterans sit in the back of the room and play good 

soldiers during the workshop exercises. They do whatever they want 

throughout the year and know when the chips are down, management 

will abandon these concepts, forms, and high flying ideals faster than 

you can say Harriet Miers. 

Over the past year, more companies have heard the message. Level 1 

firms declined by more than one-third from 25.4% of last year’s 

population. Level 4 firms are up 10% over last year but are still in the 

minority. 

Level 1 companies turned over reps almost twice as fast with 45% 

combined turnover (voluntary and involuntary) versus 27% for the Level 

4 companies. Who says reps won’t operate within a structured 

environment Reps will work and stay working where they have the best 

chance of success – and where they feel their success is best 

supported. 

For more on this topic visit our web site (www.csoinsights.com) to 

download the article: And the Word Was Process. 

Notes: 






If using a sales methodology, what impact is it having on performance 

Sales Methodology Impact on Sales Performnace 

Do Not Know 

Negative Impact 5.4% 

1.3% 

No Impact 

6.7% 

Significantly 

Improves 

34.1% 

- 

Improves 

52.5% 

Key Findings 

! Essentially no 

change from last 

year. 

! For a second 

year respondents’ 

impressions are 

positive. 

! There remains a 

gap between 

methodology’s 

perceived impact 

and process 

implementation. 

Observations 

With an average quota attainment across the entire survey population of 

59%, a strengthening economy throughout the entire year, and nearly 

90% of respondents saying their sales methodology has improved their 

performance, one can only imagine what the results would have been 

with little or no training. CSO Insights believes in training and, yet, we 

feel the majority of its potential impact is lost because it is not reinforced 

and enforced. 

Three stages of a project are: Inspiration, Implementation, and 

Completion. In training, everyone has seen the Inspiration stage. A 

program is launched with heartfelt speeches and endorsements. Almost 

everyone is inspired by being exposed to new ideas, and it is exciting to 

be part of a new program. Getting people excited is the easy part. 

Implementation is where the real work is done. It requires not just 

exposing people to new ideas but using the ideas in regular daily 

practice, measuring use, monitoring performance, and coaching 

improvement. Growth doesn’t happen overnight. Mastery comes from 

staying the course and keeping focus over time. 

While 88% of the firms are positive about their training, only 14% have 

attained Level 4 use. This indicates there are still tremendous upside 

and even greater returns from training investments than most companies 

are realizing today. 

Completion is the reward for embarking on a project and doing the 

grinding work of implementation. Completion is what “better” looks like in 

the mental movie the leader envisioned early on. Completion looks good 





on everybody. And the really good news about sales methodologies’ 

impact is that completion can be ongoing! 

The notion of continuous improvement says there is even more 

available. Once you have a learning culture established, reinforce it with 

ongoing coaching and support. When enforced with enabling systems, a 

virtuous cycle is in place for continuous improvement. And why stop at 

Level 4 Yours may be the first firm to discover there’s a Level 5 or 6 

and all the results and rewards that could yield! 

If you are in the super majority represented in the chart, know that the 

positive impact of your training is a great start and use it to build upon. If 

you are in the “negative” or “no impact” segments, evaluate how the 

program was launched and how/whether it was implemented. You may 

find there are pieces you can pick up that will still make a contribution to 

your team’s performance. 

Notes: 






What type of sales methodology have you deployed 

Type of Sales Methodology Deployed 

Commercial 

Offering 

51.4% 

Internally 

Developed, 48.6% 

Key Findings 

! Commercial 

programs have 

regained half of 

all deployments. 

! No dominant 

player among 

commercial 

packages. 

! “Build versus buy” 

decision still very 

much in play. 


differences are 

not where 

expected. 

Observations 

Although commercially developed sales programs have come back a bit 

in the past year (from 45.6%), the market leader is still internally 

developed programs. No single vendor held a commanding market share 

and, in fact, the sales training market continues to be filled with 

numerous small companies. More than 50 vendors were specifically 

named by respondents as well as many companies that use a 

combination of multiple vendor programs. 

In addition, many corporate trainers and sales leaders have been 

exposed to one or more commercial programs over the years – some 

are even certified in these programs. When these individuals move to a 

new company, it is not uncommon for them to develop their new 

company’s training from the best concepts culled from multiple programs 

or blended with key concepts staff at the new company have found 

effective over time. 

This raises the ongoing question: Build or buy 

“We can build and deliver our own program better and cheaper than 

buying it from one of the training companies.” Sound familiar This is the 

logic underlying many “build versus buy” decisions. How does it play out 

with respect to sales training 

Not as you might think from a performance standpoint. The “better” part 

of the equation is tied more closely to the adoption rate of consistent 

users (covered in more detail in the next metric). 

! 

But are internally developed programs “cheaper” 





Of course it depends on how you account, but the rough overall figures 

do not seem to support this assumption. Comparing the amount spent 

per sales rep on training each year: 

Internal 

Commercial 



What percentage of your sales force regularly uses your sales methodology 

Would you recommend your sales methodology vendor to others 

Sales Methodology Adherence Percentage 

90+% 

13.2% 


commercially developed. 

Since this is a new metric, we feel compelled to repeat an anecdote and 

suggestion from last year’s report. We had this exchange with a sales 

rep prior to a presentation we were giving at his company’s sales 

meeting. A year prior he had attended a formal sales training program. 

Sales rep: “Yeah, that program is great. Really powerful. In fact, the only 

time it doesn’t work is when I don’t use it!” 

CSO Insights: “That’s quite an endorsement. How often would you say 

you use the principles you learned in the program” 

Sales rep: “Uh, maybe half the time.” 

Think about that for a moment. If it works every time the rep uses it, why 

wouldn’t the rep use it all of the time Does he not need a win every 

time Very unlikely. 

Absolutely likely, though, is that the sales rep lacks the discipline and/or 

positive reinforcement to use the tools every time. Just as the favorite 

sales process for reps is “Demo, Quote, and Hope,” the favored 

approach to implementing a formal methodology is “Invest, Suggest, and 

Depressed.” 

You can do better. When you schedule training for your sales team, 

instead of reviewing the launch plans and hearing the great testimonials, 

follow Stephen Covey’s advice, “Begin with the end in mind.” 

Imagine in your mind’s eye what successful and ongoing implementation 

will look like. See your managers fluent in whatever methodology you 

select and actively coaching your reps through it. Think about the 

reporting you want, not the reports you get. Also, consider which metrics 

will tell you how the process is going, where the choke points/bottlenecks 

are, and how the methodology in which you will be investing will help 

pinpoint areas for improvement on an ongoing basis. 

Now, with this vision clearly before you, make it so! 

Notes: 






Would you recommend your sales methodology vendor to others 

Recommend Sales Methodology Vendor to Others 

Unlikely 

11.4% 

Never 

1.9% 

Absolutely 

32.0% 

Somewhat Likely 

25.9% 

Very Likely 

28.8% 

Key Findings 

! Significant 

increase in 

positive ratings. 

! Results track with 

but also trail 

actual sales 

performance 

figures. 

! Positive ratings 

vary along with 

results and 

ratings among 

various vendors. 

Observations 

As overall performance increases so, too, do the favorable feelings 

regarding the various training programs companies invest and invite in. It 

is interesting that favorable ratings do not always track with positive 

results. 

For example, the companies that say they would “absolutely” 

recommend their vendor to others actually have significantly sub-par 

performance across the boards. It is possible, though unlikely, that all of 

the companies in this group were so far down that even sub-par 

achievement would garner rave reviews. More likely, there was no 

objective success measure in place before the training and no 

consistent, disciplined follow-up afterwards. But it was a good training 

event – well received, positive evaluations, so “absolutely” we would 

recommend this vendor to others. 

This is actually unfair to everyone involved, including the current client 

company, the training company, and the prospect company checking 

references. 

For starters, the success of an “event” is easy but does not have much 

impact. Participants come to a program, are exposed to new or old but 

under utilized ideas, and are re-energized to begin using them (see 

“Inspiration” stage, page 166). Two or three months later, most of the 

excitement is gone as is any effort to rigorously apply the concepts. 

The chart depicts this “Event Effect” phenomenon. 





Informal Sales Operating Environment: 

Traditional Training 

Salesforce / Region / District 

Performance Effectiveness 

average 

non-sustained 

performance impact 

Training Event Effect: 

without ongoing coaching and 

formal feedback there is little 

lasting impact 

average 

Time 

If you can relate to this chart and want to get past the “feel good” or 

“smile test” training event to actual improvements, the onus is on you as 

CSO. Your consistent and appropriate use of the sales process terms 

and knowledge of its steps, analysis of opportunities against it, and 

understanding of it are key bricks in the foundation of improvement. 

If your approach to calls is to ask, “What are we doing here today” and 

to opportunities you ask, “What is it going to take to do this deal” – you 

are relegating training to event status. 

Sure, you’ll be able to point to the training you invest in each year – but 

without any personal involvement in actually implementing and 

sustaining it you may be hard pressed to point to significant 

effectiveness gains. 

Notes: 









Customer Relationship Management (CRM) 









Customer Relationship Management Introduction 

This section examines the number of companies utilizing CRM systems as part of their sales 

effectiveness initiatives. It focuses on how they evaluate, purchase, and implement those 

applications, reviews their attitudes toward the CRM vendor community, highlights the challenges 

they are encountering during their projects, and assesses the types of results they are achieving 

through leveraging technology. 

• Organizations Formally Evaluating CRM Systems.................................................. 178 

• CRM Vendors Seriously Considered ....................................................................... 180 

• Organizations Implementing a CRM System........................................................... 182 

• Type of CRM System(s) Implemented...................................................................... 184 

• CRM Vendor(s) Applications Purchased ................................................................. 186 

• Length of Time CRM System Installed..................................................................... 188 

• CRM Project Implementation Time .......................................................................... 190 

• Amount of CRM User Training Being Conducted.................................................... 192 

• CRM Application Adoption Rate .............................................................................. 194 

• CRM Project Costs: Actual vs. Budget .................................................................... 196 

• Impact of CRM on Sales Performance ..................................................................... 198 

• Benefits Resulting from CRM Usage ....................................................................... 200 

• Overall Primary CRM Vendor Satisfaction Rating................................................... 202 

• Buy From Again/Recommend Primary CRM Vendor Rating................................... 204 

• Implementation Approach for CRM System(s)........................................................ 206 

• Systems Integration/Consulting Firms Used........................................................... 208 

• Attitudes Toward Recommending Systems Integrator/Consultant........................ 210 

• Toughest Challenges Encountered During CRM Initiative ..................................... 212 

• Sales Knowledge Management Challenges............................................................. 214 






Has your organization formally evaluated CRM systems 

Formally Evaluated CRM Technologies 

No 

27.5% 

Yes 

72.5% 

Key Findings 

! Noticeable 

increase in the 

number of firms 

that have 

evaluated CRM 

technologies. 

! Success ratings 

improvement 

driving part of this 

trend. 

! Easier to 

install/manage 

options also 

driving more firms 

to look/reevaluate 

CRM. 

! Vendor shake-up 

seems to be 

calming down. 

Observations 

In 2004 and 2005, we witnessed a rise in skepticism over the value that 

CRM systems were actually providing. With this, we also recorded a 

noticeable drop in the number of firms considering CRM applications in 

their overall sales effectiveness strategic planning. That trend has now 

reversed itself. 

This year, nearly three-quarters of the firms surveyed indicated they had 

formally evaluated CRM technologies. This number equals the all-time 

high reported in 2002. 

The key drivers for this renewed interest seem to be three-fold. First, 

more successes are being documented by firms that have implemented 

these systems over the past several years; they are able to point to 

specific areas of improvement they have experienced. (Note the chart on 

page 200 for a list of benefits being achieved.) 

Second, the perception regarding the level of difficulty involved in fully 

implementing these systems is dropping. In the past, projects were 

taking years to be get into production. Now, more projects are up and 

running in months. (Note the chart on page 190 for the breakdown of 

implementation time.) 

A third trend that was scaring some firms away from evaluating CRM 

technologies was a concern over whether their vendor would survive 

over the long haul. Some claims in the early 2000’s were that 80% of the 

existing vendors would disappear from the landscape. 





The two most prominent examples have been Peoplesoft’s acquisition by 

Oracle after Peoplesoft had itself acquired Vantive and JD Edwards. 

One year later, Oracle is back in the CRM news with its acquisition of 

Siebel Systems, the largest CRM company (Siebel had earlier acquired 

Upshot). 

While these headline grabbing mega-mergers continue the trend of 

consolidation in the CRM space, the mass occurrences of customers 

being left high and dry because their vendor disappeared have not 

occurred. 

Our projections for 2006 are that CRM evaluations will continue to 

increase as firms that have no systems in place move to catch up with 

their competitors who do, and companies who have previously installed 

applications will reevaluate their programs and decide to enhance or 

replace what is existing. 

Notes: 






Which CRM vendors did you seriously consider 

CRM Vendors Seriously Considered 

V1 

V2 

V3 

V4 

V5 

V6 

V7 

V8 

V9 

V10 

Other 

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 

Key Findings 

! Shift in the 

“leaders of the 

pack” of CRM 

vendors 

continues. 

! ASP solutions 

gaining attention 

and evaluations. 

! Over 100 CRM 

capabilities 

vendors 

mentioned. 

! Emerging market 

for CRM niche 

players with addons 

to core 

systems. 

Observations 

In comparing this chart to that of five years ago, a major shift is evident 

regarding the types of CRM systems being seriously evaluated. In 2001, 

the market leaders were touting the advantages of client/server based 

applications and focusing users on how to manage the implementation of 

these systems in-house. 

Today, the applications generating the most interest are ASP 

(application service provider) offerings such as Salesforce.com, Siebel 

On-Demand, Entellium, NetSuite, and others. These fall into a category 

of applications being labeled as SaaS (software as a service), whereby 

organizations can reap the benefits of CRM without dedicating internal 

information technology resources to implement or maintain the actual 

software systems. 

These applications are not only gaining traction in the SMB 

(small/medium-sized business) space, they are also penetrating larger 

enterprises that are considering the total cost of ownership related to inhouse 

managed implementations. 

Another trend that continues is that the CRM market is making room for 

multiple players. In reviewing CRM vendors being considered in these 

evaluations, we compiled a list of over 100 software providers, so buyers 

still have many options to consider. 

For companies considering core technology suites, Salesforce.com, 

Siebel, Oracle, SAP, Pivotal, Onyx, Maximizer, Best, Frontrange, and 

Microsoft are commonly mentioned firms. SugarCRM is a new player, 





and Entellium is moving into the North American market after 

establishing itself as a player in the Pac Rim area. 

In addition to these firms, we continue to see the emergence of vertical 

industry specific CRM vendors focusing on areas such as financial 

services, medical products, distribution sales, etc. 

We tracked 22 new players that provide capabilities that extend the 

usefulness and value of core CRM application suites – providing 

functionality to enhance lead management, forecasting, incentives 

management, sales knowledge management, analytics, process 

management, service agreement renewals, reference management, etc. 

These types of applications work either in a stand-alone mode (if no 

major CRM application is in use) or as what appears to be an add-on 

feature within a CRM application that has been previously implemented. 

Based on the business plans we’ve reviewed in the last six months of 

2005, we expect to see another 15-20 firms come into the CRM space in 

2006, especially in the areas of analytics, process optimization, and 

knowledge management. These new additions will offer buyers even 

more options to consider. 

Notes: 






Did you ultimately end up implementing a CRM system 

Ultimately Implemented a CRM System 

No 

21.3% 

Yes 

78.7% 

Key Findings 

! Higher 

percentage of 

firms deciding to 

implement a CRM 

system after 

evaluation. 

! Clearer value 

propositions 

being presented 

by vendors. 

! Still, one in five 


chooses to wait 

on the sidelines. 

! Within these 

firms, often 

seeing repinitiated 

CRM 

projects. 

Observations 

Not only are we seeing more firms fully evaluate CRM technology 

options, nearly four in five companies actually spend money to 

implement these systems. 

Frequently, firms are implementing some type of proof-of-concept or trial 

as part of their evaluation process. It allows them to see firsthand if and 

how the systems will be used by their sales, marketing, and service 

people. In tracking the results of these projects, they can better gauge 

what tangible benefits they can expect to achieve if they do go forward 

with the project. 

This change in buying patterns is causing CRM vendors to rethink how 

they sell the real value of their applications. One approach being used by 

a firm focusing on optimizing call center performance is to set or preestablish 

an expectation as to the types of improvements their software 

will deliver and why. If it cannot explain how an end user firm will achieve 

at least a 5% increase in contact center revenues, it opts out of doing the 

trial before it starts. 

With both the buyer and seller’s attention focused on building a strong 

business case to justify an investment in CRM, more metrics are being 

gathered on how firms are currently performing. This will allow them to 

have a baseline comparison to reference after the applications are put 

into production. 

While more firms are adopting CRM applications, it is worth looking at 

why 1 in 5 firms is opting not to move forward with a technology-based 





initiative. For some firms, this decision is a matter of priorities. For 

example, a financial business services provider decided to do process 

redesign work before implementing technology. It felt the immediate 

benefits were more compelling. Also, it recognized that by fixing some 

sub-optimal processes first, it would establish a more firm foundation for 

implementing the CRM tools at a later date. 

One item worth noting is that in talking to some firms which decided not 

to do a company-wide CRM implementation, we found that this did not 

mean the company was not using technology at all. In some instances 

they were allowing reps to buy their own contact management/ 

opportunity management software systems, (e.g., tools such as ACT!, 

Goldmine, Maximizer, etc. or single user licenses of ASP-based tools). 

Therefore, reps did have access to some level of technology support to 

aid their selling, but it was not a corporate sponsored initiative. 

Notes: 






Was the implemented CRM system(s) purchased or internally developed 

Type of CRM System(s) Implemented 

Combination of 

Commercial and 

Internal 

16.4% 

Internally 

Developed 

12.1% 

Commercial CRM 

Application 

71.5% 

Key Findings 

! Commercial CRM 

adoption rate up. 

! Still seeing a 

noticeable 


taking a phased 

approach to the 

project 

implementation. 

! Seeing less 

demand for high 

levels of 

customizing of 

CRM systems. 

Observations 

The investments that CRM solutions providers have been making in the 

applications over the past couple of years appear to be paying off as we 

note a significant increase in the number of end user firms electing to 

implement a commercial CRM application (over 71% seen in the above 

chart compared to just over 61% in the previous year’s survey). 

This shift is resulting from changes in two patterns. First, we continue to 

see a drop in the number of end user firms opting to build versus buy a 

CRM application; dropping from 19% of the cases in 2004 to 15.6% in 

2005 to 12.1% in this year’s study. This can be attributed primarily to the 

increased robustness of the commercial applications which are now 

meeting the needs of more companies. 

Second, there is a decline in the number of firms that elect to implement 

both internally developed CRM applications along with commercial 

systems. The implementations themselves are also changing from the 

trends of five years ago. 

In the heyday of CRM, companies often made a bulk purchase of 

software licenses. Today, more firms take a phased approach to the 

project. They may buy or lease licenses to meet the needs of a division, 

department, or geographical area, get them up and running, and then 

look to add more users. 

Another trend is the lower level of complexity in implementations; that is, 

the amount of work that needs to be done to customize the applications 

to fit the needs of the users. There is a noticeable drop in the level of 





investments end user organizations need to make in order to have the 

applications fit into their world. 

This is different than the amount being invested into integrating CRM to 

other applications (e.g., finance, distribution, manufacturing, etc.). As 

companies see the benefits that can result from sharing information 

across functional areas within the company, they are continuing to make 

investments in linking these software applications to allow real-time data 

exchange. 

Notes: 






If you purchased a CRM application, which vendor(s) did you choose 

CRM Vendor Applications Purchased 

V1 

V2 

V3 

V4 

V5 

V6 

V7 

V8 

V9 

V10 

Other 

0% 5% 10% 15% 20% 25% 30% 


! ASP-based 

solutions are 

garnering more 

market share. 

! Seeing some 

replacement 

buying (opting to 

drop what is 

already installed). 

! Nearly onequarter 

of firms 

are buying more 

than one CRM 

solution. 

! Consolidation 

aside, still seeing 

growth in the 

number of 

players. 

In looking at the applications that are ultimately purchased, a number of 

trends are worth noting. The first is that ASP-based solutions are gaining 

significant market share. 

As noted on page 180, these vendors include Salesforce.com, Siebel 

On-Demand, NetSuite, Entellium, etc. Based on the result of this shift in 

buying, other traditional CRM vendors including Best, Frontrange, 

Maximizer, SugarCRM, Microsoft, etc. are offering or have announced 

plans to offer ASP-based versions of their software programs. With this 

move, we expect SaaS purchases to increase in 2006 and beyond. 

A number of the firms purchasing CRM systems this past year were 

already experienced CRM users looking to replace the applications they 

had previously been using. This buying took three forms. First were firms 

that were “moving up” in terms of the CRM functionality offered to their 

users. They may have started with contact/opportunity management and 

are now venturing into implementing a full CRM software suite. 

A second trend was downsizing. These often were firms who may have 

bought CRM applications in the boom-times and, after using the 

applications for a few years, found they paid for numerous tools their 

users did not want or need. For these firms, replacing their existing 

applications with less complicated systems offered a way to increase 

adoption and reduce cost. 

Finally, we are seeing an increase in firms opting to maintain the level of 

functionality they offer but at a lower overall cost. Firms are switching to 





vendors that offer comparable capabilities at a cheaper price. 

Continuing a trend we began tracking last year, we are finding that one 

in four end user firms buys more than one CRM system to meet its 

needs. This often takes the form of a purchase of a CRM suite, 

supplemented by tools for proposal generation, lead management, 

marketing automation, sales management/forecasting, knowledge 

management, team collaboration, etc. 

When considering all of the vendors included in these primary and 

secondary purchases, we again see that consolidation aside, the CRM 

landscape is actually expanding versus contracting in terms of the 

number of players in the space. 

Notes: 






How long has your CRM system been installed 

Length of Time CRM System Installed 

>24 months 

38.9% 

< 6 months 

20.8% 

6 - 12 months 

18.8% 

12 - 24 months 

21.5% 

Key Findings 

! New Metric: 

Nearly 40% of 

CRM systems in 

use today have 

been installed 

less than one 

year. 

! Part of this is 

replacement 

versus first time 

technology users. 


improvements 

achieved linked to 

system longevity. 

Observations 

Based on the input of a number of our research clients, we started to 

track how long CRM systems have been implemented. Not knowing 

what to expect, we were surprised to see that 40% of the companies 

reported using their existing CRM system for less than one year. 

In talking to a sub-set of firms with less than one year of experience with 

their current package, we often found that this is not their first experience 

with CRM. Instead, they were migrating from other packages over the 

past 12-18 months. 

In further analyzing the data, there is a directional trend regarding the 

relationship between length of system usage and the benefits being 

achieved. 

The first of these is adoption rates. Companies that have had their 

existing system installed for more than one year are seeing higher 

adoption rates compared to those who are utilizing systems that have 

been more recently installed. 

We will be tracking this over time, but our initial reaction is that it can 

take a long time to get users to opt-in to using the systems. 

Second, the level of success a company achieves appears to be tied to 

how long the system has been in place. Companies with a system 

installed for more than one year report that nearly 42% are achieving 

significant improvements in operational performance compared to only 

19% of companies who have been using the system for less than one 





year. 

We will provide a more detailed analysis of these numbers in 2006 to 

determine how the ratings change based on the vendor being used. 

Notes: 






How long did it take to fully implement your CRM system 

CRM Project Implementation Time 

More than 7 

Months 

29.0% 

Less than 1 

Month 

11.8% 

5 - 7 Months 

11.3% 

3 - 5 Months 

21.0% 

1 - 3 Months 

26.9% 

Key Findings 

! New Metric: Less 

than 40% of 

implementations 

are up and 

running in three 

months or less. 

! Nearly 30% 

exceed an 

implementation 

time of seven 

months. 

! Project 

implementation 

time is tied 

directly to the 

system selected. 

Observations 

Having taken part in dozens of CRM vendor evaluations, one of the 

claims heard from nearly every player is, “We can get the system up and 

running in three months or less.” They say and mean it, but, anecdotally, 

we have found it is not always true. 

To look at this claim factually, we added a question to this year’s survey 

regarding actual implementation times. As you can see in the chart, 

three months or less is the exception rather than the rule when it comes 

to real world experience. Approximately four in ten projects are 

implemented in three months. 

Noteworthy is that at the opposite end of the spectrum, nearly three in 

ten projects take more than seven months for implementation. 

A team trying to set expectations for a realistic project timeline should 

view this as a wake-up call that this phase of the project can often take 

much longer than forecasted. 

How do you determine which slice of the graph your project will fall into 

First, the system selected has a great deal to do with the amount of time 

it takes to get the application into production. Dialogue with other 

companies that have been using the same software for 6-12 months 

regarding their actual implementation times and the reasons for them will 

be helpful. 

Second, the complexity of the implementation also has a direct impact 

on the time of implementation. If the objective is to greatly customize the 





application, build a quantity of predefined reports, link the system 

applications to numerous other enterprise programs, etc., count on all of 

these to extend the implementation time. 

An alternative is to do a planned, phased rollout of functionality. Getting 

core pieces of functionality (e.g., contact management, opportunity 

management, forecasting, etc.) operational can be effected fairly quickly 

within most CRM applications. Then, turning on several new 

features/capabilities each month or quarter thereafter can make the 

project more manageable. 

Notes: 






How is the amount of CRM user training changing 

Amount of CRM User Training 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

36.0% 

32.2% 

10% 

5% 

0% 

Key Findings 

2.3% 

Decreasing 

Significantly 

! New Metric: 

Beginning to track 

the levels of 

training firms are 

providing to CRM 

systems users (a 

metric we 

previously 

tracked in the 

90’s). 

! Seeing more 

firms increase 

investments 

versus decrease. 

! Best training 

programs focus 

on technology as 

a process 

enabler. 

5.0% 

11.3% 


Significantly 

Observations 

In the section on Sales Methodology, we review the survey results on the 

amount of sales, product, marketplace, etc. training firms are conducting. 

For the first time since 1999, we are again tracking the level of CRM 

systems training being provided to end users. 

As can be seen above, when looking just at firms that have implemented 

CRM systems, 43.5% are planning to increase the level of training they 

provide versus the 7.3% that are decreasing their level of investment in 

this area. 

One of the key contributors repeatedly surfaced in projects that have 

under-succeeded or failed is a lack of sufficient end user training on how 

to utilize the systems. 

Companies give their teams CRM systems to help them sell, but they 

often don’t understand that the first “sale” they need to make is an 

internal sale. They have to sell their own people on why they should 

want to master these systems ─ what is in it for the company and for 

them if they do so. 

This means that training needs to go beyond the basic process of “enter 

this data here,” “click here to go to this screen,” “press F8 to generate 

this report,” etc. Sales reps need to know why these tasks are important. 

That is why the most effective training programs we have reviewed focus 

on the business processes reps use daily to qualify a lead, create an 

account plan, update the forecast, process an order, send out 

correspondence, etc. and demonstrate how the use of the system will 





optimize these process steps. 

In regards to CRM training, a telecommunications firm observed that 

“Too much, never is.” The firm not only trains the users on each new 

software release, but it creates Help screens for each business process 

the application supports so that users can get access to virtual training 

as needed. Because of this, the firm has one of the highest adoption 

ratings we have seen. 

Notes: 






What is the user adoption rate for your CRM system 

CRM Application Adoption Rate 

>90% 

39.3% 


The firm had approximately 35 of these tasks preprogrammed into the 

application. The motivator for the reps to use the system was that if the 

contact information was complete and current, the system automatically 

acted as a digital secretary and handled the correspondence and 

reporting tasks. If the information was missing, the reps had to do the 

work themselves. 

Another factor that can influence adoption rates is the specific CRM 

system that is implemented. As a general observation, the systems that 

have come out in the past few years or established systems that have 

undergone regular enhancements to the user interface, functional 

capabilities, system performance, etc., enjoy higher adoption rates than 

CRM applications that have not kept up with the times. 

Notes: 






How did your CRM project expenses compare to original expectations 

CRM Project Costs: Actual vs. Budget 

Significantly 

Over Budget 

11.5% 

Below Budget 

7.6% 

Over Budget 

25.4% 

On Budget 

55.5% 

Key Findings 

! New Metric: 

Over 63% of 

projects are 

coming in on 

target. 

! Still, a meaningful 

number of 

projects exceed 

budgets, 

sometimes 

dramatically. 

! Cost of 

customization is 

often a 

contributor to high 

expenses. 

! Unanticipated 

ownership costs 

are an issue at 

times. 

Observations 

When you add up the total cost for a CRM project, you find it contains a 

number of variables: people, process consulting, systems customization, 

hardware, training, support, systems maintenance, data population/ 

maintenance, etc. One question several research clients were asked is, 

“How do I know if I have budgeted enough to cover all this” 

Based on the results to this new question on actual expense versus 

budget, firms may be right in asking themselves that question, as nearly 

27% of the organizations were over budget on their project spending. 

What are some of the factors contributing to these overages The most 

common one cited is that the project team under-budgeted the amount 

necessary for customization and systems integration. 

In actuality, this expense level has decreased dramatically in the past 

several years. In the late 90’s, some firms spent 3-5 times the cost of the 

software for customization and integration. Today, most vendors quote a 

figure of 1.5 times or less. 

As ever, what can still kill you is “scope creep.” This results from not 

clearly defining what type of work needs to be done before starting the 

project – and sticking to this plan. If the specifications are too loose, the 

programmers often uncover items that were not originally considered, 

and a series of change orders will drive up the cost of this work beyond 

the original budget. 





Another aspect of the project that organizations often underestimate is 

the cost of the initiative going forward. Costs for items such as software 

maintenance fees, hardware replacement, adding users, additional 

feature upgrades, help desk support, etc. should all be defined for at 

least a three to four year horizon. 

Again, contacting other system users who are one to two years ahead in 

their implementation and usage of the application is an effective way to 

estimate the total cost of owning and maintaining a CRM infrastructure. 

Notes: 






What impact has your CRM investments had on your sales performance 

Impact of CRM on Sales Performance 

No Measurable 

Improvements 

18.1% 

Do Not Know 

10.2% 

Significant 

Improvements 

33.5% 

Minor 

Improvements 

38.2% 

Key Findings 

! Meaningful 

increase in the 


achieving 

significant 

benefits. 

! When it works 

right, results are 

outstanding. 

! The type of 

system installed 

can impact 

results achieved. 

! Seeing more 

upfront work to 

gather 

performance 

metrics (pre/post 

install). 

Observations 

The number of firms achieving significant improvements in operational 

performance continues to increase. After hitting a low of only 25.7% of 

projects in 2004, we saw the number rise to 29% in 2005, and this year 

one-third of projects are experiencing significant improvements. 

From a pragmatic perspective, an objective viewer considering the 

performance of the other two-thirds of all projects would not be 

impressed with the benefits of CRM. After all, it is fairly safe to assume 

none of these firms started their initiative planning to achieve “minor” or 

“no” gains. 

The results of firms that are successfully leveraging CRM are what 

should be focused upon. In reviewing project results this year, we found 

many powerful examples of success: 

• A professional services firm increased its lead conversion rate 

by more than 300% by programming its CRM systems to 

automatically manage the lead incubation process. 

• A medical products firm shortened its sell cycle by over 25% by 

leveraging technology to optimize its needs analysis process. 

• A travel planner found it could dramatically shorten new sales 

agents’ ramp-up time by having them use the CRM system as a 

mentor for how to manage new opportunities. 

• A financial services firm increased its close rates from 45% to 





just under 80% by using CRM to configure a comprehensive 

proposal during meetings with clients. 

As successes such as these become more common, the path toward 

optimal project success will be more apparent to project teams. 

Here again, we are finding that the type of system a firm selects to install 

can have a noticeable impact on results. All applications are not created 

equal. Some are stronger in certain areas such as marketing, while 

others tend to be more useful to sales. 

The first step to access the impact the system can have on operations is 

to contact users who have at least a full year of experience with the 

application to determine the benefits they are achieving and why. 

Another key consideration is creating an existing performance 

benchmark prior to rolling out the new system. The data show that 10% 

of the firms do not know what impact their CRM investments are having 

on their performance. Often this is a result of not creating a baseline to 

use for later comparison. 

Notes: 






What measurable improvements have resulted from your CRM system usage 

Benefits Resulting from CRM Usage 

Improved Communications 

Improved Forecast Accuracy 

Reduced Administrative Burden 

Increased Revenues 

Improved Best Practices Sharing 

Shortened Sell Cycles 

Reduced New Rep Ramp-up Time 

Improved Win Rates 

Improved Order Processing 

Increased Margins 

Other 

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 

Key Findings 

! New Metric: 

Improving sales/ 

management 


is top benefit. 

! Improving 

forecasting and 

less admin 

burden can mean 

more selling time. 

! Benefits not 

totally aligned 

with major sales 

goals seen on 

page 5. 

Observations 

It is interesting that some times the most obvious things to ask are the 

ones we don’t think of. The addition of this question to our study is a 

case in point. 

For 11 years we have been asking companies to rate the level of impact 

CRM is having on their operations. Recently, when we shared the 2005 

statistics with one of our advisors, his comment was, “So what exactly 

are the benefits they are achieving” We had no concrete answer, 

because it is a question for which we had never gathered data. 

Now, we have started tracking these metrics, and the above chart yields 

some interesting trends. First, the top benefit CRM is providing firms is 

the ability to improve communications between sales team members and 

management. More than 62% of the firms cited this as one of the top 

three benefits they are seeing as a result of system usage. 

Two other items receive high mention. First is improved forecast 

accuracy which is generally attributed to the ability for everyone to know 

which stages in the sell cycle every deal has completed. Also, reduced 

admin burden on sales reps achieved by automating reporting tasks, 

improving data retrieval capability, having the system pass data to other 

systems, etc. ranks high. 

Clearly, all of these benefits have value to a company, but note that they 

are secondary to the 2006 objectives that CSOs stated they had for their 

sales organizations shown in the chart on page 5. 





Their main focus is on revenues, effectiveness, and customer loyalty. 

The disconnect we see is that the main benefit that CRM is providing 

companies is the ability to increase the efficiency of their people through 

automating a number of tasks. 

This provides a salesperson with more time to sell, but the net result 

then becomes that the average rep is now in a position to make more 

“average” sales calls. Unfortunately, the real objective is to have the 

average rep make more “great” sales calls. 

New technologies becoming available may make this objective more 

attainable. We are seeing the release of more functionality to help reps 

make better calls – tools to help them develop strategic account plans, 

create user-targeted collateral, conduct more thorough needs analyses, 

generate comprehensive business proposals, etc. 

When you add in the ability to easily leverage CRM information on a call 

via the Tablet PC, we believe more firms will show improvement in the 

quality of the work their salespeople perform. 

Notes: 






How would you rate your level of satisfaction with your primary CRM vendor 

Satisfaction Rating of CRM Vendors 

Very Dissatisfied 

1.6% 

Dissatisfied 

7.3% 

Very Satisfied 

20.4% 

Neutral 

28.5% 

Satisfied 

42.3% 

Key Findings 

! Overall 

satisfaction 

ratings are in line 

with last year. 

! Wide disparity 

seen when 

looking at 

individual 

vendors. 

! Due diligence 

required to find 

out the real story 

of customer 

satisfaction. 

Observations 

While some of the trends we have been monitoring over the years have 

gone through some wild swings, a few have surprised us by their lack of 

change over time. One of these is the satisfaction ratings that end user 

firms have given their CRM vendors. 

The “very satisfied” and “satisfied” ratings for 2003, 2004, 2005, and now 

2006 are essentially statistically identical when you look at the CRM 

marketplace as a whole. Even though the results companies are 

achieving have improved (see page 198), the attitudes of the customers 

toward the vendors have not. 

This picture changes significantly when a vendor by vendor comparison 

is conducted. We found that the combined totals of “very satisfied” and 

“satisfied” by vendor ranged from approximately 74% on the high end to 

less than 40% on the low end. 

This wide variance suggests that CRM project teams need to conduct a 

fair amount of due diligence to derive a true reading on what customers 

actually think about the vendor(s) they have chosen. It is not safe to 

assume that because the capabilities of systems are generally 

equivalent that all vendors are equal. 

Some key questions to ask include: 

• Did the software perform as promised 

• Did you hit your initial implementation date 

• How close were you to the planned budget 

• Are you using all the features you paid for 





• How did you find the vendor to work with when problems arose 

and how quickly were problems resolved 

• What is your current adoption rate – and if it is less than 75%, to 

what do you attribute this 

It is recommended that you contact at least 10 current customers who 

have at least one year of experience using the software in a full 

production mode. 

Notes: 






Would you buy from again/recommend your primary CRM vendor 

Likelihood to Recommend/Buy From CRM Vendor 

Unlikely 

12.3% 

Never 

2.3% 

Absolutely 

20.1% 


35.8% 

Very Likely 

29.5% 

Key Findings 

! In general, ratings 

again are holding 

steady from 

previous years. 

! Lower levels of 

negative 

reactions to 

vendors than 

previous years. 

! More than onethird 

of firms with 

CRM applications 

installed plan to 

add to/enhance 

their systems. 

Observations 

Over the years, we have found that asking the satisfaction question a 

different way can often elicit a different set of responses. This year, we 

again asked survey participants to indicate if they would now buy from 

their vendor or recommend them to others. 

As with the previous chart, we find that one in five users is willing to 

purchase from or endorse its current CRM technology supplier. But, 

once again, when we look at this metric vendor by vendor, we find wide 

disparities. Responses range from some solution providers receiving 

“absolutely” recommend ratings in the near 30% range while others 

receive ratings in the low single digits. 

A key area of focus is the breakdown between user firms who are “very 

likely” versus “somewhat likely” to recommend. We found this to be a 

stronger benchmark for how customers feel about their vendors. 

As one manufacturing industry executive shared with us, “Don’t confuse 

satisfaction with loyalty. I am satisfied with my local gas station, but that 

doesn’t mean I won’t do an illegal u-turn in rush hour traffic to buy from 

the station across the street if the price for premium is 5 cents less per 

gallon.” 

So how loyal are CRM system users Based on the above data, we 

surmise they may well be more “satisfied” than “loyal.” Only 49.6% of the 

firms surveyed are “absolutely” or “very likely” to buy from or recommend 

their current vendor compared to 62.7% who said they are “very 

satisfied” or “satisfied” with the firm they are currently using. 





What about the 35.8% who said they were “somewhat likely” If we were 

a CRM vendor, we would be concerned about having a prospect receive 

a “somewhat likely” endorsement from one of our existing users. In this 

highly competitive market space, a lackluster referral can do more harm 

than good. 

We see two key takeaways from this chart. First, buyers must do their 

due diligence. Second, we look for more existing users to jump ship and 

switch vendors if they are not satisfied with the quality of the code, 

service, or costs associated with maintaining what is already installed. 

Notes: 






Did you implement your CRM system(s) internally or with outside resources 

Implementation Approach for CRM System(s) 

Used Outside 

Resources 

31.3% 

Implemented 

Internally 

68.7% 

Key Findings 

! Number of 

projects using 

outside help 

trending up 

slightly. 

! Pilots and phased 


often used. 

! ASP-based 

projects are not 

exempt from 

needing to 

leverage outside 

resources. 

Observations 

We began to measure the usage of outside resources to help implement 

CRM projects last year as an active part of this study. In the late 90’s, as 

part of individual project reviews, we tracked whether systems 

integration or consulting firms were used during the implementation of 

CRM system. We often found that as the project scope and complexity 

increased, the rate of end user firms turning to outside help also went up. 

Then, in the early 2000’s, when the CRM marketplace hit a slowdown, so 

did the number and size of contracts being signed with outside 

consulting firms. 

The above chart shows where we are today, with roughly one-third of 

CRM implementations involving the support of a systems integration or 

consulting firm. This is up slightly from last year’s study. 

One trend we see continuing in CRM projects are more phased 

implementations. An end user firm might engage a consulting firm to 

conduct an initial review of its front-office business processes and make 

suggestions for improvement. It may then seek help in evaluating the 

CRM vendors who can provide the technologies to optimize those 

processes and help create the project justification business case. 

If a vendor is selected, the project team may opt to do a pilot or proof-ofconcept 

to validate the business case with the help of a systems 

integrator. If that proves successful, they may then continue the 

engagement to complete the enterprise-wide rollout of the application. 

Finally, they may put an agreement in place to get help at various future 





stages of the project such as new release implementations. 

We are finding an end user firm signing several contracts over time 

versus one all encompassing agreement. They may also turn to multiple 

players at different stages using a sales process expert such as SPI, 

Solution Selling, or Market-Partners to do the business workflow 

analysis, an Accenture, InfoSys, or Deloitte who are experts in CRM 

systems design and implementation, and then use a firm such as C3i or 

TRG to handle project training and help desk support. 

One point worth noting is that while some conventional wisdom 

maintains that if you implement an ASP-based system, the complexity of 

the project is such that no outside help is needed, we are not necessarily 

seeing that. What we are finding is the level of complexity of the project 

is a better indicator of when additional support will be required versus the 

CRM application a firm installs. 

Notes: 






Which systems integration/consulting firm did you use 

Systems Integration/Consulting Firms Used 

Major Players 

25.3% 

Other 

74.7% 

Key Findings 

! Still no dominant 

player in the 

system 

integration space. 

! The major firms 

are competing for 

bigger deals. 

! Increasing 

number of 

boutique firms 

coming in to 

service SMB. 

! Vendors 

continuing to 

make 


easier. 

Observations 

In doing an analysis of the systems integration or consulting firms end 

user organizations turn to for help; we see a very fragmented 

marketplace. The better known firms such as Accenture, Deloitte, EDS, 

IBM Global Services, InfoSys, etc. account for approximately 25% of the 

projects. Other smaller, boutique firms account for the remainder of the 

initiatives. 

In general, the big players seek out big deals, and complexity is what 

determines the size of an engagement. If one wants to link an ASPbased 

system directly to multiple legacy systems, then the difficulty of 

the project can scale to the point where looking to an outside firm that 

has experience with other clients can speed up the implementation 

process and avoid potential problems. 

We were surprised by the number of other firms that end user project 

teams were turning to for CRM project support, especially in the SMB 

space. While the major players may balk at going after a five-figure deal, 

there are plenty of other companies who will actively seek these types of 

engagements. 

CRM vendors are taking an active role in finding, training, and supporting 

these smaller firms to assist with CRM implementations. These 

companies tend to be more geographically focused and allow SMBs to 

get local support. They often specialize in one or two systems allowing 

them to become experts on those applications. Some also have a 

vertical industry focus which allows them to bring domain expertise as 

well as technological knowledge to the project. 





Another trend we continue to monitor is the role vendors are playing in 

the implementation of CRM applications. As the marketplace remains 

highly competitive, solution providers are offering more services as a 

way to differentiate themselves from the competition. In addition, they 

continue to make investments in their software systems to make 

implementation, analytics, and support easier. 

Notes: 






Would you recommend your systems integration/consulting firm to others 

Recommend Systems Integration/Consulting 

Firm to Others 

Unlikely 

20.0% 

Never 

3.3% 

Absolutely 

21.7% 


28.3% 

Very Likely 

26.7% 

Key Findings 

! Satisfaction 

ratings of system 

integration/ 

consulting firms 

are improving. 

! Vendor 

experience levels 

are increasing 

regarding the 

tools they are 

helping to install. 

! The more 

complex the 

project, the more 

likely to turn to 

outside help. 

Observations 

We witnessed an improvement in the ratings that the systems integration 

and consulting firms received from their clients (with combined ratings of 

48.4% “absolutely” or “very likely” to recommend them to other CRM 

project teams compared to 42.1% last year). 

The experience level of the vendors has been increasing. As these firms 

gain more experience in implementing systems such as Salesforce.com, 

Siebel, Microsoft CRM, etc., they are able to leverage the insights gained 

from those engagements with new clients and improve the quality of 

subsequent initiatives. 

One suggestion for end user firms planning to look for outside help is to 

do your due diligence to assess the level of experience the systems 

integration and consulting firms you are considering have with the 

specific CRM package you are looking to implement. 

While the functionality of these systems can be very similar, the 

architectures are not. So, just because a firm has successfully completed 

multiple Oracle implementations does not mean it is an expert in 

installing Onyx or Pivotal. 

The fact that there are a number of outside resources which have and 

are developing solid levels of experience with these tools is a plus for 

CRM project teams. While there is a cost associated with using outside 

services, there is also a number you should compare to that expense – 

the cost of NOT using outside help. 





If the complexity of the project is such that your IT team would be 

venturing into uncharted waters or if the lack of available internal 

resources would significantly delay the project implementation, you need 

to assess what the cost would be of doing the project “wrong” or doing it 

“long.” 

You may well find that the cost of either of these two outcomes far 

exceeds the cost of bringing in outside help to ensure the project is 

successfully rolled out and ultimately used. 

Notes: 






What were the three toughest challenges you encountered during your CRM project 

Three Toughest CRM Project Challenges Encountered 

Populating/Maintaining Data 

Getting User Acceptance 

Generate Meaningful Analytics 

Customizing CRM Applications 

Measuring CRM Project ROI 

Identifying Sales Process Problems 

Matching Technology to Process 

Effectively Rolling Out the Application 

Evaluating CRM Applications 

Obtaining Executive Support 

Managing CRM Vendor Relationship 

Getting Adequate Project Funding 

Other 

0% 10% 20% 30% 40% 50% 60% 

Key Findings 

! The number one 

issue is still data 

management – 

populating and 

maintaining 

information. 

! Getting insights 

out of CRM is 

seen as a big 

issue. 

! Documenting 

project ROI is still 

a challenge for 

many teams. 

Observations 

The number one issue that continues to creep up the chart each year 

(from being cited by 39% of the study participants in 2002 to over 51% in 

the current research effort) is populating and maintaining good 

information in the system. 

We are really looking at two types of issues. First, is the information in 

the system accurate Past studies have shown that customer 

information (e.g., contacts, titles, roles and responsibilities, addresses, 

etc.) erode at dramatic rates. Keeping the data in the systems current is 

a never ending challenge. 

The second issue is ensuring that the information is available through 

the CRM system. To sell effectively, salespeople need access to more 

data than just contact information. They are looking for insights into their 

marketplace and competitors, want to share best practices, need to 

know who is referenceable and why, etc. 

As you will see in the next section on Sales Knowledge Management 

(SKM), the scope of what we include in CRM systems needs to evolve 

dramatically. 

A rising trend is the growing concern by firms that have implemented 

CRM applications regarding how to mine the gold in the systems 

created. For years firms have focused on motivating their users to put 

information “into” these applications. Now they are starting to focus on 

how to get knowledge “out” of these databases. 





As firms have started to experiment with the analytics capabilities that 

are emerging within CRM applications, they are seeing the potential for 

data mining insights. For example, they can see which customers are 

profitable and which are not, how long a sell cycle actually takes, how 

long it takes a new sales rep to become fully productive, etc. 

Determining a project’s ROI continues to be a thorn in the side of many 

project teams. Again, we encourage you to benchmark your current level 

of performance for each phase of your CRM project evolution. If you 

have metrics to use for comparison, determining the value of CRM will 

become easier. 

Finally, we want to mention that the challenges encountered can vary 

based on the systems installed. As part of discussions you have with 

other project teams, always ask them what problems they encountered 

along the way and, more importantly, how they addressed those issues. 

Notes: 






What types of sales knowledge do reps have challenges accessing 

Sales Knowledge Management Challenges 

Competitive Analysis Information 

Details on Customer/Prospect's Executives 

Customer Objection Handling Information 

Details on Marketplace/Industry 

Strategic Account Plans 

Best Practices used by the Sales Force 

Customer References/Case Studies 

Past Marketing/Selling Efforts 

Proposal Templates/Business Case Samples 

Details of Past Customer Purchases 

Hunting Required 

Significant Effort 

Rarely Find 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 

Key Findings 

! New Metric: 

Clearly see that 

reps have 

problems 

accessing a 

variety of key 

information. 

! Need for current 

competitive/ 

marketplace 

information 

dovetails with 

amount of change 

reps are 

encountering. 

! Sales Knowledge 

Management 

(SKM) needed to 

address the “how” 

of selling. 

Observations 

In 2004, we conducted a full study focused on Sales Knowledge 

Management (SKM), which we defined as ensuring that salespeople 

have all the facts, data, and insights to effectively sell in their 

marketplaces. The results of that research effort found that firms 

excelling in this area reported increased revenues, increased sales 

effectiveness, and improvement in their ability to create a competitive 

advantage as the top three benefits of their initiatives. 

Since, for the third year in a row, populating/maintaining data was seen 

as the top challenge in managing CRM projects, we decided to revisit 

some of the issues we explored in the SKM study to find out what 

salespeople are having problems accessing. 

The above chart shows that companies still have a long way to go if they 

are going to provide reps with easy access to the critical information 

needed to guide a prospect through the sell cycle. 

At the top of this list is helping them compete more effectively. In the 

Change Management section of this report, we saw that the number one 

thing bombarding salespeople is the amount of competitive activity in 

their territories. If that is their number one challenge to deal with, it is 

also the number one area companies are failing to help them with, as 

more than 82% of the firms reported that their salespeople have 

problems accessing current and accurate knowledge in this area. 

Also, information on customers and their marketplaces, seen as issue 

number two in the Change Management section, is a close second in 





terms of areas where companies are failing to provide sale people with 

easy access to sales knowledge. 

Having researched this topic for three years now, the conclusion we 

have come to is that firms have been focused on the “what” of selling 

with CRM systems and under-investing in the “how.” By that, we mean 

that if you look at what is most commonly stored in CRM systems, you 

find data -- contact names, price lists, data sheets, forecasts, sales 

process/opportunity management status info, etc. These are the “what” 

of selling. And while useful, they are a fraction of what a rep needs. 

In the course of interviewing a group of salespeople for a computer firm 

who was trying to assess why its reps saw little value in their CRM 

system, a senior account manager summarized the failing very simply. 

He said, “The system is fine for what it does. When I start a new sales 

opportunity, I can see in the CRM application, that for this product, what I 

need to do is first meet with the prospect firm’s CIO. I can easily look up 

what that person’s name and phone number is. I can also see what they 

have bought from us in the past and the competitive products they have 

installed. I can review what our current price is for the product they are 

interested in and read what marketing thinks are the key features we 

should promote. But that’s about the extent of the value of the system.” 

“What I would really like is to know how to sell to that person more 

effectively. What do I say on the phone to get his or her interest to meet 

with me What objections should I expect to encounter, and what are my 

responses How do I create a sense of urgency for them to not just 

evaluate, but actually buy something now And if they buy, how do I 

make sure they buy from us” 

These are all valid pieces of knowledge that sales teams should expect 

to be able to access, but as can be seen, they are far too elusive today. 

Notes: 









In Closing… 

As we assembled the final pieces of this year’s Sales Performance Optimization report, the pomp 

and circumstance related to Super Bowl XL weekend was heating up. The Pittsburgh Steelers 

faced the Seattle Seahawks and tens of millions of people who never watch football somehow 

found themselves, if not glued to the game’s broadcast, at least peripherally exposed to it. 

The sport of football used as a sales metaphor has been repeatedly employed by CSOs as in 

calling up the need to get back to “basic blocking and tackling.” This is most often heard when 

results have not measured up to potential – when “actual” falls short of “plan.” 

Football, like sales, has its share of successes and failures. As a newly formed expansion team in 

1976, the Tampa Bay Buccaneers made NFL history by losing 26 games in a row – the worst 

ever. In a post-game interview, when asked about his team’s execution, then coach John McKay 

replied, “I’m in favor of it.” Yet, the Bucs did not remain losers, and in 2003 they won Super Bowl 

XXXVI, an amazing reversal in performance. 

We recall these anecdotes now as a means of getting you to think about the performance of your 

own team. How well are you competing in the marketplace today, and more importantly, what can 

you do to improve your team’s results 

We have summarized dozens of statistics in the report, and we end here with two more: the 

outlook for sales going forward and the key sales effectiveness initiatives CSOs are considering 

to help optimize their performance in 2006 and beyond. 

. 

Sales Outlook Next 12 Months 

Somewhat Easier 

14.4% 

No Change 

14.4% 

Significantly 

Easier 

1.8% 

Significantly 

Harder 

21.3% 

Somewhat Harder 

48.2% 

Figure 3 

In Figure 3 we see the aggregated responses of this year’s study participants regarding how they 

foresee their prospects for sales over the next 12 months. While the outlook is slightly brighter 

than 2005’s (16.2% foresee selling being easier in the year ahead versus 13.9% last year), we 

still find that nearly 7 in 10 sales organizations anticipate facing more challenges in selling during 

the coming year. 





Which end of this argument you and your team find yourselves on will be determined by the 

fierceness of your competitors, the quality of your products and services, the strength of the 

economy, and any number of other factors beyond your control as CSO. But the quality and focus 

of your team’s execution, the tools that support them and the leadership and coaching you 

provide are all levers within your grasp. 

Figure 4 shows the priority the 2006 study group is placing on various methods for optimizing 

their performance in the months ahead. Borrowing a page from the NFL, CSOs are looking for 

tighter coordination and alignment between sales and marketing. This third priority is essential to 

realize success in the first objective: increasing lead flow. This increased flow and alignment will 

not just magically occur but rather will (or can) be brought into reality by the second of the top 

three objectives: revising your sales process. 

Key Sales Effectiveness Initiatives Priorities 

Optimize lead generation programs 

Revise our sales process 

More closely align sales and marketing 

Revise our sa les team structure 

Analyze our customer's buying process 

Improve access to relevant information 

Revise our channel strategy 

Evaluate/implement CRM software tools 

Enhance sales team communications 

Revise our compensation program 

1st Priority 

2nd Priority 

3rd Priority 

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 

Figure 4 

As you look at this list, consider how your own priorities reflect on the various metrics reported in 

this study. Process is seen as a key to sustainable, long-term improvement, yet only one in eight 

firms is operating at process Level 4. Companies spend an average of $2,200 per sales rep per 

year on training, but only 40% of reps consistently employ that training. Forecasts remain as 

accurate as flipping a coin and average quota attainment hovers just below 60%. 

All of this points to the challenges sales faces today and also to the opportunities. We noted at 

the beginning of this report that companies are continuing and increasing their investment in 

people, process, technology, and knowledge. And we asked whether these investments were 

adequate and appropriate. 

A favorite political cartoon from years ago shows the U.S. as a car with a flat tire. A congressman 

is pictured throwing dollar bills against the wheel in question. We asked a group, “What’s wrong 

with this picture” One caustic reply was, “He should be throwing $1,000 bills!” 

These challenges will not be met simply by throwing money at them. The resources available 

need to be applied strategically, appropriately, and adequately. These investments also need to 

be made with clear vision about the opportunity and dedicated reinforcement and enforcement to 

maximize the returns. 





We hope taking our survey has sharpened your focus and that seeing the comparisons in the 

study has intensified your resolve. If you want to dive deeper into these questions, establish the 

priority in which you will address them, and then understand how your peers have successfully 

attacked similar issues, call us to discuss the various benchmarking services we offer. 

Sell Well, 

Jim Dickie 

Barry Trailer 



(303) 530-6930 (415) 924-3500 





CSO Insights Overview 

Over the past twelve years, CSO Insights’ survey of over 7,000 sales effectiveness initiatives 

worldwide has become the standard for tracking the evolution of how the role of sales is 

changing, the challenges that are impacting sales performance, and most importantly how 

companies are leveraging people, process, technology, and information to address those issues. 

Utilizing this wealth of knowledge on how sales organizations are continually optimizing the way 

they market to, sell to, and service customers, CSO Insights provides CSOs with detailed 

performance metrics comparisons that can be segmented by industry, company size, geography, 

sales channel, etc. In addition, we also offer comprehensive case study reviews of successful 

sales performance improvement projects. 

CSO Insight's clients span multiple industries and include such firms as 3M, GE Capital, Great 

West Life, Federal Express, IBM, Accenture, Microsoft, Hewlett Packard, MasterCard, McKesson, 

Unocal, Cessna Aircraft, Bell South, Fiserv, Barclays, Smith Barney, ADP, Harte Hanks, Office 

Depot, as well as many small to midsize enterprises as well.

Sales Performance Optimization - - Salesforce.com

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?