Salesforce.com’s Own Sales Practices: How to Do it Right

Last week at the Dreamforce conference, a meeting in San Francisco of almost 20,000 salesforce.com customers and partners,  I learned about new features and a user interface re-design planned for salesforce.com’s product set as well as Chatter, salesforce’s “Collaboration Cloud” offering.  These announcements, presented at length (no exaggeration – the keynote was about 3 hours long) by salesforce.com’s CEO Marc Benioff, have already been covered extensively by members of the press, analyst and the blogger community.   I could chime in with my recollections of what Marc was like as an early Oracle sales employee (I was his first manager) and how his talent was evident at an early age (it was, but managing a visionary who doesn’t want to follow any rules was often challenging for me as a young inside sales manager, trying to make nice with a dominant, demanding field sales organization). But what I’d like to share instead is what I learned in breakout sessions from salesforce.com sales executives about how salesforce.com uses its own products to enable it’s clearly articulated Sales 2.0 strategy, organization and process, which has driven the company’s success.

The majority of the clients we work with in my consulting business, Phone Works,  are salesforce.com users.  They’ve chosen salesforce.com’s Sales Cloud2 (TM)  (CRM product) for all the right reasons: to give sales reps a tool for staying close to their customers, to track and measure the sales process, and ultimately to increase sales productivity and effectiveness and optimize revenue.  But more often than not, we see companies struggling with their salesfore.com implementations, reps complaining about having to use the tool- or just flat out not using it, and managers frustrated by the lack of data and reporting coming from the system.  These problems are not unique to salesforce.com customers; they commonly exist for users of other CRM products and for Sales 2.0 technologies in general. Why?

Most companies don’t have a clearly defined sales strategy and process that helps their sales reps sell and their customers buy.  They don’t focus on designing business processes before rolling out new technology.

Salesforce.com is one of the companies that gets it right – and it shows in their user adoption and sales results, as I learned from Robert Zimmerman and Dan Del Dago, two of salesforce.com’s sales executives (also former colleagues of mine from Oracle) in their meaty overview of the company’s sales organization and pipeline management practices that made me want to hang out with their sales teams and observe them in action.  Here are some of the key points.

Salesforce.com has an Executive-Supported Sales 2.0 Strategy and Organization, Mapped to Its Customers.

1. In a Sales 2.0 organization, organizations are designed to meet the unique needs of different customer markets.  Sales teams are structured and optimized to use the most appropriate and cost-effective sales channels to reach new and current customers in both large and small companies.  Phone and Web selling is used extensively to increase responsiveness to customers – especially those in smaller companies – while boosting sales productivity and efficiency. At salesforce.com, there is a Field sales organization and a Corporate (insides) sales group.  But unlike many companies, at salesforce.com, the Field and Corporate sales territories are differentiated purely by size of company rather than size of order.  Rather than have a dividing line of say, $50,000 – orders over $50K go to the Field and $50K and under go to the inside team – the Corporate sales team can sell orders of any size in their territory of small medium-sized companies (defined at salesforce.com as those under 1,000 employees).  Salesforce.com prefers this to the “revenue bar” approach, which can cause reps to manipulate or fight over opportunities near the dividing line.  The down side for customers in order-size-defined-territories is they get “passed” from one sales rep to another as their order increases.  This can cause confusion or unhappiness if the hand-off isn’t handled well by the sales team.

2. Field Sales and Corporate Sales are both supported by Sales Development (lead qualification), so quota-carrying reps can focus on the middle and end of a customer’s buying cycle rather than trying to build new pipeline while closing orders.  Sales Development, chartered with filling the pipeline with qualified leads for all the selling teams, is divided into two groups: SR’s (Sales Reps, who receive inbound leads via round robin routing system that metes out calls in an equal fashion to east and west teams) and EBR’s (Enterprise Business Reps, who make outbound prospecting calls).

3. There is a culture of continuous improvement and flexibility as market conditions change.  Earlier this year,  salesforce.com launched economy-related initiatives such as an aptly named “Clean Your Room” program, focused on improving data quality and accelerating next steps in opportunities.  Understanding the importance of strong customer relationships as budgets decrease, they also made customer outreach a priority, using marketing “drip” campaigns to stay front of mind whenever there was valuable news to share.

4. Executives from Marc Benioff down demonstrate commitment to and usage of the systems.  When reps see that senior management relies on the data they provide, they are motivated to provide complete, accurate, up-to-date information (or perhaps scared they’ll get fired if it is discovered that they are not using salesforce.com!)

Salesforce.com has a Sales 2.0 process, which is measured, tracked, clearly articulated and consistent, and integrated with Marketing.

1. Managers measure everything. KPI’s (Key Performance Indicators) drive performance.  With the slow economy, sales management instituted stricter minimums in metrics such as calls per week (25), meetings per week (10), and pipelines per month ($100K) earlier this year.  Key metrics fall into four categories: visibility(e.g. forecast vs actual variance, % quota achieved), process effectiveness (e.g. win rate, % reps achieving quota), productivity (e.g. selling time), and lead management (e.g. conversion rate, lead volume, lead response time). Customer follow-up is rigorously tracked and enforced to a 24-hour turnaround requirement.

2. Because it has captured sales process and customer data including SIC and zip codes for ten years, the company maximizes close rates through segmentation and customer insights.  Managers can predict a given customer’s buying propensity by industry, geography, etc.  This sales intelligence also help managers create new, equitable sales territories based on data rather than gut feel.  Reps at salesforce.com undoubtably have a hard time arguing that their territory assignment isn’t fair.

3. Marketing campaigns are measured according to pipeline impact.  Weekly and monthly reports include number of leads generated, number of opportunities generated, etc. by marketing program.  Marketing and sales alignment is a major component of Sales 2.0.

4.. Links to dashboards are auto-emailed weekly  to management, keeping everyone on target.  If KPI’s drop, there is no place to hide; the only excuse for low performance is being on vacation.

Salesforce.com Supports and Empowers its Account Executives.

1. The highly segmented organizational structure based on company size offers sales professionals many opportunities for promotion within. Insides sales reps have a career path within their own group. There is less frustration when they don’t immediately have an opportunity to move to a field sales territory.

2. Industry, customer, and role-specific sales tools and sales kits are constantly developed and made available through a Sales Central system to increase productivity.  In a separate session which warrants its own blog post (stay tuned!), Elay Cohen, VP of Global Sales Productivity, and key members of his 40-person team gave an extensive talk to an audience of mostly sales operations managers on salesforce.com’s commitment to providing standardized certification programs, skills plans, on-boarding plans, customer success stories and other tools and content for sales enablement (aka sales effectiveness) that are localized around the world.  This not only increases productivity metrics (Cohen claims a measurable 93% improvement in total pipeline and 84% increase in new business after a recent training program) but also boosts morale.

3. Using its ideas.salesforce.com platform, the company encourages reps to share ideas on how to be more productive in their roles.  Rather than coming from management, these ideas are readily accepted by the reps, especially when they come from top-performing peers.

4. In many companies,  field sales training is different from inside sales training.  At salesforce.com, sales methodology is consistent across sales teams; everyone from Sales Development to Field Sales speaks the same language regarding stages of opportunities. At salesforce.com there is an 8-stage sales process from identifying and opportunity to closing.  Regular training supports the consistent use of common methodology.

5. Sales management is predictable and transparent. Reps know exactly what is being measured and evaluated.  Successes are celebrated; when deals of a certain threshold close, an automated e-mail is sent to the core management team, recognizing the rep’s accomplishment.

6. Opportunity reviews, called “Pimp My Deal” (!) exist purely for the benefit of the AE (Account Executive). Managers strive to add value by coming up with a minimum of 3 new action items within half an hour, representing creative approaches to winning a deal.

These are just some of the highlights of how salesforce.com succeeds with Sales 2.0. Their carefully constructed and refined, innovative  business processes, tightly integrated with their own products, make them a company to learn from when it comes to superlative implementation of Sales 2.0 practices and technology.  I am eagerly awaiting salesforce.com’s own implementation of Chatter; the company will likely be a model of how to incorporate collaborative, social tools into their sales and services processes to increase productivity and accelerate results.

What can you learn from salesforce.com’s sales practices? Are your reps fighting your CRM system or other Sales 2.0 tools? Is there a strong strategy and process foundation for your enabling technology to make sure it “sticks”?  What results have you seen?

Tags: Dreamforce, Marc Benioff, salesforce.com

Lead Scoring 2.0: Measuring Prospect Behavior

Last month, I spoke to a group of Silicon Valley Chief Sales Officers about Sales 2.0.  After my presentation, I invited the attendees to share some of their approaches to reinventing the way they are selling, given changes in customer preferences, the market and economy.  Bill Binch, VP of Sales and Customer Success at Marketo, had a lot to offer.  He is the first to admit that some of his practices are non-traditional, or in his words “edgy”, perhaps the ultimate of compliments to members of Generation Y.  I asked him these questions:

Anneke: For context, tell us a little about your sales organization and how it is structured. Who do you sell to, what is your average sales price and average sales cycle, etc?
Bill:  We use several Sales 2.0 concepts at Marketo. We’ve expanded the standard sales cycle into what we call the “Revenue Cycle,” which means we measure the combined sales AND marketing cycles to learn how our customers want to buy. By measuring from their first interaction, we understand how our prospects behave and how they want to be sold to, and deliver them timely, content-specific information based on their interests and activities.  The result is that marketing provides the sales team with a nurtured, sales-ready leads, complete with their demographics, activities, and behaviors.  Which is really what Marketo as a company is about – we help companies convert, nurture, and prioritize their leads, resulting in better alignment between sales and marketing and higher revenues. So we currently have Enterprise (field) reps who call on accounts with revenue greater than $500 million as well as Territory (inside) reps who are geographically organized that sell to the VP of Marketing and VP of Sales.   Our typical Revenue Cycle runs about 100 days from identification to close with an annual subscription price of $40,000.

Anneke: You mention lead nurturing several times, which is a key concept in a Sales 2.0, marketing and sales aligned company in which measurement, tracking, and accountability are part of the sales culture.   How do you distinguish between leads that your tele-qualification team calls and leads you simply nurture using Marketo.  In other words, how do you determine who gets a follow-up call and when?

Bill: All leads are nurtured in Marketo, prior receiving a call from a tele-qualifcation rep.  Leads are ranked by a score, according to best practices which are published on our web site, and once they reach a certain score, they go to tele-qualificiation for follow up.  If tele-qualification determines a prospect to be “sales -ready,” that prospect is referred to sales. If  prospects are not “sales-ready”, they are put into a new nurture program based on their needs and purchase timeframe.

Anneke:  Tell me more about your innovative approach to scoring marketing-generated sales opportunities according to how likely prospects are to buy.
Bill: The 2.0 process requires the marketing team to provide greater detail and insight for their sales team — what influenced and drove the lead to your site, did they look at your pricing page, your videos, download whitepapers?  Who is your prospect, what company are they from, what size company, what industry, what is their title and role?  What assets are influencing the prospect to select your product and what is their propensity to buy?  By having a closed loop process, we can measure what is influencing our customers, what programs are helping reinforce our message, and what does a typical buyer profile look like.  We can then adjust our messaging and marketing spend to focus on the best sources and processes for gaining new customers.

Anneke: How does this lead scoring system compare to traditional approaches to prioritizing opportunities?
Bill: The 1.0 process was to qualify leads as A, B, or C leads, or at best case a static numeric basis.  In the 2.0 world,  sales reps need to understand the demographics, behaviors, and activities of their prospect.  They need to understand their urgency level.   These can be delivered as individual scores that move up or down dynamically — if a prospect is very active, their urgency is greater and and the sales rep should be alerted to react.  It is the combination of activity level -which shows readiness to engage – and demographic fit that determines the best qualified leads.

Anneke: What is the difference in the results you’ve seen since implementing the new approach?
Bill: The big result is in productivity – our sales team sells.  Instead of burning time researching, prospecting, and back office work, they are focused on engaging with qualified leads that want to speak with them.  By using Marketo and our tele-qualification team, we are able to keep the sales team highly utilized and the majority of their time is customer facing.  The “Revenue Cycle” process has yielded us over 200 customers since launching the product in March 2008.
Anneke: What are some of your biggest selling challenges today and how are you addressing them?
Bill: In the mid 90’s, many companies didn’t have CRM (Customer Relationship Management applications) and didn’t think they had a need, yet today it’s hard to imagine any company not using CRM to run their sales business.  The marketing side is similar – it’s been under-served and not optimized as well as it could be.  So our challenge is redefining how sales AND marketing can work more closely together to have a greater impact on revenues.   SaaS (Software as a Service) has been an enabling paradigm to get software into the marketer’s hands, but similar to what Siebel Systems (now Oracle) and salesforce.com experienced, we need more than technology.  We need to educate customers on new best practices and strategies to help solve today’s sales and marketing challenges.  So we’ve focused on hiring people with that DNA in their background, and that skill has really helped fuel our growth.

Anneke: Are you implementing or testing Sales 2.0 strategies, practices, or technologies in addition to your own product?
Bill: Yes, there are many great technologies out there that are helping us.  We use Zuora for integrated order configuration, order entry, and billing, which is critical in a subscription business.  Echosign is an electronic signature tool integrated to salesforce.com, which speeds up the contract process and reduces redlines and legal changes.  And we use Jigsaw and Tippit for research and industry expertise.
Anneke: And what are the results?
Bill: I think the biggest result is the adoption of the Marketo platform by our customers.  There had been several offerings in this category, but in 3 years we’ve gone from start-up to the 2nd largest player in our space.  Our technology, combined with usability, domain knowledge, and execution has put us on the trajectory to be the leader in the next 18 months.   Customers have been wanting a product that is usable today but also offered the sophistication and growth path for the future, and we’re uniquely positioned to provide that solution.
Anneke: Your web site describes Marketo as “marketing automation that helps B2B marketing and sales drive revenue and improve accountability”.  Can you give me some examples of results your customers are seeing?
Bill: A recent example is a manufacturer who within 30 days of starting with us, launched a campaign that yielded 500% improvement of their click through rates.  A 5X improvement is going to fill the funnel with more opportunities, which will lead to more at-bats for their sales reps.  And that’s just the first 30 days!  We have another customer, Plexus Systems who saw pretty tremendous results, which they documented on their VP of Marketing’s blog. Their results include better understanding of their buyer, better sales productivity and prioritization, and of course more leads, more deals, more revenue.

What lead scoring system do you use?  How has it helped your sales productivity and results?

Tags: CRM, EchoSign, Jigsaw, lead scoring, marketing, marketing automation, Marketo, Oracle, revenue cycle, SaaS, Sales 2.0, salesforce.com, Tippit, Zuora