It is almost impossible for an organization to plan investment and manage cash flow if there is little visibility on what the sales pipeline looks like, particularly in the B2B space where sales cycles can be 18 months or longer. Accurate sales forecasts are often critical to the perception of how well an organization is run. If a company misses revenue guidance, investors question the capability of the organization to understand its prospects for success.
Very often the organization responds by installing a new piece of software, thinking this technology holds all the answers. Yet recent research shows that around 70% of all digital transformations fail to deliver the benefits they promised. With around $1.3 trillion being spent each year on such projects, that means project investments worth $900 million are failing to deliver on promises.
“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success nor dangerous to handle, than to initiate a new order of things.” ~Niccolò di Bernardo dei Machiavelli — 1513
Scarily, that figure doesn’t include the value of the benefits those projects were supposed to deliver!
A key challenge is that there are multiple systems of record in play, with data housed in separate data silos owned by different functionaries such as marketing, sales, operations, finance, and support. What’s more, the data in each system is often not easily linked as the people who make the decision to buy are different from the people that place the order, pay the invoice or ask for support.
On top of this, organizations also have to contend with various specific challenges. For instance, the data being collected is often inaccurate or not up to date. Also depending on which system is being used or which part of the organization is inputting it, this data might be codified and placed in disparate data hierarchies and structures.
A recent article by Bob Suh in Harvard Business Review highlighted how despite investments in CRM systems, AI and other advanced technologies, sales leaders still get blindsided by forecasts that “turn out to be embarrassingly overinflated”. Suh highlights that the root causes are all too often human behaviors, and cites the following as the five most harmful:
- Withholding bad news – salespeople often hold back reporting lost deals
- Maintaining two sets of books – most salespeople keep their own records on top of the “official” ones in the CRM
- Hoping against hope – people tend to be loss averse, so rather than accepting a no and moving on, they inflate pipelines and increase sales cycle stats
- Using conveniently fuzzy definitions – deal health metrics are notoriously unreliable, and switching to a velocity index that shows how long a deal has actually been pending proves far more accurate
- Failing to ask the obvious question – organizations need to check that conversion rates from each stage of the funnel match those being assigned as most leaders never ask this question!
It is staggering how often I have spoken with seasoned commercial leads that cannot truly assess the effectiveness of their efforts due to an inability to track customer data from first touchpoints through to sales and support. This lack of closed-loop analytics hampers organizational ability not just to forecast sales for the next month, but to understand what levers need to be pulled in marketing to ensure the sales pipeline stays healthy.
I was recently asked to “sort out what was going on with our leads situation” after a series of changes in management. Definitions of leads and lead capture processes led to a confusing picture of what the organization could expect in the next 18 to 24 months. It was a particularly painful process to make any sort of prediction or to state with any certainty what was going on as the reality of the situation was that I had no confidence in the data, or how it mapped together.
One of the critical issues, in this case, was that while leads could more or less be tracked through the qualification process to opportunities, the sales team was “hoping against hope” that opportunities were not lost and not closing out lost opportunities. That led to a bottleneck of open opportunities that meant that marketing really could not get visibility on the sales pipeline, where to focus their efforts, or to understand what levers they needed to pull on to make a real impact.
Problems stacking up
To compound matters, marketing functions are also adding more and more tools to their “marketing stacks” and creating ever more data silos.
For those of you who haven’t heard the phrase before, a marketing stack is a collection of technologies that marketers use to conduct and (hopefully) improve their marketing activities. The focus of these tools is to make the process easier and to better measure the impact of various marketing tactics.
The growth of marketing technology is truly staggering, as shown by data collected by marketing technology blog chiefmartec.com. Since 2011 the number of marketing technology solutions has grown from around 150 to over 6,800 in 2019. The growth from 2011 to 2018 is shown in the graphic below.
This growth means that there are now more and more systems holding data, and in fact according to a recent survey by Gartner almost 30% of all marketing spend is now on marketing technology!
Every experienced marketer knows that you can’t predict future success on individual surrogate indicators such as website traffic or social media followers. Growth in any area is only valuable if it actually leads to a growth in actionable leads the sales team can convert to opportunities and sales.
The need for digital (re)transformation
Most of the discussion above arises from a desire to leverage the possibility for efficiency gains and customer insight promised by various technologies. However, on its own no technology will deliver these objectives. There are many commentaries out there that describe the 3P’s of digital transformation: People, Process and (technology) Platform – however this is a gross over-simplification.
While culture and behaviour change can be included in the people part, so often those initiatives aren’t followed up with appropriate metrics and incentivisation to make the changes stick.
The people using the systems also need to be included in specifying platform requirements and user stories as well as developing the new processes to ensure successful implementation.
But the elephant in the room, the biggest scariest beast you’ve ever had to tackle – is the data. Without the data in the technology platform the transformation is as good as dead.
Data, data everywhere yet not a bit in sight
As eluded to earlier, organisational data is hidden everywhere, often in discrete data silos that only a few people know about or have access to. During a recent talk to participants of the Sales Directors’ Programme and Key Account Management Best Practice executive education courses at Cranfield School of Management, the author asked where they had witnessed organisational data for serving customers being stored. The number of answers was staggering! Just a few of the answers are listed below:
- Marketing automation systems
- CRM systems
- ERP systems
- Manufacturing systems
- Customer support systems
- Websites
- Microsites
- Blogs
- Internal Sharepoint sites
- Legacy databases
- Survey software
- Spreadsheets
- Notepads
- People’s heads
Transforming for the future
Some of the biggest mistakes any organisation can make is to embark on any digital transformation project without fully aligning the project with the business strategy and other projects that are also ongoing, as well as not involving the key stakeholders and data owners – be they customers or internal commercial teams.
Don’t let your next digital transformation project be one of the 70% that fail to achieve their goals!
This post originally appeared at https://strivenn.com/transformation-for-a-digital-world/