Demographics
While many vendors conduct studies and surveys of their customer base, these surveys contain a built-in element of research bias, because it is a self-selecting group. A major difference of The TAS Group survey is that it both a "statistically significant" survey of 502 organizations, and only 15% of the respondents are TAS Group customers.
More than one half of the respondents were in sales management roles and the bulk of the respondents (77%) were business-to-business companies. Most sold through direct sales channels, with approximately 20% selling through channels sales and partner organizations. Slightly more than one fourth (26%) were in high-tech markets (a particularly large market segment for third party sales training and performance improvement programs).
The TAS Index
An interesting feature of the survey is a metric called the TAS Index (Ti), developed and promoted by the TAS Group. The metric is calculated as follows:
TAS Index= D * V * C / SC
Where:
- D = The number of deals, or qualified sales opportunities pursued
- V = The average deal size of each deal (counted in D, above)
- C = The percentage of D that resulted in an actual sale (i.e., closed deals / D)
- SC = The length of time resources were applied to the sales process
Since metrics and measurement is a core issue for ESR this year, we, of course, are interested in any promoted measures.
What does this metric tell us? The Ti gives management an "effectiveness" rating for sales. Simply increasing the number of deals or number of closes does not necessarily reflect "goodness" by this formula if it results in a disproportionate extension of the sales cycle. The same is true for closing more deals (C) within the same pipeline (D) with a disproportionate extension of the selling cycle.
In general, the Ti gets a thumbs up from ESR. We would prefer a more rigid definition of SC (for example, total cost of selling resources for the time-frame the Ti measures), but that is picking nits.
Findings of the Survey
[Note: When conducting our analysis, we intentionally skipped the summary and key-findings section of the survey results until our analysis of the data were complete.]
Key Sales Management Issues: The TAS survey corroborates our own findings, placing "Sales Effectiveness" in the top 5 concerns of sales management. This reinforces our position that measurement of the sales process and measurement of performance improvement programs is key. There is no way to tell whether this objective has been met without effective measurement, nor is there any way to "steer the ship" over the course of the year without some constant monitoring and attention.
Sales Initiatives: The top three sales performance improvement initiatives reported are:
- Individual Selling Skills (nearly 70% of respondents)
- Account Management skill development
- Sales Process
Attainment of Quota: This survey shows that 40% of organizations reported more than 50% of their sales force attaining quota. This is consistent with our own observations, and the Alexander Group and VCG Software studies we previously analyzed.
Staff Turnover: Almost 30% of organizations reported turning over one quarter of their staff. This is actually slightly higher (an should be more disconcerting to sales management) and other surveys we have analyzed.
The CRM "Bust": Consistent with all of our research, the survey data indicate that there is a significant, organizational and systemic problem with the use of CRM and that most CRM investments are significantly under-performing. Less than one half of the respondents indicated that the organization CRM system was used in at least 75% of the engagements.
[Note: Watch for an upcoming ESR/InDepth Report, which delves into the hype around CRM, customer problems, challenges and the what solutions are available to companies that have yet to see any benefits from their CRM investment. You can register as an ESR Guest (free) to receive a weekly notication of our publications, new podcasts and other valuable complimentary content. See our strict privacy policy.]
Sales Methodology Adoption: Like CRM, few organizations actually use the sales methodology in which they were trained. Only 23% of all organizations report that the sales methodology is used in at least 75% of the selling engagements, while this does increase to 60% when the CRM system and the methodology are aligned. 58% of organizations say there is no sales management mandate to use the methodology. 24% say lack of CRM integration with the methodology is the problem, and 20% say the methodology is too hard to use.
What This Tells Us
- Effective organizations use their methodology
- The CRM system is at risk as a value to the rest of the company because the sales force does not see it as an integral (read: valuable) tool in the selling process. (i.e., CRM is a burden, not a benefit to the quota carrying sales person)
- Lack of a formal selling methodology exacerbates the CRM dilemma.
Key ESR Hypothesis Confirmed by Survey Data
Perhaps the most important finding of the survey is that there is a demonstrable, measurable correlation between adoption of a formal selling methodology and sales, which further corroborates a key recommendation that ESR has been espousing for the past year: Formal Sales Methodologies mean More Sales.
This is reflected by correlating three data sets: 1) How many sales people achieve quota; 2) Of those organizations, which have a formal selling methodology, and 3) What were those organization’s Ti. The data show a close correlation between a high Ti (indicating sales efficiency) and high quota attainment in companies with a formal methodology.
