In the previous 2 posts on this matter, I discussed the roles of Sales 2.0 in improving your sales effectiveness. Here I want to discuss Velocity as a key measure that can be improved by using Sales 2.0 technologies.

The definition of Velocity is ‘the speed of something in a given direction’. Now, we don’t normally measure sales in MPH or KPH, but instead use other measures such as Quota Achievement, Close Ratios, Revenue per Day, and Sales per Product or Region. The problem of course with each of these measures it that they’re all lagging or trailing indicators, and where’s the future value in that? Ok, we can learn from experience, but, too frequently lagging measures just encourage non-productive conversations between sales management and reps.

Sales Manager: “You didn’t make quota.”
Sales Rep: “I know.”
Sales Manager: “You didn’t close the deal.”
Sales Rep: “I know.”

There’s not a ton of value in that conversation!

It’s a little disturbing that after many years of development of professional selling that the above conversation is not at all uncommon, only being less frequent than the “OK, talk me through what you did last week” chat – equally non-productive, and certainly not increasing the velocity of the sales organization.
What’s the solution, and how can Sales 2.0 solutions help? Firstly, we need to consider different metrics, and then we must consider how Sales 2.0 technologies can deliver increased velocity by intelligent measurement and improved communication.

Here I’d like to consider just one essential measure that can be a truly valuable leading indicator of performance – sales pipeline velocity. I’m going to assume that you have a defined sales process. If you don’t have one already, that’s the first step you should take.

This example is based on a real scenario with one of the clients of The TAS Group. (Let’s call them ABC Inc.)

To get started, let’s consider the view of ABC’s pipeline in Figure 1. This may similar to the view you are using today to ‘manage the pipeline’.

ABC can see that the pipeline value has gone up from $33.5m to $40.3m and that the value in the Proof stage has increased by $1.6m. But what can ABC tell about that $1.6m number? Are there more deals in here? Have the existing deals increased in value? Maybe some of the deals that were in the Negotiate stage of the pipeline have moved backwards. Perhaps there is one new very large deal that entered the pipeline during the month and got to this stage very quickly. But what does ‘very quickly’ mean? What’s the normal velocity of deals in the ABC’s pipeline? How many deals are stuck in a given stage? There are really too many questions to make this pipeline analysis valuable.

Now instead, consider ABC’s Pipeline View With Health Check Analysis in Figure 2. In this analysis, any opportunities that have not moved for more than 45 days have been analyzed as being ‘Critical’ and deals that are static for 30 days have been labeled as ‘Stalled’. Here we see that while the Target stage in the pipeline is fairly robust in absolute value terms, we can see that $10m of the $19.7m (at the end of the period) is probably never going to amount to anything unless action is taken quickly. Now ABC can begin to get a better sense of the value of its pipeline. While this is a better view, it still doesn’t tell us the full picture.

Using velocity metrics, with supporting technology, ABC can look at what really happened to the pipeline during the period – right down to the individual deal level. Consider the view in Figure 3 – Pipeline Velocity Analysis.

This report shows the movement through the pipeline in the month. For example, ABC had $22.90m in the Target stage at the start of the period. An additional $9.16m arrived into that stage during the period and $12.27 ($9.82m + 2.1m + $0.35m) moved out of Target during the period.

Let’s consider a graphical view of the movement in Target stage during the period.

With this analysis, for each of the pipeline stages, ABC can more accurately predict what’s going to happen in the future based on the current state of the pipeline, at an individual sales person level. Traditionally ABC would have been focused on having ‘5x’ in the top stage of the funnel. Now with deeper understanding of the movement through the funnel, time can be focused on the sales process to maximize velocity through the funnel. In the past that wasn’t measurable, and until you can measure something it’s really hard to improve.

Looking at static pipeline numbers is worthless. Understanding movement from stage-to-stage, for each salesperson and for each deal, begins to uncover real insight that with a little time, can help you to develop valuable foresight.

The landscape has definitely changed, and you must change with it if you’re to continue to sell to customers in the Web 2.0 world. Technologies abound that can be applied, but only when used in the context of how your market operates, and your sales team functions. Consider collaboration, technologies that automate sales process implementation, and systems that inherently provide intelligent analysis, and ways to disseminate and consume knowledge in flexible and engaging ways, just-in-time, just enough, just for you.

These are just a few of the ways that Sales 2.0 can help with improving your Sales Knowledge, Expertise, and Velocity, and that’s what keeps you effective.

An increasing number of organizations are pursuing software-as-a-service (SaaS) offerings. Others are making use of other Web 2.0 technologies to sample products over an extended period of time in a self-service without ever speaking with a sales person. We have seen these approaches creep into almost every software niche.

As a prospect’s usage of such ‘free’ products reaches a more mature point of adoption, he or she feels the need to acquire help to control complexity or introduce more compelling features. It is only at this point that the provider’s sales force should be engaged. To the ears of a 20th century sales person, this engagement seems ‘time-late’. But, it is most certainly not, because power and control have shifted from sellers to buyers.

Sales 2.0 sales forces are the ones deploying and leveraging these new technologies to advance the cause of their products and services. The Sales 1.0 sales forces, which for the moment constitute the majority, have not yet innovated their new business . They have not made changes necessary to capitalize on the opportunities offered by Web 2.0.

Upgrading a sales force so that it can respond effectively to the new type of customer engagement requires a different set of skills, systems, methodologies, and interactions. Gone are standard sales tactics and processes. They must be replaced with a new set of skills that will become second nature to 21st century sales forces. More on what these new skills are in a follow-on post.

First, your thoughts?

Talking about Sales 2.0 brings strange reactions from people. “If we don’t get some of this Sales 2.0 stuff embedded in our sales org quickly, we’re not going to be able to keep up with those (insert expletive of your choice) buyers who seem to know more than we do about our stuff,” ranks equally with “Sales never changes – it’s all about the relationships you develop.”Such varied opinions are valuable and cause some real debate. Even with this spectrum of opinion, there are two facts that are not debated. Things are changing rapidly and it’s not getting any easier to sell.

Reading today’s commentators, you could be forgiven for thinking that making your sales number is going to be really hard this year. All developed economies are struggling to avoid recession. The US dollar is weak (€1=$1.54) Google and Apple (‘infallible’ bellweathers?’) have lost billions in market cap, the very value to the US economy of multi-national corporations is in question (Businessweek), oil is expensive, and we’re told that unless we invest in ChIndia we’re doomed. So, why does your boss think you can possibly make your number? Well the fact is that whether (s)he thinks you can or not, and whether you’re a bag carrying rep, or sales leader of a global sales team – that’s why you’re getting paid the big bucks. It’s your job to figure out how to react against this ‘interesting’ landscape – and your commission depends on it.

In these straitened times there is no panacea – but Sales 2.0 might help. Knowledge, expertise, organizational velocity, and work rate are the 4 factors that impact your sales effectiveness or what I call your sales velocity.

Knowledge relates to what you know about (1) your customer, (2) their business problem, (3) how your product can be applied to solve that problem (which requires product knowledge), and (4) your competitive differentiation (which implies knowledge about your competitors).

Skill pertains to the efficacy at which you can apply the knowledge to your sales efforts.

Organizational velocity concerns the level at which your company can disseminate knowledge, enhance (selling and other) expertise and respond to needs of the sales team, and work rate – well, that’s up to you.

Sales 2.0 can help with Knowledge, Expertise and Velocity.

Knowledge: Would it help if you have online, anywhere, anytime access to the accumulated knowledge of everyone in your company as it pertains to the specific sales challenge your facing – just when you need it? Collaboration engines, knowledge management frameworks, company sales portals, blogs, are now being used by leading organizations to provide just-in-time, just-enough information to sales (and other functions). Collaboration – one of the core elements or Sales 2.0 – is a powerful catalyst for knowledge dissemination. [To get a greater understanding of collaboration in general, read Wikinomics, look at a great new micro-lender Kiva (and if you’re so inclined support their efforts), visit Witness – a human rights portal, (full disclosure: The TAS Foundation supports Witness) and – to see what’s really going at the edge of collaboration – visit Kluster.

This post is getting a bit long (and my kids are just home from their swimming lessons) … so I’m going to park this for now and come back to deal with how Sales 2.0 can help with Expertise and Velocity in the next few days. In the meantime, comments are invited and very welcome – thanks for reading.

DD