What Is Not Measured or Shared Is Not Managed

Given that capital is often constrained at midsize companies, investment in technology for demand creation or to automate and digitalize sales has historically fallen short because of never-ending cycles of disruption by technology and the market within the realm of manufacturing. The lens of demand within manufacturing firms is often co-opted for the purpose of informing manufacturing and supply chain planning or minimizing waste (i.e., cost), not in the optimization of profit (the inverse of an optimization problem of minimizing cost). This means there has been minimal investment in the automation, optimization or improvement in sales processes to date.

When ready, the most common first step firms take when deciding to invest in digital transformation of sales is typically to implement a CRM (customer relationship management) platform. A CRM helps standardize and monitor internal sales processes. It helps sales teams be more efficient by tracking opportunities for the purpose of increasing individual salesperson productivity and provides greater visibility to sales leadership and manufacturing operations based on a standard view of the sales process and likelihood of outcomes, informing demand and revenue planning.

Do CRMs Actually Help Salespeople Sell Smarter?

In May 2021, I conducted research through personal interviews of executives across more than 10 sectors to understand how and what technology contributed to helping sales teams sell and increase revenue. Salesforce, the undeniable market leader, defines a CRM as, “a technology for managing all your company’s relationships and interactions with customers and potential customers.” So?when I asked my interviewees about increasing revenue, I was asking mostly to understand if a CRM was more than just a sales productivity tool. I wanted to know if it really helped salespeople sell—and sell smarter or more profitably, not just faster or more.

Despite the weight of the future of a company being on the shoulders of sales teams, they are quite often not provided with technology that actually helps optimize the outcomes of the sales process. The sales team is often dismissed as lazy, being cowgirls, incentivized in ways that do not align with the firm’s strategic goals, and generally not trusted with data and information to make intelligent decisions.

Consistently, sales teams are compensated on total revenue and not provided with cost or profit information with which to make sales and pricing decisions, nor does the CRM help them make better data-driven decisions on price. The CRM reminds you to complete tasks, but it doesn’t answer questions if not asked and often cannot answer the hardest questions about the perceived value of the opportunity to the customer and the price a firm must charge to be profitable. If cost and profitability within the CRM are not things to which sales teams are provided guidance and visibility and if pricing is not maintained to account for changing costs or market conditions, how is profit being managed?

The answer is, it is not.

What Executives Say About the Value of CRMs

I learned time and time again that sales teams were not provided visibility into costs or profit and were typically provided standard prices from which to begin negotiations with customers that were updated no more than twice a year but more often only once a year. Because pricing was not frequently updated and did not include the context of customer, market, competition, channel, etc., salespeople use their gut to adjust prices, often with discounts.

“You can’t manage what you can’t measure.”?

— Peter Drucker, Management Thinker

In 2020, Bain conducted a global survey of 1,700 business leaders and found that 82% of B2B management teams believe their pricing decisions need improvement, but just 15% have effective tools and dashboards to set and monitor prices.

How can sales—the team that ultimately manages revenue and controls final price—successfully maximize profitability and economic value for the firm if they are not provided tools and are not incentivized to do so?

If you would like to learn how PROPHET can help empower your sales teams with intelligence to improve profit by making pricing a competitive advantage, contact us at?[email protected].