Opinions Pretending to Be Data: The Benefits of Tracking Activity in Your CRM System
Despite their benefits, there are serious problems with modern CRM systems—from the hours of data entry required to the shockingly low compliance rates. These are well known by everyone who uses or builds CRM systems. But one of CRM's shortcomings hasn't been well addressed. Although these systems act as the database for their companies, much of what resides in them isn't really data. The solution is clear, but not simple—we have to move from reporting opinions to tracking activity.
Some of the information in CRM systems, such as customer contact points, employee lists, and historical sales numbers, can be considered data. Facts might be out of date or incorrectly entered, but they can be verified. But much of the other information (most importantly, the information surrounding new revenue opportunities) isn't data; it's just a salesperson's opinion. For example, CRM entries like the projected close date of a deal, the roles of the various contacts (and the ultimate decision-maker), the expected amount of the projected contract, and the probability of getting the contract signed are all just the opinions of the person who entered them. All these characteristics, and many more, of an opportunity are inevitably biased by the people reporting them.
This might not be such a big problem if the unreliability of these fields in the CRM database was made clear. But the real problem arises once this information is entered. Because these opinions are surrounded by real data (contact numbers, etc.), because they aren't marked as unreliable opinions in the user interface, and because organizations rely on these opinions as data when making business decisions, it's easy for managers to forget that these numbers have no basis in fact.
The clearest example of this is in the "bottoms up" revenue forecast. To arrive at next quarter's revenue, thousands of sales managers multiply the deals in the pipeline by their probability to close. And the result is familiar: While organizations are raising quotas, the number of people meeting their quotas has fallen 25 percent, with only 50 percent of reps making quota on average, according to The Bridge Group, a sales consulting and implementation firm.
So what is a sales-driven organization to do? To start with, we have to stop mixing opinions and facts. We have to start tracking employee—and especially prospect—activities in ways that give us data to learn from instead of opinions by which to be misled.
To really understand how a company's efforts are affecting its results, we need a new approach. We need tools and services that track sales activities automatically, without requiring additional "data" entry from salespeople. And we need systems that actually help salespeople perform better, without imposing another technology on them. The companies that build those kinds of products will lead the next generation of CRM.
In the meantime, here are three ways to move your company away from opinions and toward real, verifiable data:
Switch your pipeline events to be verifiable. A salesperson believing a deal has a 50 percent shot of closing is not a verifiable event. Emailing the prospect a recap of his concerns, and receiving an email confirming the accuracy of the summary, is verifiable. While verifying evidence can mean additional work for managers, it's a sure way to improve forecast accuracy.
Base pipeline progress on prospect activity, not salesperson activity. The fact that a salesperson sent a proposal is necessary, but not sufficient, to close the deal. The really important facts about the proposal are: Did the prospect read the proposal? Did he forward it to other people? Did they reply? How quickly? By using prospect activity as the threshold through which the deal must pass, the power of opinions is greatly decreased.
Look for tools and services based on data. Ask every technology vendor and service provider how data is entered into their system (the less work the better), how it is reported (the fewer interfaces the better), and how data and opinions are differentiated (the clearer the better).
Not all of these critiques apply to every CRM system or to every company. Implementing these suggestions will be, or will seem to be, impossible for some companies. But for every company, taking steps to move away from opinion and toward real data will definitely result in improved sales projections and revenue visibility.
Matthew Bellows is CEO of Yesware. He is responsible for sales, product vision, and strategic direction of the company. Matthew earned his BA from Naropa University and his MBA magna cum laude from Babson College.