The Mistakes the SMB Market Is Making with CRM 2.0
Jun 06 2017
They say that once is an occurrence, twice is a coincidence, three time is a trend. In recent weeks, I’ve had conversations with CSOs at three different Small-to-Medium Businesses (SMBs) in the technology, telecom services, and manufacturing industries. In each case, they wanted to explore ways they could increase the performance of their sales teams. Common objectives were increasing the average deal size, shortening the sales cycle, improving margins, etc.
During our brainstorming discussions, we explored the role that people, process, knowledge, and technology could or should play in increasing sales effectiveness. Each of these companies was already using a core CRM solution to facilitate and manage tasks like opportunity management, contact management, forecast management, etc. The interesting thing that emerged from those conversations was the hesitancy to consider enhancing their existing CRM framework with addition technology solutions that focus on helping optimize specific aspects of selling.
After the third call, I did an analysis of the data from CSO Insights’ 2016 Sales Performance Optimization (SPO) study. When comparing the adoption rates of CRM 2.0 technologies, large enterprises were much more likely to utilize additional CRM solutions to support their sales teams. The area where I found a huge gap was in use of Configure, Price, and Quote (CPQ) solutions, like Salesforce and Oracle. Larger enterprises had an adoption rate that was a full 60% higher than SMB firms.
Why the reluctance? Thinking back to multiple conversations I have had with SMB management teams, three comments came to mind.
- We don’t need additional CRM capabilities
- We can’t afford them
- We don’t have the staff to manage them
Let’s examine those beliefs using CPQ as the model for discussion. Regarding the idea of don’t need CPQ, one data point from the SPO study performance data for SMBs really got my attention. The chart highlights the ability of SMB firms to optimize their average deal size. Here we see that only 6.5% of firms have that as a core competency for their sales force. On the other end of the spectrum, over 54% of firms see that they are underperforming in this area.
One of the key benefits of CPQ utilization that has emerged from the case studies we have done is that CPQ systems understand all the prerequisites, co-requisites, and potential add-ons involved for the products your company sells. This helps salespeople consistently identify opportunities to cross-sell and up-sell as a byproduct of the configuration progress.
Can’t afford it: really? In addition to increasing the average deal size, CPQ can also help increase margins by minimizing mistakes. A technology firm shared with us they were spending 1.5% of revenues in service allowance and free fixes to incorrectly configured units after they were shipped. CPQ could eliminate that expense. CSO Insights’ 2016 Quote to Close study also found that 55.6% of CPQ system users reported that their close cycle was reduced by more than 20%. So, before you write off CPQ as an expense, take a look at the cost-of-doing-nothing you are incurring by not having this.
Finally, don’t have the staff to manage could clearly have been a legitimate excuse several years ago. But just as SaaS opened the doors for SMB firms to implement a core CRM solution without having to have an IT staff to do so, so too have SaaS-based CPQ platforms emerged to allow any size firm to leverage their solutions.
So those concerns don’t seem to be valid.
Questions to Ask:
- What is the impact on your sales effectiveness if you under invest in technology compared to your larger enterprise competitors?
- What impact will it have on your ability to hire the best sales talent if they perceive you are under-supporting your sales team?
- Have you taken the time recently to truly understand what technology choices are available to your firm?