A related post on his blog claims that “Money cant buy you performance”.
Some questions that he raised in my mind:
Especially in B2B sales, every sales manager we have interacted with has requested that our sales pipeline metrics be converted into an incentive scheme. We have been making plans to implement an incentive scheme, but based on the Theory of Constraints – which proposes to measure global performance metrics – that relate performance of individuals or roles to the overall throughput.
It would be interesting to see how Dan’s research ties into the theory of constraints methodology.
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According to a recent report by MarketingSherpa, the biggest challenge for sales people is to generate high-quality leads.
To try and understand why it is such a big challenge, we must first answer the question – what exactly are “high quality” leads?
Lead generation guru, Brian Carrol says that most companies lack a clear definition of a sales lead – that is, their sales and marketing departments do not agree on a universal lead definition. He responds to the above survey results on his blog and advises sales and marketing teams to work together to create a Universal Lead Definition (ULD). If leads generated by marketing are transferred to sales without qualification, sales persons will assign a very low priority to following them up. By having a common definition, marketing can presumably ensure that leads passed on to sales are qualified as “high quality”, so as to address their concern.
But can sales and marketing really agree on a common definition of a qualified lead? To answer this question, we need to understand how we measure the performance of both these functions, and see if having a common definition is consistent with their individual objectives.

Marketing perspective on leads
From a marketing perspective, the ROI of marketing initiatives – campaigns, events etc. – are measured by the number of leads generated. Hence, they tend to keep minimal qualification criteria so as to get the maximum number of leads possible for the given marketing budget. For example, in case of a direct mailer, every response is considered as a lead. Or in case of a promotional event or exhibition, every person who drops a visiting card is considered as a lead. And rightly so, for however small the chance of success and however long the sales cycle, a lead is still a prospective sale!
Marketing ROI ~ Number of leads generated / Marketing Spend
To maximize the ROI of marketing initiatives, marketing requires lax lead qualification criteria, if any.

Sales perspective on leads
From a sales team’s perspective, sales performance is measured by their ability to meet targets for a pre-defined period, such as a quarter. Follow-up of every lead requires sufficient time – more so when the buying process is complex and involves several decision variables. Available sales time is limited primarily by the size of the sales team. If each lead is to be given the necessary time and attention, there is a limit to how many leads the sales team can follow up.
The primary sales performance indicators are:
Conversion Ratio ~ Orders Won / Leads or opportunities Value Converted ~ Sales Order Value / Sales Targets
Sales persons usually prefer to maintain conversion ratio at a healthy level depending on the market average. A higher than normal conversion ratio could imply inadequate number of leads or opportunities in the pipeline, while a lower conversion ratio could indicate lack of adequate closing skill.
Hence the main determinant of performance is the ability to achieve assigned targets. For this, sales persons will choose to follow-up on those leads or opportunities that:
As such, opportunities that are already in the pipeline will serve these objectives better than leads that have dubious value and unknown sales cycle. Hence leads are usually given a lower priority, or postponed indefinitely, unless they have a proven quality.
To maximize sales performance, sales requires strict lead qualification criteria.
The Marketing and Sales processes are usually disconnected from each other. Philip Kotler, Neil Rackham and Suj Krishnaswamy write in an HBR article:
Sales departments tend to believe that marketers are out of touch with what’s really going on in the marketplace. Marketing people, in turn, believe the sales force is myopic–too focused on individual customer experiences, insufficiently aware of the larger market, and blind to the future. In short, each group undervalues the other’s contributions. Both stumble (and organizational performance suffers) when they are out of sync. Yet, few firms seem to make serious overtures toward analyzing and enhancing the relationship between these two critical functions.
They conclude that:
The strains between Sales and Marketing fall into two main categories: economic (a single budget is typically divided between Sales and Marketing, and not always evenly) and cultural (the two functions attract very different types of people who achieve success by spending their time in very different ways)
Further, the marketing and sales processes are also disconnected. The marketing funnel works with the target market and attempts to generate leads. The sales funnel starts with opportunities and attempts to generate sales orders.

Marketing and Sales Process Disconnect
A forced connection between these two processes will require a resolution of the conflicting definitions of a lead that both departments will have.
In case we try and implement the marketing perspective of a lead and have lax lead qualification criteria, every lead captured by marketing will need to be followed up by the sales team.

Forced implementation of marketing perspective - lax lead qualification criteria
This will result in overloading the sales team, resulting in lowering the conversion ratio and the sales value converted. On the other hand, forcing the implementation of the sales perspective of strict lead qualification criteria will result in reduction in the marketing ROI, and very likely lead to lost business.

Forced implementation of sales perspective - strict lead qualification criteria
As we can see, there is a conflict on hand. It seems impossible to arrive at a universal lead definition as suggested by Brian Carrol, and even if we manage to agree on a common definition, implementing it will result in either departments individual objectives to be compromised.
We shall use the Evaporating Cloud methodology to try and break this conflict.

The Sales and Marketing Evaporating Cloud of Conflict
To evaporate this cloud of conflict, one must examine the underlying assumptions behind each argument that lead us to the conflict.
The following are the two assumptions that lead us to the conflict:
Both these assumptions are invalid, for:

Lead Qualification and Nurturing Process
By having an independant lead qualification team that uses a low-cost telephonic or online qualification process, leads generated by marketing initiatives can be divided into two groups:

Lead Qualification Process
The leads that qualify the ULD can be immediately transferred to the sales team to follow-up and close. The leads that do not qualify can be put into a nurturing program that maintains the dialog with the lead till it converts into an opportunity that is worth following up by the sales team.
The objectives of the nurturing process are to:

Lead Nurturing Process
There can be various types of low-cost nurturing initiatives, including email campaigns, online and offline events and webinars, articles and white paperts on the web site, blogs, etc. Each of these initiatives will result in some responses. All such responses can be tracked and recorded in the lead nurturing process. Every response, be it a click on a link in an email campaign, downloading a white paper, comments on a blog, etc. add to a valuable buyer profile that is useful when the lead converts into an opportunity for the sales team to follow up.
It is possible to resolve the conflict between sales and marketing by introducing an independant lead qualification process that utilizes a universal lead definition criteria for evaluating every lead generated by marketing initiatives and categorizes them into qualified and un-qualified leads. This strategy not only breaks the conflict, it can enhance the individual performance metrics of both departments.
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When working in teams, small slip-ups and sometimes big goof-ups are often justified by “communication problems”.
Justin Roff-Marsh, proponent of his highly effective Sales Process Engineering methodology that incorporates the techniques from Theory of Constraints into the sales process – has written an excellent article on his Sales Process Engineering blog, where he explains “Why the term ‘communication problem’ insults your team members and retards the performance of your organization“.
Justin claims that humans are remarkably good communicators as compared to other creatures, and have proven their ability to communicate effectively in complex environments that have very small margins for errors, such as operating theatres or airport traffic control. Hence, justifying errors as communication problems prevents us from investigating and resolving the root cause.
As he says,
In my experience, almost all the issues that are conveniently classified as communication problems are actually process design problems. And, in most cases, the problem is that a hand-off is necessitating the transfer of complex information from one person to another.
He gives the example of a sales process for a built-to-order product or service. Here, a sales person interacts with the customer initially to understand the requirements, and then hands-off the specifications to production. The errors resulting in such a situation is due to the need to transfer complex information between the sales person and production.
In such cases, it’s important to recognize that complex information (almost by definition) cannot be transferred from one team member to another without information loss. Therefore, it is incumbent upon management to redesign the process so as to ensure that either:
- These hand-offs are eliminated
- The requirement to transfer complex information is eliminated
For the first approach, he suggests introducing a third person such as a project manager, who partners with the sales person and later provides the specifications to production, thereby providing continuity in the process and eliminating the hand-off.
For the second approach, he suggests that complex information should be converted in the form of easily quantifiable conditions which need to be satisfied. This implies that one can conver the complex information into a set of measurable parameters which can be evaluated to meet some prescribed conditions.
In the On2Biz workflow model, the sales workflow is modelled as a sequence of milestones, where each milestone is a verifiable intermediate outcome in the process. The following diagram illustrates a sales workflow, with various individual projects at various stages of completion.

Sample Sales Workflow
Each milestone can be assigned to a different person in the team. The following workflow chart illustrates the role assignment and workflow rules:

Sales Workflow Chart
As illustrated above, On2Biz automatically generates alerts wherever there is a hand-off from one person to another. In addition, On2Biz has a provision to attach a customizable form to each milestone. The form can contain parameters that capture any complex information along with validation, ensuring that no important information gets lost during hand-offs.
The following screenshot shows milestones from an actual workflow implemented in On2Biz:

Milestones with customized forms to capture information
As seen above, each milestone has additional information captured in the format specific to that milestone. For example, the first three milestones are completed by Jacob and Sanjay, who are the tele-sales and field sales executives respectively. If converted, they hand-off the project to Misha, the accounts person. At the converted milestone, they fill in the form containing the required information for accounts to carry forward the project seamlessly. Further, Misha hands-off the project to Kavita, the creative team member, but ensures that all payment details are filled in the cheque banked milestone.
This illustrates how, by creating a properly documented workflow, the errors that can creep up due to hand-off of complex information can be avoided as per Justin’s recommendation.
For more information on the On2Biz Workflow Model, visit http://on2.biz
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A sales person is already juggling with multiple opportunities in the pipeline that are fighting for attention and that take long to close. What the sales person needs is a way to simplify the information and make it actionable. And he needs to be able to get this without feeding in a whole lot of data in the system.
Dave suggests the following:
What these salespeople require is a sales-centric application that helps them with the issues critical to their personal and departmental success such as:
- What’s the next specific step I need to be taking with each prospect in my pipeline and when should I take it based on the natural, not forced, progression of my prospect’s buy cycle?
- What information do I need to gather next from my prospects that will provide and build on the contextual knowledge I must have in order to best help them visualize how my products or services will help them achieve an objective, satisfy a need or solve a problem.
- What information do I need to convey next to my prospects that will provide and build on the contextual knowledge they need to properly and fully understand how my products or services will help them achieve an objective, satisfy a need or solve a problem.
- Which of my prospects should I prioritize my time and attention to based on how they’ve demonstrated their levels of interest?
- What members of my extended sales team do I need to involve now in my sales opportunities and what will they need to accomplish?
- How can I delegate administrative but necessary tasks to optimize my sales time with prospects?
What is required is a customizable template that the sales person can use to track the progress of each opportunity with minimal data entry. The template needs to act as a sales guide and a reference for the sales person to use when evaluating and prioritizing opportunities.
The template can easily capture the progress of the opportunity through various sales stages or milestones, and automatically measure the time taken to move through the pipeline. This gives the sales person a measure of the pipeline velocity – or the speed at which the opportunity is moving through the pipeline. This is a very important metric that can help the sales person prioritize opportunities.
Recognizing that the sales person is the primary constraint in scaling up sales, any system can serve to improve sales performance only when it improves the throughput of the sales person.
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Laura writes about her recently published report that recommends a four-point strategy to B2B marketers to avoid becoming obsolete. She advises against merely increasing marketing spend by creating new campaigns or clever advertising will not deliver results. And suggests that blindly getting into online or social marketing will only de-focus the marketing strategy.
To avoid obsolescence, B2B marketers should undertake four transformative steps:
1) Build a marketing-only database to capture buyer insight.
Today, stalking prospects with outbound, undifferentiated messages yields unpredictable results. But this is what happens when marketers rely primarily on list providers, database marketing services, or other sources of information for targeting buyers. To make campaigns pay off, marketers need to collect and analyze more information about what separates their best customers from the others. Build a marketing database to do this. Big firms may need to look at something from Aprimo or Unica, smaller firms can get by with less. But get a handle on your prospect data in 2009.2) Shift from simply generating demand to managing it.
When marketing delivers a new batch of leads, sales wants to know exactly which ones have the most potential, regardless of whether marketing outsources the leads or not. To convince sales that marketing-qualified leads are worth pursuing, marketing must execute multifaceted campaigns that engage — and qualify —prospects while extending marketing’s responsibility further along the sales pipeline. Top marketers focus on managing demand, not generating it. They also score their leads numerically, systematically. I’ve talked about this before, but you can see how you rate here.3) Combine digital and traditional tactics to build dialogue around needs and motivations.
Business buying cycles are long, and marketers use this to their advantage when they weave together digital and physical channels to engage buyers emotionally, deliver brand experiences, and form ongoing relationships. Integrated marketing success in B2B depends on leveraging the strengths of different channels to build an ongoing conversation with buyers. To do this well requires organizational alignment, an outcome-based strategy, deep customer insight, analytic planning, and consistent measurement. Find out how you stack up here.4) Embrace the groundswell and community marketing principles.
As Social Computing moves into the business world, B2B marketers dial down on acquisition and step up to community marketing. To set community marketing strategy successfully, marketers must know whether target customers willingly participate in social activity on the job. We have data to share with you about how buyers behave socially while working. Come preview it at our teleconference.They also need to set social objectives that align with business outcomes, and evaluate tactical and technology choices last.
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In short, if scaling up sales is the major bottleneck to scaling up your business, then here are some ideas to help you understand and tackle these challenges better.
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Some of our clients have sales teams and project teams that are located in different cities and towns acrosss the country. We have observed their process for routing expense claims to be slow, resource-intensive and cumbersome. The employees are typically expected to fill in vouchers and attach supporting documentation such as bills and submit them for approval. These claims are then approved by a local authority and then passed on to the central accounts department.
From our observations, having supporting documentation is a necessary evil. However, most of the paperwork is required primarily during initial approval by the local authority, and subsequent consolidation by centralized accounts can be much simpler if all the expense claims are digitally recorded in a central repository that is accessible to all locations.
The Expense Claims Workflow that we built provides the following procedure for expense claims:

The workflow proceeds as follows:
Approved: The area manager may approve all or part of the amounts claimed. Those expenses approved by the area manager are forwarded to Accounts on a weekly basis. (The collective printouts of the expense reports along with the documents are forwarded by courier each week).
Clarification: Expenses marked for clarification are sent back to the employee for clarifications. The employee gets an email alert with a link to the expense in question.
Denied: Expenses marked as ‘Denied’ by the area manager may be reviewed later with the employee as required and can then be re-submitted subsequently.
Approved and Locked: Expenses approved by accounts are considered Passed and Locked. Approval may be granted for the entire amount or part of the amount only. The area manager then cannot modify the approval status.
Clarification: Some expense claims may be returned to the concerned area manager or employee for additional clarification.
Denied and Locked: Expenses denied by Accounts are considered final and locked. The area manager then cannot modify the approval status.
In the above workflow, all concerned persons, such as the employee who entered the claim, the area manager, or other persons with supervisory roles and permissions, may track the progress of each claim through the entire workflow. A stipulated time frame can be set within which claims are to be processed through the system, failing which alerts are generated and the defaulting claims are escalated to top management.
Finally, the expense information is tagged against other information in the workflow system, such as:
Due to the fact that each claim has all this information tagged to it, a detailed analysis can be provided that tracks the levels of expenditure by various above fields.
We shall soon post sample screen shots, analytical reports and graphs that the system generates.
We would like feedback and suggestions regarding any additional features that we could incorporate that may make the system more useful in different usage scenarios.
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Small businesses owners like Manoj are seeking solutions that will help them grow and join the surge in the Indian economy. And most of them assume that the solution to their scaling up needs is the one-size-fits-all ERP solution. After all, do we not keep reading about how every large manufacturing company in India has spent millions on large scale ERP implementations? If it seems to work for them, maybe it should work for us too.
As technology providers, we know that “One size does not fit all”, as Andy Hayler likes to point out. But as a small business owner, what issues does one have to consider?
Here is the discussion we had with Manoj:
So, we need to find a path of least resistance in creating the system to capture the information. This means finding a good balance between information value and ease of use. Creating a monster of a system makes it extremely difficult to implement. Its far healthier to do it stage-wise, in a way that we can change the plan as we go ahead, based on where we find least resistance and maximum value.
So what do you think about this approach? We would like to hear…
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It used to be you’d beat your competitors by achieving greater scale in your operations, enabling you to spread your costs over more products and thus push down the cost of producing each product. Scale was tangible, a manifestation of plant and equipment and other real assets. Today, you strive to beat your competitors by creating an idea or a model that can scale without constraint, expanding easily and flexibly to handle ever more business. Scalability is intangible.
So scalability is achieved as a net result of the entire business process being scalable, instead of merely increasing “production capacity” or efficient “resource planning”. As Nicholas points out, this scalability is easier to achieve in a pure technology business like Google, where building a good business is not all that different from building a good data-processing system. But in other industries that involve human actions and physical products, achieving this kind of scalability is not that straight-forward. The ability of a business to achieve scalability is directly proportional to its ability to create a standardized workflow that can then be scaled up to deliver higher throughput.
Scale and scalability both have strengths and weaknesses as business strategies. We know the strengths and weaknesses of scale pretty well by now. We’re only beginning to understand those of scalability.
It is our endeavour to try and unravel precisely this mystery for our clients. Its an interesting adventure!
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One solution we created to overcome these hurdles was to create a Client Web Server. It was a small foot-print web server that was installed on each client computer, and which did all the work of the user interface, and made network calls to the server only to fetch data from the database. It worked great, because the network traffic was minimal and user interface was fast. We were thrilled with our solution. Based on its success in the small, two location installation, we later deployed the same solution in Branch Management System for an engineering company which had several branch offices spread around the country. This was when we faced the big hurdle – managing installations on several client computers was no mean task. With the Windows 95 OS that was prevalent in those days, we had to repeatedly re-install the web server every time there was virus infection or other such frequently occuring disasters.
Fortunately, by then the connectivity scene was much better, and we abandoned our Client Web Server model for a traditional centralized web server with normal browser clients.
Now, browsers are becoming more and more intelligent, capable of doing user interface tricks that could earlier be implemented only on native applications. Technologies such as DHTML – or Dynamic HTML allowed web applications to modify entities in the user interface dynamically using Javascript. CSS – or Cascading Style Sheets simplified the process of stylizing the interface – such as fonts, colors, and later, even the layout of entities on screen. The latest development termed AJAX – or Asynchronous JavaScript + XML – a term coined by Adaptive Path allows web applications to retrieve data from servers witout refreshing the page, thereby providing faster interfaces in the web browser. We have recently started using AJAX extensively in our applications and are thrilled by the performance enhancements.
The question that this all raises is how far can we, or should we push this model? Jason Kottke’s excellent article on Web based Operating Systems – or Web OS talks about how big guns like Google, Yahoo and Microsoft are tooling up for creating the next new frontier of the web. He talks about precisely the same model that we used five years back to overcome connectivity problems – a client side web server! How interesting. But hopefully, if one of the big guys are behind the effort, they will have the deep pockets required to see this model through its inevitable teething problems.
We’re all excited by the possibilities of where and how far we can push this model. Just to give a brief idea of how we’ve matured in web based applications, here are a few screen shots of applications we’ve built over the years:

Web based Order Manager – 2000

Web based File manager – 2003

Web based Sales Management System – 2005
As we stretch the possibilities of web applications into the enterprise, the capabilities of applications on the client side become increasingly important, and we hope to see the advent of a widely supported Web OS soon.
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