SMA Case Study: Unlocking Productivity through Sales Pipeline Management Kate Laneve Director, Global Sales Operations NCR Corporation April 30, 2010
The Sales Management Association A global, cross-industry professional association for sales operations and sales management. Focused in providing research, case studies, training, per networking, and professional development to our membership. Visit us online at salesmanagement.org 2
Today s Presenter Kate Laneve, Director Global Sales Operations, NCR Corporation Kate Laneve Director of Sales Operations for NCR Corporation s Global Sales team. 29-year career with NCR. Kate has held leadership positions in sales, marketing, finance, operations and professional services Six Sigma Black Belt Past-President of Women in NCR (WIN) International Board Member, Sales Management Association s Sales Operations Advisory Board 3
Today s Webcast Agenda and Discussion Guide Importance of Funnel Data Building a Commitment-Oriented Sales Culture The Four V s of Funnel Management Keeping Your Funnel Clean Common Mistakes in Funnel Management Q&A 4
Funnel Management for High Performing Sales Teams Our sales people spend a significant amount of their time managing opportunities and forecasts. We re okay with that! 5
Funnel Data s Importance Critical Downstream Processes Depend On It Sales Management Resource deployment decisions Industry Solutions Group (Marketing) Products, programs, competitive responses Services Staffing Global Operations Inventory, production planning Finance Monthly and quarterly projections 6
Creating a Commitment-Oriented Sales Culture Accuracy is Imperative! When you link downstream processes to funnel information, accuracy is imperative! Create a commitment-oriented sales culture Link sales process phases to specific forecast categories: commit, upside and pipeline Pipeline We re trying to figure out if we can make something happen (Analyzing and Validating phases) Upside We THINK it MIGHT happen but are unclear of all of the details. (Offering and Proposing phases) Commit We KNOW it WILL happen. (Closing phase) 7
Creating a Commitment-Oriented Sales Culture Accuracy is Imperative! Create a commitment-oriented sales culture Weekly funnel reviews by sales management Focus on the four v s of funnel management to ensure the success of each person Focus on what s going to happen, not what has already happened Frank, pointed discussions based on facts Coach for performance or manage people out of the business Provide real-time reporting and information access 8
Creating a Commitment-Oriented Sales Culture Reporting on Forecast Accuracy Accuracy is monthly/quarterly commit $ value compared to booked orders $ value Set goals for accuracy: between 90 and 105% Being over plan is just as much a problem for your supply chain as being under plan 9
Hope is Not a Strategy... What would you do? Name Annual Quota YTD Actual (Q1) % Achieved Forecast (Q2-Q4) $'s Expected % Expected Southeast $ 60,000,000 $ 2,317,588 3.86% $ 52,127,641 $ 54,445,229 90.74% Northeast $ 35,000,000 $ 8,132,868 23.24% $ 19,729,287 $ 27,862,155 79.61% Southwest $ 12,000,000 $ 2,591,955 21.60% $ 9,193,500 $ 11,785,455 98.21% Midwest $ 55,000,000 $ 5,596,627 10.18% $ 49,639,258 $ 55,235,885 100.43% Northwest $ 40,000,000 $ 2,954,544 7.39% $ 31,759,926 $ 34,714,470 86.79% Totals $ 202,000,000 $ 21,593,582 10.69% $ 162,449,612 $ 184,043,194 91.11% The role of sales management is to ensure the success of the team by ensuring the success of each individual not just for the short term, but for the long term horizon. Funnel metrics provide the means to assess both short and long term team and individual contributor potential for success. 10
Funnel Management s Four V s A best in class sales manager directs the team to success by focusing on the 4 V s of funnel management: Increase volume Reduce velocity Focus on high value Ensure viability 11
Seven Key Funnel Management Metrics Volume-Based Metrics: Are we getting bigger? 1) Year-Over-Year Funnel Growth Set objectives annually for % growth in total funnel and in the final stages of your sales process (proposing and closing) Growth objectives should be set based on your discontinuation and win rates e.g.,: If your discontinuation rate is 35% and your win rate is 70%, you must grow the funnel by 35% to achieve a 25% increase in orders 2) New Opportunities 3) To achieve growth objectives, you must identify and open new opportunities at a rate faster than you are closing opportunities. If you close 10% of your funnel monthly, then 12% of total funnel should be comprised of new opportunities 12
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Putting It Into Practice: Analyzing Volume 6,000 Total Open Commit/Upside 5,000 4,000 3,000 2,000 1,000 0 Values updated based on June 09 MER 13
Putting It Into Practice: Analyzing Volume $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 WON LOST DISCONTINUED TOTAL CLOSED NEW Comparing total closed to net new deals opened in the funnel. 14
Seven Key Funnel Management Metrics Velocity-Based Metrics: Are we fast enough? 3) Funnel Aging Set goals for funnel aging based on your market conditions. Our goal: 60% of total funnel aged <180 days Historically, the average age of a won opportunity is about 6 months. Opportunities that remain in the funnel longer than 6 months typically are lost or discontinued, with our most aged opportunities falling into the discontinued category. The OODA loop (for observe, orient, decide, and act) has become an important concept in both business and military strategy. The concept was developed by military strategist and USAF Colonel John Boyd, father of the F-16. Boyd believes that decision-making occurs in a recurring cycle of observe-orient-decide-act. An entity (whether an individual or an organization) that can process this cycle quickly, observing and reacting to unfolding events more rapidly than an opponent, can thereby "get inside" the opponent's decision cycle and gain the advantage. http://en.wikipedia.org/wiki/ooda_loop 15
Putting it into Practice: Analyzing Velocity Time is your other (silent) competitor. If a deal is stalled, don t wait to take action. The role of sales management is to help the team keep the momentum going. Global Sales Non-Annuity Funnel % of Funnel <180 Days 63% 61% 60.4% 61.3% 60.4% 59% 57% 55% 53% 51% 56.8% 54.9% 56.5% 50.9% 51.4% 53.6% 53.0% 49% 47% 45% Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 16
Seven Key Funnel Management Metrics Value-Based Metrics: Are we pursuing the right business? 4) Strategic Mix Where is your growth coming from? Our goal is to drive a 3X increase in software and professional services revenue over the next three years, therefore, 15% of our open funnel should represent SW and Consulting PS business. 5) Discontinuation Rate Opportunities should be pre-qualified before entering into the sales funnel. A high rate of discontinuations could reflect a poor job of properly qualifying opportunities and requires a deeper understanding by management. Our goal is to keep our discontinuation rate at or lower than 45% of the closed funnel. 17
Millions Putting it into Practice: Analyzing Value Jun-09 Y/Y Funnel Growth New Opportunities Win Rate Discontinuation Rate YTD Funnel Velocity Average Days in Funnel ** removed quick win opps** Open FunnelAge Total Open Commit/ Upside YTD vs. Prior YTD YTD Won Lost Discontinued Month CLA -3.6% 11.2% 0.3% 73.4% 59.4% 151.2 172.1 213.6 157.3 Europe 6.7% 15.5% -0.8% 68.4% 43.7% 197.8 174.4 261.9 239.3 Japan 5.9% 13.6% 9.8% 77.3% 63.7% 176.2 249.6 363.9 191.0 MEA -13.3% 25.6% -34.9% 58.6% 45.0% 217.7 184.6 273.6 258.0 N America -3.6% 6.9% -11.7% 80.9% 60.9% 191.7 186.6 274.5 221.1 N Asia Pac -0.8% 53.7% -32.3% 96.3% 28.9% 168.8 253.0 250.7 249.4 S Asia Pac -9.5% 26.4% -13.0% 70.3% 38.7% 203.5 174.7 226.8 205.0 Global Sales -0.6% 14.5% -10.3% 73.3% 51.3% 191.7 183.1 270.0 225.4 We look at discontinuation rate on a cumulative basis, focusing on YTD by region. Reasons for high discontinuation rates must be explored what is the qualification process? Management must make a trade-off between achieving funnel growth and putting poorly qualified opportunities in the funnel Rate is usually higher at beginning of the year when sales is cleansing the funnel 18 DISCONTINUED $3,500 LOST $3,000 WON $2,500 $2,000 $1,500 $1,000 $500 $- 2008 2009
Putting it into Practice: Analyzing Value NCR Region by Product Type Non-Annuity Open Funnel FX Neutral - Based on March Month End Rate Prior Year Prior Month Prior Week Current Week vs. Prior Year Month Current Week vs. Prior Current Week vs. Prior NCR Region Product Type End Month End Week CLA CMS 24% 0% 0% Consulting 86% 0% 0% HW 64% 3% -1% SW 67% 2% 0% TS 403% -1% 0% CLA Total 62% 2% -1% Strategic mix is key to achieving growth objectives Set at beginning of the year to focus sales on the growth path and to focus marketing on campaign development Could remain consistent over long term horizon but flexibility in rapidly changing markets is the key to success 19
Seven Key Funnel Management Metrics Viability-Based Metrics: Will we make plan? 6) Funnel Sufficiency Taking into consideration your average discontinuation and win rates will help you determine what the total size of your funnel must be to achieve plan. e.g.,, with a 35% discontinuation rate and 70% win rate, your total funnel should be 2.5 times the annual order plan to meet or exceed expectations. At $5B annual revenue plan, this translates to a total open funnel of $12.5B! 7) Quarterly Commit Coverage Our goal is to have a minimum of 60% of the value of our quarterly order outlook covered by Commits This takes into consideration the effect of book and bill business not covered by opportunities in the sales funnel. Also considers backlog not represented by booked orders. Our Upside Requirement is the value of 2X the gap between Outlook and Forecast Commits. If Upside probability of win is either 50 or 75% you need 2X to close the gap 20
Putting it into Practice: Analyzing Viability Does your team show signs of commitment anxiety? 21
Putting it into Practice: Analyzing Viability We expect our sales leaders to understand on a daily basis whether their teams are on track to make plan. This is the in your face approach to funnel management. Names withheld 22
Putting it into Practice: Keeping your Funnel Squeaky Clean! Update your funnel (at least) weekly Once you are in the offering phase, always schedule your roll-out to send correct signal to demand planning Ensure you have enough high quality opportunities in the funnel to make your plan (2-3X your annual quota) Discontinue opportunities that are going no where Close your opportunities on a timely basis once a decision is made (won, lost or discontinued) When asked questions, point people to the funnel for their answers 23
Common Mistakes in Funnel Management The top mistakes we make in managing our funnels: My dog ate my homework (I didn t finish my updates on time) Euell Gibbons (I was out in the wilderness without access to the internet) Closest to the pin (I couldn t find the right product so I just stuck the opportunity in something close enough) Friday night liars club (I really have no idea what this account is doing to do so I just made up the dates) You keep me hangin on (I can t get a decision from the account, so I move the dates out every month) Ambulance chasing (I just know they ll get the budget for this eventually) Headlights off (Creating a new opportunity and closing it as a win within the same month) Commitment anxiety (Failure to have sufficient committed opportunities to make your planned quota and/or failure to submit your monthly forecast) Behind door number 3 (Changing product offering in mid-stream) I delegated it (Expecting someone else to manage your opportunities) Can you deliver that yesterday? (Slipping the expected book date without updating your delivery dates) 24
Discussion
Contact Kate Laneve NCR Corporation kate.laneve@ncr.com Thank you