| By SAVO Group CEO John Aiello
As with any major business initiative, a company must justify an investment in this new concept.
Within a sales organization, managers can measure an infinite number of factors when trying to gauge success. At the end of the day, however, there are only five that matter and sales enablement directly impacts each one.
The metrics that most directly impact revenue attainment are:
- Number of opportunities in the pipeline
- Average deal size
- Win rate
- Length of the sales cycle
- Total number of “active” (or “fully ramped”) salespeople
In all these categories, companies can see significant improvements in sales performance with relatively minor improvements in each metric. A 3 percent improvement in each area, for example, yields a 23 percent increase in revenue. How significant is a 3 percent improvement?
If the average number of opportunities pursued by a salesperson annually is 75, this becomes 77.
If the average deal size is $100,000, it’s now $103,000.
If the current win rate is 60 percent, it’s now 62 percent.
If the length of the sales cycle is currently 26 weeks (or six months), it’s now 23 weeks.
If the current number of fully ramped salespeople is 50, the new total is 52.
So how does sales enablement directly impact each of these categories?
1) Increase Opportunities
One of the most significant benefits of sales enablement is a reduction in the time required to create customer-facing sales materials. According to the American Marketing Association, salespeople spend up to 40 percent of their time on this task alone.
By automating the identification of the best content for a given selling situation and making it much easier to personalize those assets for the customer, salespeople can reinvest the time saved in higher-value selling activities.
Most notably, they can reinvest that time in territory development and prospecting.
2) Increase Average Deal Size
The strategy that virtually all sales organizations are now employing to increase average deal size – as well as to differentiate their offerings – is called “solution selling”.
By definition, solutions encompass a broader set of offerings to customers and are typically sold within a single sales cycle. However, these organizations are realizing that it’s not good enough to simply “tell” your sales team to sell solutions. You must “enable” them to do so.
For example, one company surveyed reported that 80 percent of its salespeople believed that employing sales-enablement solutions made it easier for them to cross-sell and upsell.
3) Increase Win Rate
The American Marketing Association reports that only 10 percent to 20 percent of salespeople are creating the most effective message for their prospects. Enabling a salesperson to deliver a more targeted value proposition during every customer interaction will directly impact their odds of winning.
Arming that salesperson with the latest industry information, competitive intelligence and objection-handling guidance will dramatically improve that salesperson’s pre-call preparation.
Combining access to this information with the time saved creating customer deliverables leads to better preparation, more effective sales interactions and ultimately improved win rates.
4) Decrease Sales Cycle
Sales cycles across all industries have been steadily increasing.
Economic conditions, corporate governance and the increasing complexity of customer needs have all had an impact on both the duration of the sales cycle and the number of decision makers and influencers now involved in the buying process.
Technology can now drive proactive recommendation of the best content for a salesperson to use based on the selling situation. New applications also help salespeople better prepare for each sales interaction and offer highly targeted and personalized customer deliverables.
All these factors help compress every stage of the buying process. Further, given that multiple decision makers are now involved in these sales cycles, the ability to quickly generate sales assets customized for these different audiences is critically important.
5) Increase Active Sales Headcount
Turnover rates within sales organizations can range from 10 percent to 40 percent depending on the industry.
Further, ramp-up periods for new hires can range anywhere from four weeks to six months. As a result, at any point in time a significant percentage of any sales team will be in an educational mode and not directly contributing to the team’s revenue performance.
If a sales organization can compress that ramp-up time, it effectively increases its active sales headcount. As a result, this can increase revenue production. Though a newly hired salesperson may not be fluent on all of your capabilities, this person can describe characteristics of the selling situation they are encountering.
Sales enablement accelerates the learning curve by proactively recommending the best assets for that situation. With an automated program matching content with specific selling situations and proactively recommending the best sales assets for each situation, the ramp-up time for new hires is dramatically reduced.
Sales enablement directly impacts the five most critical metrics for any sales organization: pipeline, average deal size, win rate, sales cycle duration and active sales headcount. Customers have seen staggering results after investing in sales-enablement programs.
Companies across a broad range of industries report returns of 140 percent and higher within six months of this investment.
These capabilities also offer benefits for other stakeholders such as the marketing department that creates these materials and the sales manager who must continually assess the success rate of a company’s collateral material, employees and sales strategy.
With sales-enablement solutions in place, a company can easily track the benefits of this investment not only in each step of the sales cycle but in overall revenue growth as well.
John Aiello is the co-founder and CEO of the Chicago-based SAVO Group.
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