Cso Index 08 Report Abstract

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© Loyalty Group 2008

No part of this report may be reproduced, published or distributed without the prior written approval of Loyalty Group A/S.

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List of Contents About CSO Index 08 .................................................................................................... 6

Thanks to................................................................................................................... 6 The CSO Index project.............................................................................................. 6

Executive Summary..................................................................................................... 9 Sales demography and loyalty................................................................................. 11

Managerial conditions ............................................................................................. 11 What are your most important managerial goals for the next 12 months?......... 11 What are your most important managerial goals for the next 12 months? (cont.)............................................................................................................................ 12 Over the next 12 months, where should you focus your efforts in order to achieve your managerial goals?....................................................................................... 13 Over the next 12 months, where should you focus your efforts in order to achieve your sales goals? ................................................................................................ 14 What percentage of your sales force failed to achieve their targets over the last financial year?..................................................................................................... 15 What percentage of your sales targets have you managed to achieve over the last financial year? .............................................................................................. 16 What is the average running-in period for a new salesperson in your organisation?....................................................................................................... 17 As a sales manager, how do you spend your time?........................................... 18

Turnover .................................................................................................................. 19 How does your company generate its turnover? ................................................ 19 What percentage of last year’s turnover can be attributed to new customers?.. 20

The sales force........................................................................................................ 21 Employment period for the entire sales force ..................................................... 21 How do you see your sales force developing over the next 12 months? ........... 22 By what percentage is your total sales force likely to expand? .......................... 23 By what percentage is your total sales force likely to increase? (cont.) ............. 24 By what percentage is your total sales force likely to decrease? ....................... 25 How high has your staff turnover been over the last 12 months? ...................... 27

Sales performance..................................................................................................... 28

Potential Customers ................................................................................................ 28 How do you find potential customers?................................................................ 28 Where do potential customers come from? ........................................................ 29 Opening meetings............................................................................................... 30

Forecasting.............................................................................................................. 32 Does your company operate with forecasting/pipeline analysis? ....................... 32 What percentage of the total number of sales forecasted are closed with no changes to original amount?............................................................................... 33 What percentage of the total number of sales forecasted are closed by the set deadline?............................................................................................................. 34 What percentage of the total number of sales forecasted are actually won?..... 35 What percentage of the total sales forecasted are lost to the competition?....... 36

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What percentage of the total sales forecasted are lost because the customer couldn’t reach a decision? .................................................................................. 37

Marketing and cooperation...................................................................................... 38 To what degree do your marketing activities support your sales/sales organisation?....................................................................................................... 38 To what degree do your marketing and sales organisations cooperate?........... 39 Marketing Department responsibilities................................................................ 40

Sales force competencies ....................................................................................... 41 Ability of your salespeople to…........................................................................... 41 How good are your salespeople at forecasting sales? ....................................... 43 How accurately are you able to predict monthly/quarterly sales/orders? ........... 44 Why are your salespeople poor at introducing new products/services to existing customers?.......................................................................................................... 45

Organisational Challenges ...................................................................................... 46 Primary challenges for the sales force................................................................ 46 Primary challenges for the sales managers........................................................ 48

Sales processes and methods ................................................................................. 49

Changes .................................................................................................................. 49 What changes have occurred in your customers’ market(s)? ............................ 49 How have the competitive parameters changed in your own market? ............... 49 How have your products/services changed? ...................................................... 50

Education................................................................................................................. 51 How much money do you invest in education your salespeople (per person, per year)? .................................................................................................................. 51 How is your current level of sales training expected to change over the next 12 months? .............................................................................................................. 52 How is your current level of sales management training expected to change over the 12 months? ................................................................................................... 52 When did you last attend sales or sales management training? ........................ 53

Sales processes ...................................................................................................... 54 On average, how long is the sales cycle in your company (from identification of potential customers to the first sale)? ................................................................. 54 On average, how many meetings must your salespeople attend in order to close a sale with a potential customer?........................................................................ 55 On average, how many meetings must your salespeople attend in order to close a sale with an existing customer?....................................................................... 56 Does your company use a dedicated, structured sales process/ methods? ...... 58 What effect has this had on company turnover? ................................................ 59 What percentage of your total sales force regularly uses your sales process/methods?............................................................................................... 60 Why are your sales process/methods not being widely used?........................... 61 What impact has an investment in the introduction of a sales process/methods actually had on your business results?............................................................... 62 Which outcomes have you been able to measure as a result of the sales process/methods?............................................................................................... 63

CRM............................................................................................................................. 64

When was your CRM system originally implemented?....................................... 64

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Who managed the implementation of your company’s CRM system?............... 65 What was the greatest challenge of your CRM project? .................................... 66 Why are so few people using the system? ......................................................... 67 What percentage of CRM users are utilising the system actively?..................... 68 What measurable effects can be attributed to using the CRM-system?............. 69 How has your CRM investment affected your business results? ....................... 70

Conclusion ................................................................................................................. 71 Loyalty ........................................................................................................................ 72

Does your company perform regular surveys to gauge levels of customer satisfaction, loyalty etc.? ..................................................................................... 72 To what degree are the results of customer surveys built into your salary packages?........................................................................................................... 73 To what degree do you use incentives/reward systems based on the results of customer surveys to encourage sales people to improve satisfaction/loyalty? .. 74 How much access do your IT systems (e.g. CRM system) provide to the results of customer surveys?.......................................................................................... 75

Conclusion ................................................................................................................. 76

What will it be like to sell your company’s products/services over the next 12 months? .............................................................................................................. 76

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About CSO Index 08 No part of this report may be reproduced, published or distributed in any form, including any filing in databases with a search system, without the prior written approval of the producer (Loyalty Group A/S). Exceptions may be made for short quotations from articles, reports, summaries and the like. For more information please contact Loyalty Group A/S, Borgergade 2, 1300 København K, Tel.: +45 70 25 26 27, e-mail: Mikkel Korntved, [email protected] / Lars Jepsen, [email protected]. The reader must understand that the data forming the basis of this report was as accurate as possible prior to processing. The Producer accepts no responsibility for ongoing updates of the information in this report. The Producer assumes that the reader will use the information contained in this publication to keep abreast of areas covered by the report. The Producer accepts no responsibility for the way in which the reader/purchaser of this report may choose to use the information. The views and opinions expressed in this report are those of the Producers and their partners only. No opinions expressed by people or organisations participating in the CSO Index 08 survey have been included in this report.

Thanks to First and foremost we would like to thank the more than 1,500 people (sales managers and sales people), who participated in this in-depth survey. Without their views and opinions the performance of this task would have been impossible. We would also like to say a huge thank you to our partners, Business Danmark (www.businessdanmark.dk), Mercuri International (www.mercuri.net) and Microsoft Dynamics (www.microsoftdynamics.com), who very generously granted us access to their comprehensive membership and customer databases for the purposes of this survey. Business Danmark also contributed actively by giving the CSO Index 08 a mention, both on their website and in their monthly publication “InBusiness”. We would also like to thank Mercuri International and Microsoft Dynamics for their assistance in putting the data into perspective.

The CSO Index project This report represents a milestone in the structured charting and analysis of the sales climate in Denmark. We intend to conduct similar surveys on an annual basis so the next one can be expected in 2009. This particular document should be viewed as the primary report for the CSO Index 08. On request, the Producer can generate ad-hoc analyses and reports containing more detailed information and even branch-specific data. The CSO Index 08 contains the key data and conclusions from the 2008 survey. The survey reveals and analyses the challenges influencing sales performance today, and more importantly, what companies expect of the market, their organisations, and their use of various sales processes in 2008. The input for this survey came from sales managers in several different sectors – from small companies with under five employees to large organisations with a staff of more than 500. The questionnaire is based on more than 200 variables covering general performance in a sales organisation. Data was collected via a web-based questionnaire. The respondents were invited from Business Danmark’s membership database and from the customer databases of Mercuri International and Microsoft Dynamics. The subjects were screened according to their position and responsibility for other personnel. The respondents were also hand-picked from a network of Danish business people.

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The respondents were invited via e-mail and at the beginning of the questionnaire had the option to answer anonymously. The questionnaire itself took an average of 24 minutes to complete. For the purpose of putting the results of the CSO Index 08 survey into perspective, and to enable us to draw the primary conclusions, the respondents were divided into the following groups: Primary result: Total number of Scandinavian responses Geography: Denmark, Sweden and Norway History: Danish results from the CSO Index 07 This survey is based on the responses made by sales managers. A similar survey was also conducted among salespeople, so managers’ responses to certain questions have been compared with those of their staff. The purpose of the questionnaire was to gain insight into the different forms of measurement governing sales performance:

• General sales demography and loyalty: This section deals with issues such as satisfaction and current employment, managerial goals and initiatives in 2008, budget attainments, length of service in the sales force, expectations regarding its development in 2008, plus sales efforts made in the marketplace etc.

• Sales cycle: This section focuses on performance, order sizes, sales cycle (i.e. from the initial contact to the final contract), verifying who qualifies as a potential customer, percentage of closed orders, the use of forecasting and pipeline management as a managerial tool, and the relationship between sales and marketing etc..

• Sales performance: This section focuses on the professional skills of the sales force in areas such as activity management, the identification of potential customers, forecasting, differentiation, and the introduction of new products to existing customers. Also included are internally-oriented questions concerning the relationship between the sales manager and the top management etc.

• Market conditions: This section deals with the sales manager’s insight not only into their own market conditions but also those of their customers.

• Sales methodology: This section focuses on the company’s use of sales training and its effect, and covers the use of a structured sales process (and if so, which one), how satisfactory the method was considered to be, and also how effective.

• CRM (Customer Relationship Management) IT systems: This section covers the use of CRM-systems, examines various considerations linked to their implementation; the efficiency of current solutions, levels of satisfaction, and the anticipated effect of a CRM-system.

To put this data into perspective and to increase its relevance for your own sales organisation, we recommend performing this survey in your own company either prior to or after reading this report. Loyalty Group can help you do this at a separate charge (see below for our contact details). This survey will reveal whether your company’s performance rates better, equates to, or is worse in a number of key areas, than the other sales organisations in the countries included in the CSO Index 08. In conclusion, we hope that this report will help you set the right course for your sales organisation. It should certainly form a solid foundation for increasing your sales efficiency. Even though this information can be used in a multitude of ways, we recommend using it as a basis for brainstorming; as inspiration for setting new goals

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and for identifying and prioritising any operational challenges your organisation may face. For more information or for help in putting the main survey or report into perspective, or for access to more detailed analyses of the data collected, please contact: Lars Jepsen, Research Manager Mikkel Korntved, Seniorrådgiver Loyalty Group A/S Loyalty Group A/S Tlf.nr.: +45 70 25 26 27 Tlf.nr.: +45 70 25 26 27 E-mail [email protected] E-mail: [email protected]

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Executive Summary The recently-published CSO Index report makes exciting reading indeed. This year’s point of origin is the sales manager and the challenges involved in generating results for 2008/2009. Increased turnover and profitability, together with efficient management of sales are the most important challenges facing any sales manager in the present marketplace. Achieving these goals demands higher competency levels, an ability to make add-on sales to existing customers, and more efficient customer segmentation. Today’s sales managers need to focus on quality rather than quantity, ensuring that all sales activities are not just volume based but quality-based – i.e. targeted at the right customers. It is a difficult dilemma for these professionals, who feel that more time should be spent on coaching and other development activities, but find progress hindered by their everyday responsibilities. Thus, too little time is spent on generating results through others, and the salespeople are left to their own devices. An age-old problem that won’t go away When striving to increase your turnover through enhancing your efficiency, it is important to establish whether customers are seeking new sales channels. Generally, it appears either to be “business as usual” or - more disturbingly - that companies are not entirely sure what technology and new types of media can offer. Online/web-sales are thriving, but where sales managers in the CSO Index 08 report that only about 5% of their turnover comes from these channels, other surveys show that the number is far greater. Sales managers want to focus on selling to existing customers, but since this message has not yet percolated through all the layers of the organisation, their salespeople continue to make newbiz their first priority. This illustrates how important it is to communicate their priorities and options more clearly. The sales force is stable, despite the fact that the market has been overheated and that jobs have been easier to find than ever. Conversely, this stability has made sales organisations less willing to change – which is a major challenge. A number of initiatives have been taken with the aim of increasing turnover and profitability, and making add-on sales to existing customers easier to achieve – but these have not had the desired effect. Quite a few companies report having defined their sales process. But despite the fact that the effect on results has been very positive, many choose not to use the process actively on a daily basis. Many companies avoid CRM systems if they demand considerable deviation from the beaten track - and the price is a loss of efficiency. Conversely, companies that actively use CRN systems do become more efficient. Customer loyalty analyses are compiled but not used actively, despite the fact that this is one of the sales managers’ primary focus areas. Furthermore, the results of such surveys often aren’t even shared with the salespeople. Are sales organisations effective enough? Key figures can be found in the analysis and the individual sales organisation can compare these with their own average figures. It is thought-provoking however, that so many companies continue to ignore developments in their key figures, thereby robbing

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themselves of the opportunity to compare themselves with their competitors and to measure the effect of any improvements made. Pipelines and forecasts are also about increasing efficiency through monitoring, evaluating and taking action. Many companies choose not to follow up on whether certain activities ever came to fruition, a decision that is in direct conflict with the opinions expressed by sales managers elsewhere in the survey on the subject of increasing efficiency. Half of the offers made are lost to the competition or to a “no decision”, which means that half of the time used on making offers is wasted. When a sales manager elects to focus on training, a natural place to start would be to evaluate whether offers are worth sending at all – and if they are, to ensure that they are accurately prepared from the outset. There is more than enough to get to grips with, but it is worth remembering that an average figure indicates that some companies are much better, while others are considerably worse. In many areas it is the sales managers who perform particularly well – fortunately they contribute to raising the bar on what can be achieved. The CSO Index can help individual sales managers and their staff to evaluate whether their actions help to raise the bar, or whether they actually lower the bar, making it easier for other companies to win. Enjoy the read! The Editor

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Sales demography and loyalty Managerial conditions

What are your most important managerial goals for the next 12 months?

8.3%

13.5%

37.1%

39.8%

50.5%

53.1%

59.2%

0% 10% 20% 30% 40% 50% 60% 70%

Reduce cost of sale

Reduce costs

Increase customerloyalty

Increase market share

Increase profitability

Increase saleseff iciency

Increase turnover

What are your most important managerial goals for the next 12 months? The answers to these questions provide a clear picture of what occupies sales managers in Scandinavia in 2008, and what lies behind the actions taken and priorities chosen. Unsurprisingly this makes increasing turnover the most important goal for 2008. The differences between the three countries are minimal.

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What are your most important managerial goals for the next 12 months?

7.5%

12.5%

29.2%

37.5%

55.8%

54.6%

60.4%

8.2%

18.5%

39.0%

43.8%

54.8%

47.9%

56.8%

9.1%

9.6%

43.1%

38.0%

40.8%

56.7%

60.3%

0% 10% 20% 30% 40% 50% 60% 70%

Reduce cost ofsale

Reduce costs

Increase customerloyalty

Increase marketshare

Increaseprofitability

Increase saleseff iciency

Increase turnover

Denmark

Norw ay

Sw eden

What are your most important managerial goals for the next 12 months? (cont.) Reviewing the other areas, it is worth noting that Denmark prioritised customer loyalty more highly than the other two countries. Sales organisations appear to be focusing more on “Value for money”, whereas goals such as increasing profitability and efficiency feature lower on their list of priorities. The same priorities apply for their salespeople. Compared to the results for Denmark in 2007, the focus on sales efficiency has increased - from 39% to 56.7% to be precise. This could be because the desired growth cannot be achieved by increasing resources but through using existing resources more effectively. The following section focuses on the actions taken by sales organisations in pursuit of their objectives.

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What are your most important managerial tasks for the next 12 months? (Top 5)

33.7%

35.1%

38.4%

49.7%

52.9%

0% 10% 20% 30% 40% 50% 60%

Introduce new products to the market

Strengthen the use of existing salesmethod/sales process

Better, more targeted segmentation of customersand potential customers

Increase the average sales per existing customer

Increase the level of competency w ithin theorganisation

Over the next 12 months, where should you focus your efforts in order to achieve your managerial goals? It is a well known fact that results cannot be achieved without making an extra effort. As the saying goes, “Where there’s no pain, there’s no gain.” The sales managers offered their views of what was required in order to generate the desired results and achieve their managerial goals. For the five most important managerial tasks listed above, some interesting findings emerged: The most common approach was to raise the level of competency in the organisation. 52.9% stated this as being the most important area of contribution. In second place was an increase in average sales per existing customer, and in third place, better and more targeted segmentation of customers and potential customers. This suggests a serious intention to do things better rather than just doing “more of the same”. Compared to the Danish results for 2007 this shows a significant improvement; in 2007 the figure for increasing competency levels was 42% compared to the current 52.9% for Scandinavia (54.7% for Denmark).

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What are your most important sales tasks over the next 12 months? (Top 5)

18.8%

21.9%

31.0%

38.8%

47.5%

0% 10% 20% 30% 40% 50%

Shorten the sales cycle

Make more use of existing CRM-system

Increase my sales hit-rate

Make more use of existing sales methods/salesprocess

Work on a new market/markets

Over the next 12 months, where should you focus your efforts in order to achieve your sales goals? The main priority for salespeople is to explore new markets in order to generate growth. This clearly indicates that they need to be steered in the right direction, since selling to new markets is not considered a high priority by sales managers. When discussing strategy with their salespeople, managers should focus on the following combination to achieve the best results:

- Quantity – are we doing enough of what we should be doing? - Direction – are we focusing on the right products and

customers? - Quality – are we dealing with the right customers in a quality-

oriented manner? During one-to-one discussions the REC approach can be useful, where R stands for setting goals at a result level, E involves setting them at an effort level, and C involves competency levels and capacity. The following were considered less important for the achievement of managerial goals:

- Implementation of a new CRM system - Introduction of new sales methods/process - Shortening the sales cycle

CRM, the sales process and sales cycle are dealt with in more detail elsewhere in this report.

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