Sales enablement tools are all the rage now, with many promising to be the right lever for growth. A study by Simon-Kucher found that most companies have invested in digital projects.
Specifically, 75 percent of these companies have focused on sales tools to enhance their revenue. The study involved 1,925 companies from different industries across more than 40 countries. However, despite the hype, three-quarters of these initiatives failed to grow revenues.
Every company must have a digital plan, but that plan can’t be about the technology. It must be about how you make more money! That requires a focus on the users – sales reps, managers, leaders, etc. – and having the tools used effectively. We need to take their behaviors (both rational and not) into account.
Focusing on sales enablement
As a top line focused consultancy, we at Simon-Kucher conduct thousands of commercial excellence programs every year. In our previous articles, we discussed sales incentives and strategy. Now, we will discuss how to maximize the benefits of sales enablement tools by considering human behavior.
#1 “If it takes less than two minutes, then do it now” (Present bias)
Sales tools would benefit from implementing the ‘two-minute rule’ principle that aims to improve personal productivity through quick actions. But this principle is often overlooked by many sales tools, including CRM.
Extensive forms are provided to busy representatives, especially to those who work in the field. These forms require a significant amount of time to complete. The intention behind this is to collect data that may be useful in the future.
But no one updates the records. Often, we choose the first answer in drop-down boxes to quickly click through screens. Like the game Whack-a-mole. Either way, it defeats the purpose.
Fortunately, we now witness a new class of apps that are simple, quick to use, and designed for mobiles/tablets. Reps prioritize current events. They gather crucial information immediately after the meeting. They don’t wait until the end of the day or the next time they are in the office.
Peer Pricing: Case study
For a client’s CRM project, we used Simon-Kucher’s Peer Pricing framework to help salespeople set prices for deals and adjust their incentives. The company reduced the average discount given from 34 percent to 28 percent by applying these principles.
We could see peaks now at each of the levels corresponding to targets from the tool. Interestingly, the sales conversion rate remained unchanged. The sales team increased prices without losing volume and that flowed straight through to the company’s bottom line.
#2 “No-one pays list price” (Anchoring)
What guidance does a rep have on where to set prices for a customer? It’s fairly typical for the rep to have a list price (or rate card), though they’ll usually say, “No-one pays list price”. Normally, the only other thing that holds them back is the maximum discount they can offer before seeking approval. Without further guidance, this limit strongly influences discounting behavior and pulls levels down toward it.
However, there is a better alternative available. We can use the Peer Pricing technique to set reasonable discounts between the highest and lowest prices.
We use different colors for per groups, like traffic lights, to give each salesperson specific advice for each deal. This helps them avoid bias and use the right level of guidance, instead of relying on their previous deals.
Reps still decide, but we can use peer pressure by tracking their deal-making with metrics. An example could be how many green deals did you complete this month? The final piece of the puzzle is then to tie this in with their incentives.
#3 “The spreadsheet's on my hard drive somewhere” (Dunning-Kruger effect)
Microsoft Excel remains one of the most regularly used sales tools. The downside of Excel is that calculation errors can be difficult to spot. During our work, we’ve regularly seen spreadsheets with mistakes that have gone unspotted for years. These spreadsheets often lie outside the ‘system’, sitting on the individual laptops of the salespeople.
We know some salespeople don’t realize the limits of their Excel skills (Dunning-Kruger effect). We have seen rebate structures where the company makes less profit as they reach higher volume levels in a contract agreement. Salespeople can receive practical rebate calculations to help them see the possible results of different deal scenarios.
#4 “They sell what they know” (Availability Bias)
There’s only so many products that a salesperson can remember or feel comfortable selling. As a result, sales usually focus on only a few products, even if there are many products available. How can we help salespeople cross-sell a wider range of products?
Amazon’s recommendation system has greatly influenced selling tools by focusing on customers. These methods assist with selling by showing customers related products that others have purchased.
These methods analyze data and make predictions to suggest the best offers for salespeople based on past deals. Even if they are not familiar with the product, they can trust that the suggested match is a good one. This is because their colleagues have closed many similar deals.
#5 “Winning awards or winning deals?” (Agency problem)
A company’s website is increasingly crucial for sales. Buyers are conducting more product research online before engaging with a salesperson. The website should help people decide what to buy and tell them what to do, even if they buy in person.
The web design firm’s goals may differ from the client’s goals. They may prioritize showcasing their creativity to win awards instead.
Such miscommunication can result in enhanced website appearance, but a decrease in generated leads. Make sure to include lead generation goals in the criteria for evaluating suppliers. Also, include them in the brief given to the web design company. Additionally, consider any potential success fee.
#6 “How did we miss that?” (Framing effect)
“I’ve looked at these numbers for years and never spotted that”. What is the difference?
The client in question looked at ‘the numbers’ on a long list. We used our eyes to analyze data and turned it into a visual chart. All of a sudden, their team started pointing at the customers with low profit margins and asking who they were.
Sales performance dashboards are usually part of any enablement project. Scatter diagrams visually represent sales data. They help identify interesting cases for further investigation. This provides more insight into customer and sales rep behaviors.
Checklist for effective sales performance dashboards
Sales dashboards are more important now. Here are some helpful tips to consider:
- Requirements. Starting small and growing later is better. Having five reports that people read is more effective than having 50 reports that they ignore.
- Go beyond averages. Averages are great for budgeting but lousy for developing insights as they hide the outliers.
- Make it visual. Our eyes are one of the most powerful tools for analyzing, so think about charts and graphs.
- Set thresholds. To enable exception reporting on priority cases.
- Allow analysts to download data. Data needs to be extractable from the dashboard so power users can create their own analyses.
Summary
Yes, sales enablement tools are important, but the focus must not be on the IT. It must stay on the task of making more money and on the importance of human behavior in that.
Despite the many sales tools available, the most important sales topic mentioned in our study was Value Selling. This remains crucial even in the digital age. Companies should have salespeople who have the right skills and can explain the value of their product to customers.
