You can’t “cut” your way to success…

February 23, 2010

While I was in Colorado this week before attending the VCIR conference www.vcirwinter.com/ which showcases some of the rocky mountain regions top emerging growth companies I had a chance to meet with Jim Dickie, a managing partner in CSO Insights www.csoinsights.com/.

CSO Insights is a firm that does a tremendous amount of survey research every year across thousands of sales executives to identify, measure and track sales effectiveness metrics and trends. As a former senior software sales executive who is now an Operational Venture Partner with a Boston based venture capital firm that provides growth capital to expansion stage software companies it did not take long for Jim and I to get into a great discussion around sales performance optimization (SPO).

Jim was taking me through some of the latest results from their report “Sales Performance Optimization: 2010 Key Trends Analysis“. As part of this conversation around the key trends from the survey we touched on a topic that I have discussed with many founders and CEO’s that is very topical in the current economic climate. The topic was “You can’t cut your way to success”

From the fourth quarter of 2008 until now OpenView Partners has provided advice and operational support to our portfolio companies and their management teams with an emphasis on optimization of their human capital across all areas of the company while managing for capital efficiency. While in some cases this resulted in under-performing or excess headcount being let go we continued to emphasize the need to invest in the remaining employees to improve their performance and execution to maximize the companies’ growth and return during this difficult time.

What CSO Insights discovered through their research is that many companies did just the reverse in their sales organizations…

Consider the following:

Lead Generation Did Not Keep Pace With Sales: In last year’s report we noted that the number one sales effectiveness priority going into 2009 was optimizing lead generation. But while sales rep quotas increased, 67% of the firms taking part in our 2009 Lead Generation Optimization study reported they had frozen or reduced their lead generation spend for the year.

Improvements in Sales Knowledge Management (SKM) Were Under-delivered:
The number two sales effectiveness priority for 2009 was improving sales rep access to sales knowledge. Less than 1 in 10 firms delivered on the promise of implementing an SKM system, as the vast majority of companies moved this out to a 2010 priority.

Sales Training Investments Were Curtailed: Across all the firms surveyed in the 2010 SPO study, the average investment per rep for training (sales skills, product training, negotiations, justification skills, etc.) decreased by 13%.

Decisions on Tools for Optimizing Sales Management Were Tabled:
Only 12% of the firms that stated they were going to move forward with implementing new technologies to help their sales managers optimize pipeline/forecast management and rep coaching actually followed through on those investments.

In reality these companies actually contributed to their poor performance by turning off investment in the very things that would have helped their sales organizations deliver more of what their companies needed… customers and more revenues!

During 2010 OpenView will continue to stress operational execution through cycle time reductions and process improvements across all operational areas (including sales) in our portfolio companies. However one thing we won’t be doing is encouraging them to try and cut their way to success by not investing in the resources they have.

If you are interested in more key trends around Sales Performance Optimization feel free to reach out to either Jim Dickie or the co-founder Barry Trailer who I have known for years at CSO Insights. Both are great guys with a wealth of knowledge and experience in this area.

All the best!

G

Venture Partner

<strong>George Roberts</strong> is a Venture Partner at OpenView. He enjoys partnering with companies and helping them achieve their goals through strategy, focus and operational execution. From 1990 to 2003, George spent 13 years at Oracle Corporation, most recently having served as Executive Vice President of North American Sales. While at Oracle, George was responsible for over $1 billion in revenue and more than 2,000 employees, reporting directly to the company’s CEO and Chairman, Larry Ellison.