Sales

analytics
guide
Practical tips and advice for using
analytics to drive sales performance

Brought to you by
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Contents

Foreword 3
Chapter one: 4
An introduction to sales analytics
Chapter two: 11
Sales analytics best practices
Chapter three: 16
The KPIs to keep an eye on
Chapter four: 20
How to measure the ROI of sales
analytics
Chapter five: 25
Predictive analytics – the future of
sales analytics?
About Microsoft Dynamics 30
About MyCustomer 31
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Foreword:
A quick search of the term ‘sales’ on a certain, popular ecommerce site brings up a
staggering 250,000 results related to the subject. Clearly it doesn’t take too much
effort to establish that the art and science of selling is something the human race is
fascinated by.

The role of the modern day salesperson is evolving rapidly, and while the books
that provide motivational stories and guides to the psychological side of selling are
arguably still pertinent, the emergence of the digital buyer throws up a completely
new set of requirements for most salespeople.

No longer can you get by with just a shot of charisma and a black book of contacts.

The buying cycle has evolved. Customers now do their research about products
and services online, forcing actual selling to the bottom of the buying journey and
meaning that all too often, a salesperson will come into contact with a prospect at
the point where they’ve already made up their mind whether to buy or not.

At the same time, however, our ability to build an understanding of consumers, their
behaviour and potential for buying our products before they even know it is fast
becoming a reality, and our use of consumer and organisational data is becoming
more and more sophisticated.

What this means is that sales is becoming an increasingly analytical discipline.

Descriptive, diagnostic, prescriptive and predictive analytics are all on hand to aid
the modern sales leader and their teams in trying to establish more efficient and
effective modes of pinpointing good leads and turning them into sales.

Sales analytics represent an exciting opportunity, however there are a number of

best practices and challenges involved in wielding these tools to their true potential.
With this in mind, I hope you are able to read this guide and establish the power of
using sales analytics in your business, and see how you can apply the correct strategy
and tools to utilise it.

Gina Timm
Microsoft Dynamics
CRM Marketing Manager
Chapter 1:
An introduction to sales analytics
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Chapter 1:
An introduction to sales analytics

In 1935, AGA was struggling to sell its latest model

of kitchen cooker to British homeowners, and so
executives enlisted the help of a “rising star” in the
Swedish firm’s sales team: David Ogilvy.

His solution was to produce a manual that AGA’s salespeople could adhere to
– a step by step instruction booklet that gave those doing door-to-door selling
everything they needed to know in order to turn all their prospects into sales. It was
an instant success.

Ogilvy eventually moved to the US to cut his teeth in advertising, and quickly
became one of the industry’s leading figures – the “King of Madison Avenue”. But
the manual remained a blueprint for sales people across the globe for many years to
come. Even as recently as the mid-1980s, Fortune magazine was still calling it “the
best sales manual ever written”.

Fast-forward to present day, however, and leafing through the pages of Ogilvy’s
sales bible reveals a discipline very much of a bygone era:

“There are certain universal rules. Dress quietly and shave well…do not wear a
bowler hat…study the best time of day for calling; between twelve and two pm you
will not be welcome, whereas a call at an unorthodox time of day - after supper in
the summer for instance - will often succeed…pretend to be vastly interested in
any subject the prospects shows an interest in…the more prospects you talk to, the
more sales you expose yourself to, the more orders you will get.”

Today, the discipline of sales may adhere to some of the same underlying principles,
but the idea of a salesperson being able to simply dress appropriately and have a
shave in order to win more business seems about as likely as them winning the
lottery and getting struck by lightning in the same week.
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Rapid change
Flanked by the perfect storm of rapid technological change, shifts in consumer
behaviour, bloated marketplaces and new channels of communication, the average
salesperson is very different to the one that once invited themselves round to
houses after supper in order to sell the latest kitchenware.

Andris A. Zoltners sums things up in the book, The Power of Sales Analytics: “As sales
leaders ponder the challenges of structuring, sizing, deploying, hiring, developing,
motivating, informing, and controlling their sales organisations, they are working
with a new generation of technology-savvy workers and an explosion of data and
technology that has several components:

cc Escalating volumes of information on customers, sales transactions, market

potential, competitors, sales activity, and sales people.
cc Social networks such as Facebook, LinkedIn, and Twitter.
cc More powerful and fast-changing computer, storage, and mobile
communication technologies.
cc Advanced models and analytics tools.”   

The new generation of salesperson is understandably more technologically astute

than those in the 1930s, but perhaps the biggest shift in thinking has been caused
by how much the sales cycle has changed in the last 10-20 years.

“The way people are buying today has radically changed in the last decade,” says
Jonathan Woodward, UK business lead at Microsoft. “Organisations and consumers
are far more educated in their buying position and spend a significant amount of
time researching and reviewing their options before even thinking of engaging
a salesperson.

“This means that in some instances a salesperson will never be involved in the
sales cycle when a customer buys direct, online or via an another channel. When a
salesperson is engaged they will be far further down the sales cycle and engaging
with very well-informed customers.

“So, two main areas have changed in this new world: marketing has moved from
just an awareness engine to being the customer awareness, nurture and advocacy
engine that supports sales more than ever before. And sales has moved to engage
far more analytically, to ensure that the deals they engage with are the ones that
have the highest chance of closing and winning, leveraging all the insight that is
collected before and during their engagement.”
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The slow burning effect

Such a change in characteristics has led to analytics slowly becoming a cardinal tool
for sales teams, especially those in mid-to-large size businesses.

While the analysis side is by no means a new concept, (even back in the 1970s,
Xerox’s head of sales operations, J. Patrick Kelly was pioneering sales analytics,
describing the process as “all the nasty number things that you don’t want to do
but need to do to make a great sales force”), the technology evolved, the datasets
exploded, and so the analysis of sales performance increased and sales leaders were
able to use tools like Microsoft Excel and statistical software to manage their team’s
pipeline effectively.

Yet up until recent years, the data being gleaned in the process of the sales cycle
remained, for many teams, elusively complex to understand – continuing to
represent the “nasty number things” that J. Patrick Kelly so aptly described.

“Why has it taken nearly 40 years for sales analytics to become widely accepted as
an essential sales management tool?” asks Neil Rackham, author of SPIN Selling, in
his foreword for The Power of Sales Analytics.

“A primary reason is that in the early days, nobody knew what data to analyse. My
own research in the 1970s provides a good example of the problem. We wanted
to measure the skills most linked to sales success. Our purpose was to analyse
the behaviours used by successful salespeople during sales calls and to use that
information to train and coach the rest of the sales force. We needed to decide
which behaviours to analyse.

“Hundreds of observable things happen in the average B2B call. We ended up

measuring more than a hundred different possible behaviours before we found
the half dozen trainable behaviours that we were looking for. Until we had built a
valid success model, we didn’t know what data we should be collecting for analysis.
Initially, this work was just as wasteful and expensive as the seat-of-the-pants
approach that we wanted to replace.”

However, in time, businesses have come to implement more sophisticated data

management and storage systems, and this has helped bring sense to the use of
data across every organisational department. CRM systems have evolved, and while
still viewed upon with an air of suspicion in some sales teams, have burgeoned
to become the go-to platform for data analytics to take form. So much so that
Rackham calls analytics the “newest sales ‘must-have’: a contender for the next big
thing to follow after mobile CRM”.
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The business benefits of sales analytics

According to the 2015 State of Sales report, there’s a 58% increase in planned sales
analytics use from 2015 to 2016.

“Analytics are the key that enables the VP of sales, sales operations and front-
end sales organisations to move from a culture based only on gut feeling and
perception-based decision making to one based on factual data supporting tactical
and strategic decision making,” say Gartner analysts Praveen Sengar and Bhavish
Sood, in their Five Best Practices to Strengthen Your Sales Analytics Initiative report.

Sales analytics, when not used in isolation, are said to have the power to transform
sales performance. According to Sirius Decisions, sales analytics “enable more
effective, fact-based decision making”, and sales leaders should “leverage
analytics to complement their judgment and experience”. These analytics give
sales teams more of an understanding of their pipeline and funnel, and a better
idea of what’s going on in certain stages: when deals will close, how long they’ll
take, and more.

Woodward perhaps puts it best when he says, “the benefits of having insight into
win/loss prediction, sales rep performance, pipeline prediction, year-over-year
comparison, real time opportunity scoring allows sales rep to address the single
biggest issue: time. Sales Analytics = Sales Productivity = Increased Revenue.”

Indeed, the 2015 State of Sales report states that high-performing sales teams
are three times more likely to be using sales analytics to drive sales than those
under-performing teams.

When used within a team that full embraces the processes, sales analytics tools are
able to take data and answer any of the following questions for sales leaders:

cc Which deals are most likely to close?

cc Which sales rep has the best chance of closing this opportunity?
cc What is my predicted close rate on my pipeline?
cc Why do I win /why do I lose deals?
cc What is the next best action for this opportunity?

However, the challenge of creating a joined up, well-oiled sales analytics function
is one that very few businesses can say, with certainty, they have achieved.   
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There are three core issues with a sales department that mean analytics
deployments can under-perform:

1. Analytics are not measuring the right things

Sales figure are of course very important, as are metrics such as the amount of calls
that are turned into meetings and how long sales cycles take from start to close. But
they are not metrics to assess sales staff performance. And by purely focusing on
sales figures, organisations ignore the other factors that affect performance.

2. Poor communication
If organisations fail to communicate the motivations for the sales reporting
and their wider significance for the organisation, it can be difficult to drive
behaviour change.

3. No strategy
Sales reporting should empower staff to become more competitive and encourage
them to get closer to their customers. Buying the software is a good starting point,
but without a strategy, sales analytics can only get you so far.

And Jonathan Woodward adds that this second point, about the use of analytics
being misaligned through an organisation, is potentially the most pertinent, as it
often boils down to data simply not being given enough gravitas as a fundamental
part of the business’s culture.

“A data-driven culture has been proved to enable your organisation to outperform

your peers and unlock what IDC call the ‘data dividend’, unlocking additional
revenue to the tune of $1.7 Trillion over a 4 year period worldwide.

“By acquiring the right data, applying analytics, putting it into the hands of the
employee and doing this at speed significantly make a difference to the efficiency
and financial performance of an organisation. By moving the organisation towards
a data culture, whereby decisions are taken based on data, we allow ourselves to
increase our productivity significantly.”

And one final, but by no means diminished challenge sales leaders must overcome
if they are to successfully integrate analytics is the need to get their sales team
on board, because as with the early days of CRM, many salespeople often see the
suggestion of tracking and analysing their performance as a means for leaders to
‘keep tabs on them’.

“In this respect,” Woodward adds, “sales leaders need to really drive home how
analytics can improve their productivity.
“Time is probably the single most valuable commodity to salespeople. Being highly
productive and focused on the right deals as a seller is the difference between
mediocre and typically stellar sales performance.”

And it is this hurdle and the best practices that associate with it, that we’ll address
in the coming chapters.

Chris Ward Input contributed by:

Jonathan Woodward, UK business
Deputy Editor, lead at Microsoft
MyCustomer
Praveen Sengar and Bhavish Sood,
research directors, Gartner
Chapter 2:
Sales analytics best practices
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Chapter 2:
Sales analytics best practices

In days gone by, sales management was definitely

more of an art than a science and one centred very
much on gut feel.

But a new generation of sales directors is now starting to come through. They are keen
to get their hands on company data in order to help them make smarter decisions and
boost the performance of their sales teams based on facts rather than feelings.

Because the adoption of sales analytics tools - beyond the seemingly ubiquitous
spreadsheets - is still very much in its early days, here is some best practice guidance
to help steer you through some of the most common pitfalls:

1. Take your sales analytics initiative one

step at a time
Sales analytics tools can help you track and understand the behaviour of your sales
force and also give you insights into why customers buy what they buy.

But there are four key types of tools on the market to help you do this and Gartner
splits them into four categories, each of which is on a continuum:

cc Descriptive – What happened? For example, which key opportunities did we win
or lose?
cc Diagnostic – Why did it happen? For instance, we won or lost due to competitive
pricing.
cc Predictive – What will happen? For example, win rates are likely to improve
next quarter.
cc Prescriptive – How can we make it happen? For instance, we will improve win
rates due to more effective value selling.

This means that it is usual to start your project at the descriptive and diagnostic
levels and, once experience has been gained, to move onto the next stage.
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2. Ensure your data is complete and

accurate
Any sales analytics tool will only be as effective as the data entered into it from sales
force automation and/or enterprise resource planning systems. But many companies
tend to employ such tools in a rather undisciplined way, failing to provide sales staff
with simple, structured templates laying out the data they want to collect.

It is also worth focusing time and effort on ensuring that the quality of your data is
high by undertaking a data cleansing project on existing information and making
certain that it as complete and accurate as possible. Failure to do so could mean that
answers to your questions are not reliable.

As part of this process, also take the time to agree on standard, objective terminology.
The idea is to ensure that everyone understands what basic words and expressions
such as “qualified leads” mean in order to avoid misunderstandings later.

3. Understand what outputs will help you

attain your objectives
All too many organisations go out and buy an expensive sales analytics tool and then
sit back and wait for the magic to happen. But in order to make the most of it, it is
very important to have a clear view of what you are trying to achieve – so what are
you using the tool for and to what end.

To help things along here, consider which part of your sales process needs attention,
either because it is poorly-understood or broken. Then, come up with very specific
questions about that area in order to gain a clearer idea of what is going on. Such
questions could include how long it takes on average to close a deal and which
customers buy what products where.

4. Ensure you have sales operations

expertise in place
If a given sales manager does not have sales operations expertise, it may be helpful to
bring such skills in. Sales operations personnel are logistical, process-oriented people
who provide discipline and structure when working with sales analytics tools. Many
are data scientists, or are in the process of becoming one, and undertake activities
such as preparing reports, evaluating sales enablement tools and setting up systems.
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5. Handle change management carefully

In order to get hold of the right data for analysis purposes, it is crucial to ensure that
sales staff keep their records updated with pre-defined information such as potential
opportunities at each stage of the sales cycle.

To encourage them to do so, make it clear that the organisation now relies on such
information, which means that it is considered a core responsibility to accurately
record their activities in order to ensure that the team, and the company itself,
performs better as a whole.

Tied to this, however, is the need to prove these statements by being seen to act
on the data provided. For example, if an individual is found to have problems in
converting leads into sales, use the data as the basis for discussion and offer to send
them on a training programme to aid their professional development.

Also important in this context is the sales leader’s management style and approach,
which means that training may be required here too. If change management is not
handled sensitively and the team feels that data is being used against them in a
Big Brother-ish fashion, they will find ways to subvert the process or simply start
sandbagging.

This means that helping personnel to understand how data can be used to their
benefit is crucial. One approach is to openly share dashboard information in your
weekly catch-up meetings rather than waiting for quarterly team meetings in order
to keep people in the loop.

But bear in mind that using data to inform discussion can also change the
nature of the conversation too. So if someone is not hitting their sales targets,
the focus no longer necessarily has to be on asking why. Instead it can move on
to offering possible solutions such as altering the size of territories or focusing
on repeat business.

6. Keep things simple and iterative

Large corporate sales analytics projects that are led by IT departments often fail
because they can become over-scoped and over-specified and just too complex. The
problem is that, rolling out functionality based on everyone’s pet features all at once
can result in the initiative simply collapsing under its own weight.

But keeping things simple and limiting the initial scope of initiatives generally works
well. The old adage ‘deploy early and deploy often’ applies here, with each stage of
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the process comprising activities that are linked to key deliverables, which are made
available at the end of each phase.

This means that new features are rolled out iteratively in chunks on a must-have
basis, which in turn enables you to understand what has been used and what works.
Managing this process is likely to require an experienced project manager or subject
matter expert in order to keep nice-to-haves to a minimum, however.

Over time, data from other departments such as marketing and customer service can
also be added in order to encompass the entire business, but the key lesson here is
that it pays to start small.

7. Remember it is the data that will give

you sales insights, not the tool per se
Your sales analytics tool will show you patterns in data and answer your specific
questions, but it will not be able to interpret this information for you – that is down
to you. But it is in interpreting and acting on the data provided that the real power
lies as it will help to inform your sales strategy.

Cath Everett Input contributed by:

MyCustomer Contributor Vera Loftis, UK managing director of

Bluewolf
Cesar Brea, chief executive of Force
Five Partners
Bob Apollo, chief executive of
Inflexion Point
Chapter 3:
The KPIs to keep an eye on
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Chapter 3:
The KPIs to keep an eye on

Many organisations, before they embark on their

sales analytics journey, tend to focus on tracking sales
numbers rather than on truly understanding how they
were achieved.

This means that they do not necessarily have much insight into the mechanics of
how they make money or what opportunities they might be missing. But if sales
insight can be combined with performance data, it becomes possible to obtain a
rounded view of what is working well or where possible problems are taking place.

This is where key performance indicators (KPIs) come in. They provide a standard way
of defining and measuring how well sales teams are doing in terms of achieving their
sales goals and can be tweaked to modify behaviour in line with strategy changes.

Here we provide a guide on just what KPIs actually are and how to get them right:

What are key performance indicators?

KPIs are a set of quantifiable measures that assess the elements of organisational
performance considered most important to a firm’s current and future success. In
other words, they enable you to understand whether a company, business unit or
individual employees are performing in line with desired business outcomes.

As a result, says author and KPI expert David Parmenter, these behavioural measures
need to demonstrate seven core characteristics in order to be effective. They should be:

cc Non-financial – no monetary value is assigned to them.

cc Timely - they are measured frequently.
cc CEO-focused –the chief executive or other appropriate senior manager
acts on them.
cc Simple – all employees understand what is being measured and what action
needs to be taken if they are not being achieved.
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cc Team-based – responsibility for hitting them is assigned to an individual team

or teams that work closely together.

They should also have a:

cc Significant impact – this means they influence more than one of the
organisation’s key critical success factors.
cc Limited dark side – they are tested to ensure a positive impact on performance
rather than introducing unexpected perverse incentives.

In a sales context, KPIs are generally based on internal metrics such as sales
conversion rates or reps calling a given number of prospects per week. The aim is to
make it clear where they should focus their time and efforts in order to hit goals.

So for example, if your sales analytics data indicates that most of the team
concentrates on small-to-medium enterprises as the sales cycle is quicker and
easier, even though there is much more money to be made from large companies,
your KPIs will need to reflect your requirement for them to switch focus.

Why is it important to use KPIs?

By having pertinent KPIs in place, it becomes possible to modify the behaviour of
your sales staff to ensure it is aligned more effectively with the wider sales strategy.

This means that if you combine such measures with sales insights and performance
data, you can gain a more holistic view of what is working well or where possible
problems are occurring in a given sales campaign or wider sales process in order to
take swift action. Such action could involve either tweaking things to ensure you
stay on track or even coming up with an entirely new approach before any real
damage is done.

So for example, if a given campaign isn’t performing as well as hoped, spotting the
situation early is likely to make it easier to turn around. Possible action here might
include setting new KPIs to ensure that sales people personally call on up to 10
customers a week to raise awareness - or even pulling the campaign entirely before
there are any negative financial repercussions.

How do you go about defining KPIs?

The KPIs that you choose completely depend on your sales strategy and what it is you
are trying to achieve so there are no hard and fast rules. But examples can help to
illustrate the point.
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So for example, your target as a manager might be to see sales increase by 10% over
the year ahead. But when you look at your customer data, it becomes clear that, while
your team are great at winning new customers, they are less successful at keeping
them for any length of time or in cross- or up-selling to them.

As a result, you set KPIs to ensure that your sales team spend 50% of their time each
week working with existing clients and making two new contacts there a week in
order to build on and develop the relationship.

But it is also worth bearing in mind that the more granular and specific a KPI is,
the more effective it tends to be. So, for instance, asking reps to speak to 5 new
prospects a week will generate more positive results than just requesting that they
talk to customers more.

Although getting such measures right takes experience and is an iterative process, by
tracking behaviour regularly, it becomes possible to see what works and what doesn’t.

Where do people go wrong with KPIs?

A common pitfall is getting carried away and trying to measure too much. Generally,
up to five KPIs is quite enough and less is generally more - particularly if sales staff
are not used to having their performance measured in this way.

Another mistake is simply pushing out KPIs without explaining properly to the team
what they mean or why they are being tracked in this way. Failure to educate people
properly is likely to see staff trying to find ways to pervert the process, which simply
doesn’t help anyone.

Cath Everett Input contributed by:

Vera Loftis, UK managing director,
MyCustomer Contributor Bluewolf
Clive Longbottom, founder, Quocirca
Chapter 4:
How to measure the ROI of sales analytics
 21

Chapter 4:
How to measure the ROI of sales analytics

No matter what industry you work in, being able

to demonstrate that you have made a return on
investment from your sales analytics project is
a must.

On the one hand, the board will inevitably be keen to see that its money is being
spent effectively. On the other, it is important to be able to tell whether your time
and efforts have been worth it.

So to help you get there, here are some key considerations when measuring ROI for
sales analytics implementations:

1. Where will money need to be invested?

An obvious area for investment is either the technology required to implement an
analytics system in-house or on a subscription to a software-as-a-service-based
offering that can be accessed online.

Current options here include Microsoft, which enables organisations to build their
own predictive models from scratch.

2. Common areas of underinvestment

Another thing to bear in mind in this context - and one that is often overlooked
or underestimated - is the amount of time, effort, and therefore outlay, that is
required to identify relevant data sources, which includes salesforce automation and
enterprise resource planning systems, and then ensure that the data itself is clean,
accurate and consistent.

Failure to do so could result in the answers to the questions you ask your analytics
system simply not being reliable because any outputs will only be as good as the
data you input.
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A further and again all too frequently neglected area of expenditure is on education
and training. Introducing new key performance indicators (KPIs) to the sales team
without explaining what they mean, why they are necessary or how they will benefit
all concerned is highly likely to lead to dissension. It is also likely to see staff try to
find ways to bypass or even pervert the process, which isn’t good for anybody.

Moreover, introducing KPIs, perhaps for the first time, combined with the insights
provided by sales analytics data, can also often reveal areas where sales reps- and
their managers - require training for professional development purposes.

3. How can I best demonstrate ROI?

According to Vera Loftis, UK managing director of business consultancy Bluewolf,
where a lot of people go wrong in ROI terms, is in spending lots of money on
expensive analytics tools, populating them with data and then sitting back to “wait
for the magic to happen”.

But in order to get the most of such software, it is important to break the processes
around using it down into several areas. The first is employing the sales insight data
you have collected to understand why your customers are buying what they do and
when - or not as the case may be - and develop a strategy around these findings in
order to optimise sales.

For example, if it becomes obvious that, while your sales team is great at acquiring
new clients, it is not so good at keeping them or cross- and up-selling to them, then
it makes sense to devise a strategy around customer retention as a straightforward
way to boost sales.

The next step is to come up with KPIs that ensure your reps focus on the key
outcomes outlined in your sales strategy. “A lot of people get KPIs and performance
metrics confused, which makes them difficult to track, and that’s when ROI
conversations get convoluted,” warns Loftis.

While KPIs are linked to behaviour, performance metrics focus on things such as
year-on-year revenues and performance against targets. If the two become “tangled
up”, however, it can become difficult to understand if an individual process is
working or whether it needs to be modified.

But, says Loftis: “The value of these new analytics tools is they can pool data insights,
KPIs and performance data to give a rounded view of what’s happening in semi-real
time. So it’s no longer about working with reactive, static reports once a year.”
 23

Instead it becomes possible to see what is working well and what isn’t on an
ongoing basis.

“If you follow the process consistently, ROI should be obvious,” Loftis says. “So your
insights inform your strategy, which is based on KPIs, and if your sales reps do what
they should, you should achieve your goals. If not, you can use your analytics tools
to re-evaluate.”

But to make it all work, she warns that sales strategies must have ROI calculations
built into them from the outset. “That is, if we follow this strategy and the sales rep
follows this behaviour, this is the result we can expect,” Loftis explains.

4. Common pitfalls when trying to

demonstrate ROI
A common pitfall when looking at ROI is simply trying to make the scope of initial
sales analytics projects too wide.

The ultimate aim should be to include data from other areas of the business such
as marketing and customer service as they all contribute to the sales process. But
the secret is to start small and “crawl, walk, run”, according to Mike Grigsby, vice
president of analytics at Omnicom’s strategic communications agency Targetbase.

For example, specific sales niches that are often worth exploring initially in ROI
terms include lead-scoring, exploring product mix recommendations and improving
sales pipeline visibility.

“You don’t have to put a huge system out there a year from now and wait for a
return,” Grigsby says. “It should be immediate. Start small with a single use case,
use it for three months and it should pay for itself. If not, you can pull the plug.”

But this links into another frequent error – trying to demonstrate ROI too quickly.
A key consideration here though is that, because organisational and process change
takes time, any ROI is unlikely to materialise in the first month or so – and certainly
not before the three to six month mark.

But as Loftis concludes: “When you’re looking at analytics, it’s very methodical
and logical in some ways so it should actually be the easiest of all business areas to
demonstrate ROI.”
Cath Everett Input contributed by:
Vera Loftis, UK managing director,
MyCustomer contributor Bluewolf
Mike Grigsby, vice president,
Targetbase
Chapter 5:
Predictive analytics – the future of sales
analytics?
 26

Chapter 5:
Predictive analytics – the future of sales
analytics?

Even though sales analytics tools have been around

for years in one shape or form, most organisations
still tend to use Microsoft Excel spreadsheets to
manage their pipelines and help them understand
what has happened in the past.

This is despite the fact that the majority of salesforce automation or enterprise
resource planning systems come with their own perfectly respectable so-called
descriptive and diagnostic analytics tools.

Just to clarify what these terms mean, according to Gartner, there are four key
types of tools on the market, each of which has a slightly different role and
purpose. These are descriptive, diagnostic, predictive, prescriptive, as mentioned
in chapter 2.

Spreadsheets fall into the first category and so are fine for looking at historical
trends and exploring internal sales workflow and pipeline management issues such
as conversion or close rates.

But if you want to look for patterns in more external, client-centred data in order
to undertake forecasting and explore issues such as which customer segments are
particularly price-sensitive so that action can be taken to encourage a future sale,
then predictive analytics is more likely to be your thing.

While each approach has its place, the problem with the descriptive and diagnostic
approach, warns Targetbase’s Mike Grigsby, is that “a plateau is reached very quickly
as you don’t go beyond the past - and there’s no insight into how to make things
better in the future”.
 27

Therefore, he believes that predictive analytics tools are the way forward, even
though the market for such products is currently immature, fragmented and in flux,
with lots of small players around that are likely to be snapped up by bigger ones.

As for uptake to date, this is highest in sectors such as high tech and consumer
packaged goods. But adoption is also picking up in financial and business services
as well as healthcare – although Gartner expects it to be another three to four years
before the technology really moves into the mainstream.

Clean, accurate and consistent data

Current product options, meanwhile, include standard tools from generalist business
intelligence vendors such as Cognos and software that enables organisations to build
their own predictive models from scratch by suppliers such as Microsoft.

Other possibilities comprise software-as-a-service-based specialists such as Model

N, which sell pre-built models and industry-specific applications that cover either
one element of the sales process or come as suites handling three or four.

But a key consideration if opting to go down the predictive analytics route is that,
in order to operate effectively, such tools need to work against clean, accurate and
consistent data provided by in-house salesforce automation and enterprise resource
planning systems.

The issue today though is that many companies simply do not have faith in the
quality of their data – which is why they often bypass such systems entirely and use
spreadsheets instead. Another downside is that it can take time to de-duplicate and
cleanse this information to ensure that it is in workable order.

As Gartner’s Bhavish Sood points out: “It’s about maturity. So if you’ve not been
doing sales analytics for long, the historical data on which to start won’t be there. As
a result, before you start using predictive capabilities, you need to have a culture of
using standard business intelligence tools already. If you don’t, you’ll struggle.”

Cesar Brea, chief executive of multichannel marketing consultancy, Force Five

Partners, agrees. “You really need enough data to reach statistically meaningful
conclusions. So if your system is handling hundreds of leads, it should be fine, but if
there’s sub-100, it starts to get hard to make a reasonable judgement.”

But Surya Mukherjee, market researcher Ovum’s senior analyst for information
management, believes that it is not just a matter of clean data. In many instances, a
cultural shift is also required.
 28

“You might be able to do some basic predictive stuff with the help of new
technology, but you’ll really need to move up the maturity curve in terms of your IT
and business processes to take real advantage of it,” he says.

For example, many companies today operate a silo mentality, which results in
functional heads holding their cards close to their chest and refusing to share their
true budgets and plans with colleagues.

Cultural shift
But to truly get the most out of predictive analytics implementations, the focus
has to be much more on collaboration, with people sharing data across the
organisation in order to work towards the common goal of higher revenues
and profitability.

As a for-instance, Mukherjee points out that finance has never really understood
how sales people operate because, while they like to deal in hard numbers, sales
professionals tend to hedge their bets and say ‘there’s a 50% chance of this or that
deal closing’.

“But what technology helps you do is to show finance what the pipeline looks
like so they can see that the company will make these sales and profits,”
Mukherjee says. “It’s also useful for operations to ensure enough raw materials
are available to make the products required and for logistics to ensure there’s
enough warehouse space. It’s basically doing what analytics has always promised,
but never delivered.”

To make it happen, however, requires a huge change management project supported

by the highest levels of management. As a result, says Mukherjee, it is important to
start small. This means you should:

cc Identify what kind of use case will have the biggest impact.
cc Build a business case around it.
cc Test it out in workgroups that are receptive to change.
cc Broaden out the scope of the initiative over time.

Force Five Partner’s Brea also believes that putting no more than a year’s worth
of relevant data into the analytics system is enough initially as trying to do too
much in a bid to get more precise predictions invariably leads to trouble.

“The objective is to come up with a better result than a guess from a sales
executive, but don’t ask too much at first. Think of it as an evolving standard,”
 29

he says. “So maybe get it 80% as good in the first three months, matching in
the first six months and exceeding them in 12 months. It’s about delivering early
and often and focusing on improving accuracy rather than on one-time standards.”

As for the last category in Gartner’s model, that of prescriptive analytics, widespread
adoption, it seems, is even further out. The tools themselves are only just starting
to emerge and are today better suited to business intelligence experts and data
scientists than the average sales professional.

In fact, according to Gartner’s Hype Cycle of Emerging Technology, the technology is

unlikely to hit the mainstream for at least another five to 10 years – although judging
by the work required to make predictive analytics happen, it appears that sales
organisations will have quite enough to keep them occupied in the meantime.

Cath Everett Input contributed by:

Mike Grigsby, vice president, Targetbase
MyCustomer contributor
Bhavish Sood, research director, Gartner
Cesar Brea, chief executive, Force Five
Partners
Surya Mukherjee, senior analyst, Ovum
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