CRM automation: efficiency versus effectiveness

Published on the 18/06/2013 | Written by Praveen Sengar


Gartner_opinion

Gartner analyst Praveen Sengar says you need to judge sales tools by their impact on sales success, not the cost of sale...

It’s no secret that sales technologies demonstrate value by significantly improving sales processes.

But to achieve optimum results organisations need to exploit the tactical efficiency value, as well as the strategic effectiveness value of sales technology. This is where sales automation software is playing a key role, and is resulting in reduced lead-to-quote time, reduced prospecting time, compensation accuracy, reduced resource requirements and deadline fulfilment.

This year, spending on sales CRM software will grow almost 18 percent in Australia and more than 16 percent in New Zealand, so interest is high.

However, sales automation initiatives are often the most challenging project within CRM automation.

The benefits seem obvious in terms of efficiency, but assigning hard metrics to assess ROI is a challenge.

Efficiency versus effectiveness
To determine the usefulness of sales force automation (SFA) applications, you need to define the business objectives you want to address and consider it an opportunity to gain not just efficiency but also effectiveness. While efficiency refers to doing things properly, faster and cheaper; effectiveness is about doing things better or doing the right things.

Sales leaders need to fully understand the difference as it relates to SFA applications. Applications that are more geared toward efficiency (e.g. proposal generation and lead distribution) involve performing elements of sales processes quickly and accurately, whereas applications that have a greater impact on effectiveness focus on making the salesperson or process better and stronger.

Finance or IT organisations often start out looking purely for cost savings or efficiencies. For SFA, the goal is almost always sales revenue growth; however, most ROI assessments are based on cost savings or efficiencies. In configure, price and quote (CPQ) projects, for example, 90 percent of the project in CPQ process automation is driven by efficiency objectives, while only 10 percent is driven by effectiveness objectives.

Mapping sales technologies
Mapping sales technologies on the impact they have on the sales process (effectiveness or efficiency) helps organisation to prioritise their focus on sales automation and better understand potential outcomes. Efforts to improve effectiveness will help sales organisations to gain better skills of persuasion.

Sales efficiency involves better equipping salespeople with superior information and tools that can help reduce the time consumed by non-selling activities and increase the focus on interactions with clients and prospects.

Decision support for SFA technology
Efficiency and effectiveness benefits in sales projects are not well-measured. Knowing which sales apps influence effectiveness and efficiency prior to purchase is difficult. The real problem area is measuring revenue growth benefits and proving the project is the cause of those benefits because there are always multiple external causes of revenue changes at play as well.

Most people use proxy metrics which they can prove are affected by the project, such as time freedup or time spent engaging with customers, as well as assumptions made over those metrics on sales revenue. The key is to get someone from finance on the project team to help create the business case and spend enough time to decide on the specific metrics.

ABOUT PRAVEEN SENGAR//

writer_Praveen_SengarPraveen Sengar is a principal research analyst with Gartner’s business applications team. He focuses on configure price and quote (CPQ) technology research and works with clients in Asia Pacific on their CRM projects.

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