Sales Pipeline Management 101 and How CRM Can Help

Recently I was at a two-day conference talking about the slowing economy, business opportunities and the like. It was basically 16 hours of presentations with people offering a few insightful tips and advertising their services.

One of the great takeaways I got was the 'pipeline formula' from Simon Harris of ActionCOACH. I'm sure I'd seen it before, and it is in various places on the internet, but it is nonetheless a great little tool:

Number of Leads

*

Conversion Rate

=

Number of Customers

*

Number of Transactions

*

Average Sale Value

=

Revenues

*

Margin

=

Profit

Most people are obsessed with the bold factors (Customer numbers, Revenues and Profit) and often people implement CRM systems thinking they will build it and one of these will come. Here is the secret; you can do nothing about the bold factors but you can do lots about the rest. Moreover, CRM systems help you track and measure all the non-bold factors. This is how Microsoft Dynamics CRM does it...

Number of Leads

Dynamics CRM has a lead record out of the box. Here you can upload all your generated leads or enter them on the fly

Conversion Rate

At the press of a button, a user can convert a lead to a sales opportunity, contact and company. Also as every record has a status associated to it in Dynamics CRM, tracking conversion rates is simply a case of counting those with a successful status against those with an unsuccessful one.

Number of Transactions

Dynamics CRM tracks your sales opportunities until they close. Looking at won sales opportunities, over a given period, we see how many sales have been made.

Average Sale Value

The value of a given sales opportunity in Dynamics CRM is either entered manually by the user or uses the products and services, also stored in Dynamics CRM, to determine the value. Therefore tracking the average sale value over a period is simply a case of averaging the value of all the closed and won opportunities over that period.

Margin

For a given product record, Dynamics CRM allows a user to store the cost of the product or service as well as the sales price. Therefore it is easy to work out the margin of a product or, for an opportunity with products attached, the margin on the opportunity.

So there you have it. If you want to improve your pipeline, consider the 'pipeline formula'. If you want to track how well you're doing, get a CRM system like Dynamics CRM.

Take profits in Salesforce? Unlikely

Those wise analysts at Morgan Stanley have suggested investors 'take profits' from their Salesforce.com shares.

http://blogs.barrons.com/techtraderdaily/2009/03/25/salesforcecom-take-profits-says-morgan-stanley/

This is a nice way to say 'sell out'. Here is the thing, unless you'd bought your Salesforce shares before 2006 (three years ago) you wouldn't have any profits to take. Apart from a brief period in late 2006, any other buyers will be selling at a loss.

Where were these analysts back in September 2008 when the financials screamed 'overvalued':

http://leontribe.blogspot.com/2008/09/valuing-salesforcecom-and-its.html

or at the height of the bubble around three months before this? The financial reports were the same and yet the so-called experts felt $70/share for Salesforce was great value.

The analysts will blame the economic downturn but as can be seen in in the blog post above and in this one, the financials of Salesforce have been following a steady path for the last five years.

http://leontribe.blogspot.com/2009/02/salesforcecom-revisited-still.html

Moral of the story? Understand analyst motivation. It is not always to provide impartial advice to the market for the betterment of the average Joe investor.

All Aboard the Cluetrain, its been waiting at the station for 10 years

"Markets are conversations"

"These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge."

"To traditional corporations, networked conversations may appear confused, may sound confusing."

The above perfectly describe what we now see through technologies such as Facebook and Twitter. These quotes also describe the challenge corporations are having in working out how to interact with the new phenomena of 'social networking' and how to converse with their customers in these new channels. The Skittles Experiment is an excellent example of how corporations are jumping into the new pool to see if they can swim or not.

The 'gurus' now talk about authenticity in corporate messaging if communication in these new channels is to be successful.

Here is the thing. Social networking is not new. The three quotes at the top of this post come from The Cluetrain Manifesto, written ten years ago before Facebook, before Twitter and before the term 'Social Networking' was probably even coined. The Cluetrain strongly advocates corporations to interact with customers as if they are human beings and not demographic cross-sections of society.

Here is the next bit of good news. The Cluetrain Manifesto is available to read on the Internet for free, here it is. To understand how to speak to customers or see how social networking had its seeds in the world we now call Web 1.0, read the Cluetrain Manifesto.

Self-hosting Azure and removing the fear of the cloud

A very interesting article I came across outlining Microsoft's vision for their Azure technology:

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9129156&intsrc=news_ts_head

Just like CRM can be provided as a service by hosting providers outside of Microsoft, so will be true of Azure. This is fantastic in terms of empowering organisations or even governments.

Imagine you have a series of embassies around the world. A government would not want to host constituent or public servant data in the cloud on someone else's servers but now they could do it all themselves. They achieve the power of the cloud but maintain the security, or perceived security, of keeping the data on their own boxes.

Where I can also see this being used is with companies with offices on the USA west coast as well as offices in London. This puts the time difference at around 8 hours, perfect for a cloud server to run at a sustained level of use for 16 hours a day, rather than running two servers at capacity for 8 hours per day each.

Microsoft's overall strategy is very smart in that it allows people who are nervous about jumping into the cloud to dip their toe in the water on their own boxes first. When they get used to it, assuming it will be cheaper to do the same on Microsoft's offering than someone else's, they will then fully embrace the Microsoft Azure offering on Microsoft servers. Any perceived security fears will be outweighed by the economic considerations. 

This lower of the barriers to entry and is a significant market differentiator in my opinion. For Force.com, Amazon's offering, and so on, you either embrace their servers or you don't. While the more technically savvy will have no issue with the jump, often the decision makers are less technically proficient and a lot more cautious. A DIY cloud is the perfect compromise.