By definition, Sales Operations is a set of activities and processes that help a sales organization run smoothly and deliver results in line with the company’s strategy and objectives. Intense competition, rapid growth, mergers & acquisitions, and other external factors require the kind of transformational change that sales organizations go through on a regular basis.
Often however, Sales Operations teams end up spending all their time on Operations and precious little on Planning. Sales Ops teams can also struggle with making the data-driven decisions critical to short- and long-term planning. These problems significantly affect the sales organization’s ability to adapt and remain competitive over time. There are a few core challenges that must be overcome in order to prevent this from happening.
Forecasting is one of the most important aspect of Sales Operations planning, and it’s also among the most difficult. It requires input from finance, sales, marketing, business planning, even the supply chain. The impact of inaccurate revenue, margin, or variable compensation payment forecasts can be catastrophic, sometimes even to the point of materially affecting the organization’s bottom line. Accurate sales forecasting and variable compensation accruals absolutely require timely and accurate data, as well as the proper forecasting and accrual processes to ensure they give insight throughout the year without any nasty surprises at the end.
Organizations that struggle to cope with the challenge of establishing a reliable forecasting process also put themselves at a great risk when it comes to setting accurate sales goals for the next plan year. As a best practice, the total forecast of an organization should tie out with the goals for the sales force such that you can be sure the sales force is rewarded only when the company meets its goals. This means the accuracy of the forecast is intimately linked with the accuracy of the goals for the sales force, and a breakdown in the former will lead to all the negative outcomes associated with the latter. Inaccurate goals are highly demotivating to your sales force, and will be a serious drag on the ability of your sales force to deliver on the intended strategy.
Plan effectiveness assessment
Many companies scramble in Q4 to gather sales performance data, hurriedly model next year’s plan, and then let it run for nine months until the process gets repeated. Aside from the risks to plan design, that strategy also leaves their incentive plan vulnerable both to fast paced market changes throughout the year. Much like forecasting, a good plan effectiveness process happens over the course of the year with the most up to date data available. A regular rhythm for plan health assessment throughout the year sets the stage for improving the effectiveness of next year’s incentive plans and quotas. It provides Sales Ops leadership insight into the weaknesses of the existing incentive plans and quotas early enough that they have time to address them, even correct them in the current plan year.
A proper plan and quota analysis rhythm enables Sales Ops to do the in-depth modeling and sensitivity analysis necessary for a robust plan design and fair and equitable quotas. However, even a disciplined process of forecasting is not enough to solve the planning challenges Sales Ops faces.
Accurate, integrated data
Having a solid planning process is critical, but it’s doomed to fail if it’s based on inaccurate, inconsistent, incomplete, or delayed data. To forecast results, assess sales and plan performance, and make strategic decisions about next year, Sales Ops must integrate data from a multitude of upstream systems: ERP, HR, and CRM just to name a few. No easy task! This challenge is compounded by the myriad of data sources within a single organization, from cloud platforms, to legacy mainframes, to manually maintained spreadsheets. Successful planning depends on the quality, accuracy, and consistency of this data.
Even a solid sales ops planning process can fail if based on inconsistent, incomplete, or delayed data.
Even with a good planning process in place and a foundation of accurate and timely pipeline and performance data, Sales Ops teams often struggle with a lack of focused resources and improper tools when trying to manage the planning cycle.
Meeting the Sales Ops planning challenge requires leaders to build a team with the skills, bandwidth, and expertise to focus on strategic activities like pipeline forecasting, plan modeling, or quota setting. They should understand how to design the right processes for these activities and be able to execute the annual planning rhythm. These resources also need the freedom and capacity to think strategically and spend time on key planning activities in order to make the right decisions.
If the team is constantly distracted by labor intensive and inefficient manual tasks they will spend the majority of their time just managing day to day administration. This prevents even the most strategic minds from planning ahead. The lack of proper supporting technology is one of the most common causes of inefficiency and distraction in most Sales Ops teams.
Robust, flexible technology
Planning-focused people are critical in Sales Ops, but those resources need the right technology to do their job. It is extremely difficult to manage a sales planning process using antiquated systems and homegrown solutions supplemented by manual processes required to meet all important exception cases. Such technology infrastructure does not provide Sales, Finance, and Sales Ops leadership with the visibility and insight needed for proper planning. It also causes the Sales Ops team to spend most of their time on reactive operational tasks rather than proactive strategic planning. Lastly, inflexible systems often limit the ability to adapt sales compensation plans and processes over time.
Having the right technology platform in place will provide time and breathing space for your Sales Ops team to plan ahead, drive improvements, and transform processes that take sales performance to new heights. It will also enable the Sales Ops team to focus on successfully playing in the strategic role it should in forwarding the corporate strategy.
Successful Sales Operations planning requires a well-defined rhythm of activities throughout the year as well as accurate forecasting and insight into plan effectiveness and quota accuracy. All of this must be built on a foundation of accurate, timely, and complete data. In order to properly execute this planning rhythm a well-designed Sales Ops should have people with skills, experience, and time to focus on strategic work as well as the best-in-breed tools and technology to facilitate the process. Having these pieces in place will enable Sales Ops to plan ahead and set the sales force up to succeed and adapt as strategies change.
Ben Thoren, Senior Consultant, Optymyze, contributed to this article.