While many companies talk a good sales-transformation game, few go for wholesale revision, settling for changes in one or two crucial aspects of sales. Even companies that embark on radical transformation often take a number of years to do so. Once in a while, however, a large company tackles it all with great speed. Imagine rapidly transforming a company’s systems, processes, sales-force organization, and alignment with both customers and internal departments.
Reed Construction Data has gone through such a remarkable sales transformation. The entire executive team, led by Lisa Fiondella, the firm’s chief customer officer, had to make a bold commitment to make it work.
Operating in the United States and Canada, Reed sells data on construction projects to industry participants, including manufacturers, contractors, and suppliers, and also offers cost-estimating data. Reed sells through a sales and customer-support organization of 175 people with five primary functions: inside sales, outside sales, account management, sales operations, and customer relations. About 135 of these are inside salespeople, paid a base salary and incentive compensation.
New Team in Town
Fiondella is part of a new management team, which had three goals from the start: First, Reed had to better align sales and other customer-facing departments with their markets. Second, they needed greater internal alignment among sales, customer support, and production. Third, instead of just anecdotes, they needed much more information on customers.
The problems were formidable. “Outside salespeople thought they owned their customers and prospects,” Fiondella remembers. “They protected them and fought inside sales. Some sales leaders yielded because things had always been done this way. There was too much time spent on infighting rather than selling.”
It was difficult to manage and coach inside salespeople, because there were only three managers for all reps, yielding a rep-to-manager ratio that ranged from 30 to 1 to 50 to 1. Turnover was astronomical – at times up to 50 percent. A few star reps were making six figures in compensation, but most reps were not making their numbers.
“There were a handful of superstars, a few mediocre reps, and many at the bottom,” Fiondella says. One star sold $100,000 a month versus a quota of $30,000. Fiondella wonders, “What [would have] happened if he’d left?”
With so few management positions, there were few opportunities for sales reps to advance, and management positions were filled by executive discretion. In addition, sales reps handled their own lead generation. “They searched the Web and also looked for construction trucks driving down the road,” Fiondella recalls.
With no effective business oversight, sales reps were free to discount as they saw fit, paid for bringing in new orders but not being accountable when customers failed to pay. In addition, the old CRM systems generated little effective information and were not unified, with US sales using one CRM program, Canadian sales using another, and the people who sold cost-estimation data keeping financial tabs with spreadsheets. “It was impossible to obtain good metrics on sales performance,” Fiondella says.
To add insult to injury, Reed was operating in an extremely difficult business climate in late 2008, just as the construction market tanked, and Reed’s parent corporation considered selling off the unit. “That was a very difficult time for the business,” remembers Fiondella.
The reforms that would bring the company back from the brink began in early 2010. First, Fiondella set up a sales-operations office to administer policy and monitor compliance with it, for example on discounting. And a promising young manager was designated to help Fiondella think through sales process and systems as the company undertook CRM replacement.
A Team Approach
Next, the inside sales force was divided into six teams, with a 16-to-1 rep/manager ratio. By designating, per team, three reps who would act as senior reps, with higher salaries and greater expectations, and could collaborate with junior reps on difficult accounts and split the commissions, the company created a hierarchy for better management and rep advancement. Through interviews and a formal selection process, the company filled both management and senior rep positions.
For its financial system, Reed chose Oracle and Zuora software as a billing service, and Salesforce CRM for its salespeople. New phone and product-demonstration systems were also installed.
The conversion to Salesforce was a major effort, and Fiondella brought in consultants from Bluewolf to make it work. There were some hiccups along the way, and Bluewolf had to bring in the “A” team to keep things moving. Data migration to Salesforce took just a bit longer than planned at the outset; however, the end result did not disappoint, as Fiondella explains: “We wanted our CRM to be our customer system of record, to provide as close as possible 360-degree information to manage all our active prospects and customers.”
People changed, too. The original head of inside sales departed as business expectations changed, and an interim manager also left recently. The promising young manager who had helped Fiondella with strategy and supervision of the Salesforce conversion eventually took over the inside sales force.
There were some pleasant, unplanned surprises along the way. For example, Fiondella noticed that one young rep was having success with an alternative approach to product demonstrations: Reed had often allowed prospects access to data on a trial basis to check their interest. Some prospects took the data and never called back. The young rep had found a much better way to demonstrate the value of Reed data. He had purchased his own copy of Glance, an on-the-fly demonstration tool.
“There is no password, no time to set it up, and you don’t have to download stuff,” explains Tom Scontras, Glance’s VP of sales and marketing. “It’s a screen-sharing tool, and you just click on one button.”
Scontras argues that today’s prospects don’t want to schedule a 90-minute Webinar weeks in advance – or probably ever. “They just want to get the information they need quickly, and you have to be able to show them quickly.”
Fiondella and her management team evaluated the Glance tool and built a case to acquire it for the inside sales and customer relations teams. The results have been impressive. Weekly demos have increased, time taken to set up demos has decreased, and close rates have increased dramatically. Salesforce automatically tracks the use and results of Glance demos and provides tangible information about product demonstrations.
Training for Results
More transformation is coming: Fiondella hired a training manager to implement a value-based selling program. Reps are being trained in product knowledge, sales competencies, business acumen, and knowledge of the construction industries to which Reed sells. The compensation plan, which once rewarded only calls and making quota, has been redesigned to include clawbacks and will be modified to include value-based performance objectives.
Reed began to improve lead quality by using search engine optimization and marketing in late 2007. These techniques yielded better leads with higher close rates and less activity needed to close them. But they do not produce the sheer volume of high-quality leads that Fiondella seeks. So she has begun using D&B360, a Data-as-a-Service tool that embeds D&B data on millions of businesses and contacts into other applications. And Reed is now implementing Eloqua to manage all leads.
Through retention and renewal, Fiondella is extending sales transformation to the whole customer life cycle, well beyond acquiring new business: “We have mapped the entire process with key metrics at each stage and are aligning resources with these steps. For example, we focused on the customer on-boarding process to make sure we set up and trained newly acquired customers to effectively use our data.”
Fiondella installed new metrics to manage sales and other customer-related data, including revenue, sales productivity, lead conversion, quota, bad debts, renewals, and on-boarding. Fiondella wants performance management to be thoroughly based on achievement of key performance indicators and objectives. She seeks complete organizational alignment, with sales functions operating in tandem with marketing and production.
Because major steps were only completed in late 2010 and the process is still ongoing, measured results are preliminary so far, but things are looking up. “Different areas are improving at varying speeds,” Fiondella says. For instance, there has been a dramatic reduction in bad debts, and renewal rates continue to improve.
Overall turnover of sales reps has declined substantially to about 20 percent annually, as has involuntary turnover. Voluntary rep turnover is up, but Fiondella notes that this may be due to the stress of the transformation itself. It will be a while before it is possible to judge the complete effects on rep retention.
But it is not too early to recognize that the transformation Reed, Fiondella, and the whole team have accomplished represents a remarkable amount of change across the board in a short time. This is truly sales transformation on a broad scale, undertaken under difficult conditions but producing solid results.
An Agile Deployment
The conversion of Reed Construction Data to its new Salesforce CRM system was a highly successful implementation, according to Raymond Juarez, who managed the project for Bluewolf. He credits strong leadership at Reed for much of that success.
Companies come to Bluewolf when they need to make big choices in software. Like Reed, a firm may have an idea of what it wants but needs experts to make final and exact decisions. “We do a blueprint with a clearer vision, a timeline, and overall costs,” Juarez explains. “We look at the business needs and the symptoms and say, here are the options for addressing them.”
Bluewolf will usually outline a baseline solution, along with its benefits and costs. “Then,” explains Juarez, “if they want to gold-plate it with a more complex solution for more dollars, we can say, here are the time and costs to that.” Bluewolf has alliances with several CRM vendors but is not committed to anyone. It short-listed several choices based on Reed’s needs and scalability. Reed chose salesforce.com.
The next decision was whether to implement with in-house resources. Reed decided to use Bluewolf to implement because it wanted speedy delivery of a fairly complex solution. The consultants put fewer than five people on the project full time and brought in subject matter experts from time to time. “It’s a matter of having the right people at the right time,” Juarez explains.
The project blueprint jump-started the implementation. “We believe in agile implementation,” Juarez stresses. “We deploy in sprints from week to week, bringing in stakeholders in real time to see if this is really what they meant or just sort of what they meant.” He contrasts this approach with going off for six months to develop a solution and then deploying it: “People may have changed and requirements may have changed.
“Reed was hungry for innovation and had the leadership to make it work,” Juarez says. “That chemistry was important to do it all at speed and with complexity.” Reed wanted to move quickly in 10 months to get all the data from disparate systems into Salesforce. The new CRM also had to feed the new Oracle financial system. And it automated contracts, cutting close time by 25 to 40 percent from the old, manual contracting processes.
Bluewolf did not need to spend much time configuring Salesforce. “It is versatile, and you can change field values easily,” Juarez says. “But we did have to decide which geographic region went first, which was next, and what the business requirements were.”
Bluewolf concentrated on CRM implementation but also advised Reed on how to manage change. The two biggest challenges both related to change. “They had gifted leaders who they might lose in the new environment,” Juarez says. “You don’t want to drive these people away; you want to keep them.” The second challenge was simply getting it all done in 10 months. “You have to rely on leadership to make sure change is implemented,” Juarez summarizes.