Today’s article is about how to build a sales operations department from scratch. The best growth executives understand that sales ops is the most strategic sales function in the company. They understand that when deployed correctly, sales ops can impact revenue growth in a very meaningful way. Do not starve this key department. If you do, you will miss the revenue goal. To follow-along, download our 10th annual workbook, How to Make Your Number in 2017 and turn to pages 314 to 318.
Recently we spoke with Burke Lippert, Senior Director of Sales Operations at Spok. A mid-market company, Spok is a global leader in critical communications for healthcare, government and public safety. I interviewed Burke to demonstrate how to build an effective sales ops team from the ground up.
Burke is uniquely qualified to speak on this subject. She has been in sales operations for over ten years with four different medium-sized software companies. In each of those roles she helped establish a formal sales operations function where they previously didn’t exist.
Sales Operations can become a ‘catch all’ if you’re not careful. if you don’t define that thing tightly, sales ops can become the dumping ground, which means that you do all the things that nobody else wants to do or has the time to do. Most damaging is that sales operations isn’t able to impact revenue growth in a meaningful way.
My interview with Burke demonstrates how to build a sales operations department from scratch. Below I have included a transcript of our detailed discussion.
What business outcomes a new sales operations team should strive to deliver?
Burke: They should really strive to create the bridge between sales and the rest of the business so that the sales team can understand the business goals and the leadership can have the forecast information they need to make business decisions. What I often say to people is, “A great sales op professional is multilingual.” They can speak business. They can speak finance and marketing and sales and can act almost as an interpreter between those two groups.
What should the strategic focus areas of a new sales operations team be?
Burke: You really want to align your focus with the business and sales objectives. Show how what you’re working on will have a direct effect to the goals of the organization, but also you don’t want to bite off more than you can chew. Sales ops collaborates with many areas of the business and can become, unfortunately, the dumping ground for a lot of initiatives that the business is running. You need to establish your charter, set clear objectives that are aligned to the business, and then stay on track. Stay with those goals.
Sometimes when funding a new sales operations team from scratch, budget can be difficult. What should the expectations be there? How much funding or budget should a new sales ops team have and probably maybe more importantly, however small, or big that budget is, how should it be allocated?
Burke: Every organization has sales organizations, whether it’s formally established or not. You have some form of operations that probably are housed in a bunch of different areas in the organization. The budget sometimes stays within those spaces and it isn’t necessarily a sales operations budget, if you will. The areas of focus that I would invest in and make sure they’re present in a budget is, the technology and tools that help the sales reps to be successful from a CRM to a quoting too, RFP, proposal software, and then sales incentives. Most people have a president’s club. You have product and marketing promotional events, SPIFFs, etc.
What’s important is sales training, sales conference, and sales methodology. I would say those are the three key areas that you need to make sure that you have good budget for in sales operations. But it isn’t necessarily going to sit in a sales ops budget when you’re first starting out.
Greg: Pretty much every organization trains a sales force either on skills or methodology or product or some type of process. Very often those training dollars might sit in learning and development or in human resources, etc. That’s good advice for the audience. The budget is there. When I hear sometimes newly-appointed sales ops leaders, I don’t want to say complain, but raise concerns that there isn’t enough funding. The funding is there, you figure out a way to make sure it’s directed at the right things and the training example is a great example.
What are the roles and responsibilities of the new sales ops team?
Burke: When starting out resources might not be there, like that budget, so it might not list within the sales ops team but you need to rely then on the rest of the organization to wear different hats while you formally establish the role. These roles might include sales enablement which encompasses sales training, probably. Some knowledge management. Business analytics that’s got forecasting and to manage account planning, compensation planning. Then the technology and tools like we just talked about and the optimization of all those tools.
Then kind of a, I often call this one a catch all, process, and operations. How generic. The contract process itself, the sales process. Improving all the different ways that sales interacts with the rest of the company and then of course how we interact with the customer as well. A super important one but it does become that catch all one. I think those four big areas of roles that should exist within sales operations.
What should the executive reporting requirements be for a news sales ops team?
Burke: I get asked most about forecasting and how we can predict the forecasting so we can consider long-range planning. The second one is an A player. I get asked, “Hey, we’re going to bring new sales people on. We want to do this. How do I make sure that the people we’re bringing on are A players. That they mimic some of these behaviors that we really like.” Those are the biggest ones I get asked nonstop, I would say. I would start with those.
If you really want to add value though, you need to find a way to proactively provide the different levers that executive management can pull to increase sales. Otherwise you’re just producing a bunch of status reports.
I hear from sales ops leaders all the time that this is a big problem for them and this is the reason I asked you this question, is that these ad-hoc requests for information. People think it’s easy to pull the information and it’s not. If they keep coming at you all the time you spend your time reactive just reporting on the business versus affecting the business. If you can get agreement with the executive team on some standard reports and some regular cycle, whether it’s weekly, daily, monthly, quarterly, whatever it is, you can get out ahead of it. Have you experienced that?
Burke: What I would say where we’ve been successful is establishing what you just discussed and saying, “Hey, these are the ones that the business needs. These are the reports the business needs to look at to be able to make decisions.” Then taking that and making sure that it makes its way to sales management, to the sales reps, so that they know how they’re being measured and what to look for so there isn’t a lot of that noise and bouncing around where, “Oh, guess what? We’re having an on-the-fly forecast call to talk about blank.”
They’re really prepared, understand their business, and can answer any questions right away because they know what the executive team is looking at. You do have to push back. You do have to make sure you set and establish those with executive management and again, reinforcement. It’s not that you can’t make a turn along the way, but that the whole business understands why the turn and what we’re doing and that again, you’re able to push that all the way through the organization.
For a new sales ops team my question is, how sophisticated should the quote to revenue process be?
Burke: You hit on the key word. I really think the simpler the better. While your back engine may be doing some crazy math and some awesome reporting etc., but from the sales reps perspective the simpler the better. As much as that can be automated for them is better. Automation, automation, automation. The big focus I really think here is keeping it simple for sales, less admin work so they can get on to their next sale.
Then on the other side of course, because here’s the multilingual side, you should make sure that from a finance perspective, from the business perspective, that once the sale is closed that you’re able to go all the way through the rest of the process based on the information that you are giving the rest of the organization at sales close.
Implementing a new quoting tool, you need everyone involved. You need finance involved, you need professional services involved, you need product involved to make sure that everyone’s needs are met and that you can automate as much as possible so they’re getting all the information on the backside without having to front-load a ton of that or adding a lot of extra work to the sales team.
Greg: If you’re implementing a new sales ops team for the first time, or maybe you’re listening, you don’t have sales ops and you’re contemplating it, this is a great place to start. Quote to revenue is basically laying out every single step that should happen from the time you issue a quote to a customer to the time you collect an invoice. The reason this is important is because your job as a sales ops team is to make the sales team more efficient. Efficiency is measured in the percentage of their total time they’re selling versus doing non-selling activity. The ratio is selling versus non-selling activity.
If a typical salesperson’s going to work 40 to 50 hours a week, you want somewhere between 60 and 75% of that time in front of the customer trying to generate revenue. If it’s less than that you’ve got a less efficient sales team. The sales ops leader can dive into this, document this process flow and ask questions such as, “How long’s it take for legal to get approval on something? How long does it take for professional services to come up with an implementation plan? How long does it take finance to approve a discount? How long does it take engineering to approve a configuration change?”
These things can take sales cycles that should be fairly contained and make them very, very long and we all know what happens. Time kills all deals. Getting efficient there and making sure that the external sale is harder than the internal sale. If the internal sale is harder, getting approval from all these people, then the external sale, your A player sales rep’s going to walk out the front door because you’re just easy to sell for and you’re not easy to buy from.
Quote to revenue is mid-to-late funnel if you will, whereas forecasting is mid-to-top of funnel. You mentioned when I asked you the question regarding executive reporting, that forecasting is, people are asking you to quote-unquote, “Call the number.”
What should the forecast management process be for a new sales ops team?
Burke: I think primarily, standardized, and predictable. It’s not going to happen overnight but getting everyone to use the same sales process. The results, the same levels of forecasting across the company is huge. I have experienced this in most companies that I’ve worked with that everyone has their own way that they do it and it just leads to some bad forecasting, quite frankly.
Getting everyone on the same page. What are the requirements to move the sale through the cycle? What are the expectations in each area? Making sure also that it is aligned to the buyer and how they’re going through the process, so it’s very clear that when something gets into, “Hey, we’re committing this.” We’re able to put this number in front of you and say that, “This is what I’m going to do.” That we know exactly what that means when they say that and we know how many steps are left in the cycle to get to the end.
We’re still experiencing this and really trying to clean and polish this piece of it but getting that predictability in there so that the rest of the business feels comfortable forecasting their revenue based on this forecast.
Greg: You said something there that is critical and worth repeating, is that a sales process is, I don’t know. Let’s say you got five steps to your sales process. In order to move from maybe step three to step four, and go from maybe 30% probability to 60% probability in the forecast, it should be something that the buyer does. It can’t be the opinion of the salesperson. If it’s the opinion of the sales person, something like, “Hey, I sent them a proposal.” Well, that doesn’t mean anything. If you are basing your weighted forecast on a probability basis on that, you’re going to have an inaccurate forecast and that’s the quickest way to get fired if you’re a sales ops person.
If it’s driven on the buyer behavior, so for example maybe stage four to stage five, the buyer is checking references. That’s something the buyer’s doing. That’s an indication of real interest, of real time investment, and that will increase the accuracy of your forecast quite a bit. I know it seems obvious and it seems basic and fundamental but sometimes the most basic and fundamental are the best.
All right, let me move further upstream. We’ve talked about forecasting. We’ve talked about quote to revenue. The one that I’m most passionate about, that I think sales ops can truly add a ton of value to their business, is pipeline management. These are deals that aren’t in the commit. These are deals that might be a quarter or two out, but having a formal, standardized, predictable pipeline management process can completely change the game. Tying that into marketing’s demand-gen program keeps a steady stream, a supply chain of leads to opportunities to customers coming.
What’s your experience with the pipeline management process and should this be something that a new sales ops team jumps into right away or should they wait? What’s your thought on this?
Burke: I believe that it doesn’t get enough focus. On the committed deals and what’s coming in right now — the here and the now. There isn’t, unfortunately, enough focus on the pipeline management, how to fill that funnel. Giving sales reps the tools to do that, to make sure that they are doing that, making things a little more predictable, that say, “Marketing brings in this many leads. Sales talks to this many people” and it trickles on down. Putting that focus up top there I think can be super valuable.
New sales rep, similar to having a new sales ops group is, how do you fill that pipeline or help them fill that pipeline when there’s nothing there? To start there, I think can make an impact. You’re not going to see, of course, the impact for a little bit but you should put some focus there. Wrap some KPIs around that. Mimic what an A player is doing. Make sure that those behaviors are being met and you can say, “Hey, this is how many calls you should be making. Here’s how many times you should be in front of the customer. Here’s what we’re expecting. Here’s how we’re going to support you in all of that.”
I think that’s a big piece of it, too. Then showing them trends of what’s working and what isn’t and then being able to adjust with them and help them through that process. I think it’s a big deal, too. Don’t let them sit and spin and hope that they figure it out but really giving them the tools during that time and making sure that everyone, like you said, standardized, predictable, so that sales team has the same expectations throughout the pipeline life cycle. Every single sales person is doing the same thing.
We see sales ops leaders standing up a formal deal desk for the big deals. B2B software and B2B in general, sometimes we make or miss the number each quarter, each year, on a small number of very large transactions. Creating a deal desk and making sure everybody in the company is contributing to closing those big deals seems to be a hot topic right now. Do you think that that’s something that a new sales ops team should do?
Burke: I think it really depends on the complexity of the product and the sale. You mentioned the larger projects. The enterprise level, let’s say. More complicated. You have a lot more cooks in the kitchen getting in there and helping from legal to product to executives and finance. When you’re bringing all those people together to march forward with this deal in those big sales, I think it does make sense to have a formal … I don’t know if it’s necessarily a deal desk where I’m sitting and waiting for the call but I think you can really accomplish a lot of this with an account plan. “Here are the steps that we need to take. Here’s how we’re walking through.” Keeping the business informed of where you are and where they are supporting that from your technical, people coming in, solution consultants etc., and supporting that. Maybe you have to write a formal proposal but really having the whole business know where you are in that account plan and sticking to that.
I’ve seen smaller companies do a formal deal desk when it’s spitting into the machine and the machine spits back out. “Here’s your quotes and you can give this to the customer.” I think there’s a bunch of different levels. I think from the enterprise sale, though, that it does make sense to have a formal process of how you’re going to bring that deal over the line.
When deployed correctly sales operations can impact revenue growth in a meaningful way. But it must be properly staffed and built. If you need more help, download our tenth annual workbook, How to Make Your Number in 2017. It’s the guide top sales and marketing leaders use to make their number in a predictable, hassle-free way.