I recently interviewed Todd Jones, an executive sales operations leader who knows how to support aggressive revenue growth. Today’s topic is focused on how Sales Operations improves the efficiency of the sales force. It’s difficult to grow revenue faster than your industry’s growth rate and faster than your competitors. Todd and I answered questions out of the How to Make Your Number in 2018 to demonstrate emerging best practices for Sales Operations to impact revenue in a meaningful way.
As the Vice President of Sales Operations and Enablement at Renaissance Learning, Todd demonstrates how to improve the efficiency of the sales team. Todd is uniquely qualified to speak on this topic of sales operations. His background spans all aspects of sales, sales operations, enablement, and business management. Todd has more than 25 years of experience in sales operation leadership positions from marquee names within the technology space such as NetApp, QLogic, Symantec, and now Renaissance Learning.
The sales leadership team is working on the business every day to make the number. But if you’re only working ‘in’ the business and not ‘on’ the business, sometimes you’ll get stuck on the expectations treadmill. Every month, every quarter, every year, you’re running a little faster uphill each month to try to hit the number. The strategic function known as Sales Operations can make sure that while you’re running on the treadmill, you’re also working on the business so things don’t have to be so hard. These include both tactical and strategic initiatives. The strategic focus of the sales operations team becomes focused on the programs that allow you to achieve the sales plan.
Why this topic on this day? Sales ops has become a catch all phrase. The sales ops leader gets assigned all the work no one else wants to do. Often underfunded and understaffed, sales operations leaders fail to deliver a meaningful revenue contribution. Yet, the best growth executives understand that sales ops are the most strategic sales function in the entire company. They understand that when deployed correctly, sales ops can impact revenue growth in a very meaningful way. Do not starve this vital department. If you do you’re going to miss your revenue goal.
I have included the full transcript of my conversation with Todd, or if you prefer, listen to the full interview through an audio podcast.
My first question, is meant to help educate the audience that sales ops is a strategic function focused on business outcomes. My question is, what are the business outcomes a sales operation team needs to deliver?
Top line growth and profitability are always our number one priorities both within sales operations and the organization at large. Our primary objective within sales operations is focusing on the skills development, the sales effectiveness, and ultimately driving the productivity and capacity of our selling resources. As the selling environment becomes more complex, it is critical to ensure that the alignment of our initiatives, our investments, ensuring the awareness of such things, and the utilization, most importantly, are well-understood and consumed by the sales organization. Those things will all drive sales capacity and improve the sales productivity of our sellers in the field.
We started here with business outcomes. I’m now going to come down a bit and talk about strategic focused areas, and the audience probably will look you up on LinkedIn and they’ll see you many, many years of really great experience. You did a nice job of introducing that. One thing they will know is that you’re relatively new to Renaissance Learning, so you probably have given this question some thought. And that question is, what are the strategic focused of your sales ops team as you sit here in the beginning of 2017?
As you started the call off today, sales operations often can be what I would categorize as the dumping ground for all things that need to be addressed or challenges within the organization. As I entered the function here at Renaissance, I think as important as it is to understand what we will do, equally important to understand what we will not do to avoid becoming that dumping ground I described. As it relates to our function and based upon my prior experience, the strategic areas of focus for any best-in-class sales operations organization are really quite simple. We need to focus on the re-engineering alignment design of our core sales processes, the system capabilities, and automation tools that align in support of those processes, having a clearly defined business management process in addition to an operational cadence that supports the objectives of the organization. And then ultimately ensure that our coverage model or compensation plan in the programs that we offer for the sellers to take to market and manage their book of business are clear, well-defined, and aligned across the company.
Question for you that I have which is you mentioned the business management process. That’s a term that some people might not be familiar with. Can you tell us a little bit more about that?
It’s around how we manage the customer engagements ensuring that we have clearly defined roles and responsibilities across the sales model aligning back to that coverage model that I mentioned and that it’s clear in terms of my role as a seller, what my responsibility and what actions I need to take through those engagements with my customers. From there, understanding the insight, the information, if you will, that’s necessary to validate how we’re progressing in those engagements, if we have any issues that we need to address such as gaps in our coverage, perhaps coverage from a pipeline standpoint. I know we’re going to talk about that, one of my favorite topics, I’m sure that of your listening audience as well, and really understanding what actions are required to improve and deliver on those outcomes that we’re all looking for. So really business management is how we operate, how we function as a sales organization, how we lead, inspect, and deliver on those commitments to the company.
Regarding the org chart and kind of the relationships between departments, so if you could for our audience, Todd, describe the sales operations organizational chart and the working relationships with a few different groups. So first executive leadership, then we got product management, sales leadership, finance, marketing, HR, and IT. As you can quickly see, sales ops, I mean, one thing you must be good at in sale ops is cross-functional collaboration here, so tell us a little bit about that.
Yes, it is a core requirement. My job and responsibility as well as a functional responsibility across my team. It takes a village, Greg, to deliver and execute on the priorities and deliver that top line growth we’re looking for. So, a couple of things around the organizational structure and the framework that we’ve implemented. We have a very clearly defined operational framework here at Renaissance that we just recently established soon after I came on board. We have really focused that operational structure around what is core to the organization to operate effectively going back to that business management and sales cadence topic that we were just discussing. And I think in addition to those things from an organizational standpoint, it’s really focusing on what is necessary and core to being effective in selling within the segment that we serve and ensuring our customer success as much as our sales people’s success as well.
As with most sales operations functions, we’re lean. We’re a very small team organizationally, we are highly dependent upon those cross-functional relationships that you mentioned to be successful. Not only successful as a combined organization but successful in delivering those services that are core to operating the sales team effectively. So, in terms of our overall structure, we are a highly leveraged model, we can go into that a little bit more in detail if you like, and we’re dependent upon those core relationships within marketing, the product group, finance, HR, to succeed in achieving the results that we’re looking for.
Our relationships within those engagements span all levels of the organization starting with the executive leadership team all the way down to individual contributor engagements on an ongoing basis. You can really view sales operations, at least that is true here at Renaissance, as the bridge between go-to market strategy to sales execution. We really bridge between function, we bridge from a top-level executive standpoint all the way down into the direct engagements that we support on a day to day basis with our sellers in the field.
One tactical follow-up, do you a peer in marketing? Is there a marketing ops person?
Absolutely. In fact, a very tightly and close relationship, tightly aligned relationship and close working relationship with an operations leader within the marketing organization. When you look at a go to market model and a strategy associated with that, really three key pillars. The alignment from a product strategy standpoint with our product group and our product marketing team. Alignment and clarity of roles and responsibilities of the marketing organization inclusive of that marketing ops function. And then sales right in the middle of it.
The product and the marketing strategies influence what we need to do from a go to market standpoint, influence the services, the programs, and the operational processes that are required to support that as well. It’s a very clearly aligned roles and a tight working relationship as I mentioned with the marketing ops leader.
Regarding roles and responsibility, so I guess, what are the roles and responsibilities of the sales ops team and how are those determined?
Yes, Greg. As I mentioned, we have a very well-defined operational framework and operating model here at Renaissance for our sale ops function. I believe it’s critical to be very clear and well-aligned with all the resources within the organization at any company. In addition to the services that I mentioned, services spanning a multitude of topics, might be a program, might be a system or a sales tool, among many other things, but being well-aligned on the services and clear on what you will deliver to the organization as a part of the effectiveness of the operational model that we’ve created, those core services and support that go to market strategy that I touched upon. In terms of the functions that we have here or the roles and responsibilities within the function that we have here at Renaissance, my organization’s quite simple. You’ll find and your listeners will hear me mention this a couple of times here today that I really truly believe simple is better.
Many sales ops functions in many organizations, I think, create complexity where it’s not required, and it only confuses the issues not only internally but also, and equally as important, it confuses your selling team. So, we have a very simple model, extremely straightforward, and somewhat traditional if you will. The specific functions within my organization include a sales tool, an automation function, a sales process function, really focus on the re-engineering and design of our core sales processes, we have a sales insights organization as well giving us the information and the data that we need to make those critical business decisions and allow us to act where we need to. In addition, we have a sales enablement and program function and then ultimately a proposal services and professional development function as well.
These functions brought together within sales operations are really those core services and initiatives that are required for our sellers to be successful not only in driving top line revenue and growth but also ensuring our customer success as we engage with them directly.
You mentioned simplicity, so I’m going to give you a really simple definition of two terms that I know are near and dear to your heart, sales operations and sales enablement. What we have seen is that sales operations are about efficiency, and we determine that based on the efficiency the sales team measured in selling time and sales enablement is focused on effectiveness, a need that’s typically revenue per head and in some cases even down to the granular level or ramping new hires quickly. So, this top of the show here today is about efficiency. You’re unique in that you have both ops and enablement. We normally see two different people there, so you got a lot on your plate.
Let me ask you the question regarding selling time. What is the efficiency rate of your sales team, and maybe over the span of your career, what have you done there to improve that?
Yes. At Renaissance, as true with most companies and probably true your audience here today, the amount of time that sales reps spend internally is far too great. That time spent internally takes them away from the direct engagements with our customers, which we want to increase anyway that we can. After the amount of time that I’ve spent here at Renaissance, what we’ve looked at is what those things that are preventing the sales person from having more face time with their customer? Those processes, the administrative burden, the number of internal meetings or reviews that are occurring, and we’ve really worked to align those more effectively to be efficient, to minimize wherever possible, so we put more time in front of the customer with our selling team members and those resources that we’ve invested in as part of our go to market model.
Currently, our efficiency rate is still not what we want nor what we desire where approximately 40% of any seller’s time is in front of their customers, that’s that direct engagement with a customer, this leaves with a clear opportunity to improve. Our target efficiency rate is approximately 60% of a seller’s time out in front of their customer on a weekly basis, and that would align with industry best practice and best practice that I’ve experienced through the course of my career as well. Certainly, we’d always target north of that, I know our leadership team would like to see that even greater. I think 60% is a balanced approach and a reasonable expectation to wind to.
Yes, I agree. I think 60% is a target. And the reason why I feel that way is because I think it’s maintainable. I think sometimes if it goes up higher than that, it might drop back down and now you got these swings. What we’re looking for is consistent, predictable performance, so I think 60% is a good target to shoot for. Okay, so that’s helpful.
I want to now move to a topic that is getting a lot of discussion these days, but I think there is a lot of confusion, and its analytics, specifically sales analytics. I’d like to get your opinion on it. I think there’s a lot of hype around it, I think sometimes people aren’t even sure what analytics is. This whole concept of predictive sales analytics is, there’s some heat around that. Todd, if you’ll allow me, I just want to educate the audience in a simple framework here that I think you’re probably familiar with, and then I’m going to ask you two specific questions.
So, audience members, if you think about kind of the continuum of analytics, you start first with descriptive analytics, which describes accurately what’s happened in the past. Most everybody can do that fairly well. Then you get to diagnostic analytics which says, why did it happen? And that one’s a little bit more tricky. Very often their people confuse correlation and causation. That’s a fatal mistake. Then you move up the value curve, if you will, and you get to predictive sales analytics which says, if nothing else changes, this is what’s likely to happen in the future.
And then lastly, which is really the holy grail, you get to prescriptive analytics that says, now that I know it’s likely to happen in the future, if I don’t like it, how do I change it before it happens? And that’s where you prescribe a set of actions. So, in my view, that’s a really simple way. I think, most everybody those are common terms, most everybody kind of understands that.
Todd at Renaissance and even across your career here, what’s your opinion on the state of sales analytics today and maybe share with us your perspective of moving from descriptive to diagnostic to predictive to prescriptive.
Yes, hot topic as you indicated. My experience is straightforward. Most companies, there’s data rich and information poor. A lot of reports, a lot of dashboards, and a lot of good intent to produce the insight that we all believe is necessary to understand our business more effectively. However, what impact is it having on our ability to create that predictive model that you had touched upon? Certainly, there is across companies, but some models, I think, are overly complex quite simply, and again, simple is better in my opinion.
From experience, here and apply it here at Renaissance, most of us know as sales operations leaders or as sales executives and other team members, we know the specific activities and the engagements that are required to deliver those outcomes we’re looking for. Those things that are sales reps in selling resources need to do each day to succeed and deliver the outcomes. We’ve developed a very clearly defined structure in this area.
First and foremost, what roles and responsibilities are required, and what are the associated, we call them sales motions that align with each one of those responsibilities? From there, we know the activities that are required, we know the measurements that we would align with those activities, and we have a baseline that, if achieved, will produce those results. So, we literally track this each day, each week, monthly, quarterly, and annually across all the way down to the individual within the sales organization to determine through insights in those analytics and information that I touched upon what is most important, what’s happening within the selling engagements, where do we have hot-spots or gaps, and what actions are required to take to produce a different result? So very well-defined here at Renaissance. I would suggest it’s one of the more mature models that I’ve seen throughout my career. I’m very proud of the work that the team has done in this area.
You know, it’s not lost on me that you have as part of your team you called that insights. You mentioned tools, processes, insights, enablement, et cetera, et cetera, when I asked you kind of the services that you deliver to the organization and you called that insights, so obviously it’s very important to you.
Extremely important, and just to be clear, the definition of insights, this is not a function that some organizations would refer to as business intelligence or BI function. It is not a reporting team. This is a small set of resources that aligns to influence someone such as the BI function on what information do we need to effectively manage the business. They in turn spend their time understanding what is the data telling us? What information can we glean from the data that’s been provided and invested in, and then what action do we take? It’s all about action based insight, Greg, based upon experience.
Can you describe your forecast management process for us?
Forecasting is one of the favorite topics of any good sales operations leader and honestly one of those topics that we’ve all been trying to figure out for many, many years. As mentioned several ties now today, I believe simple is better. Sales forecasting certainly holds true or aligns with that mantra. Here at Renaissance, we’ve really implemented, just recently, in fact, we’ve re-engineered our overall sales forecasting process, and aligned it more with what I would categorize as a tried and true methodology. Its opportunity based, we have very clearly defined opportunity components in terms of those things that matter the most. We have a clearly defined process in terms of the individual roles and responsibilities to manage those opportunities through their life cycles, we have a stage-based process to support that.
In addition, very simple and clearly defined definitions which is important to a sales forecast process. Definitions around commitment, definitions around upside and risk and then the KPIs and measurement that we were just touching upon to understand if we have early indications of our inability to achieve that commitment that we made as a sales organization. We have a very tight cadence in terms of the inspection and review process starting with the individual sales rep all the way up to and including executive leadership, and we review it here at Renaissance on a bi-weekly basis, and then much more frequently at the close of the fiscal quarter.
Very tight, stage-gated, love it. Fantastic. That’s the best practice for everybody. If you’re struggling audience with forecasting accuracy, hit rewind and listen to what Todd just say again and you’ll get some real value out of that.
My next question is regarding pipeline management. Pipeline obviously sits above forecasting, if you will, in the old nomenclature if you’re an old tech veteran like myself, there’s the commit and then the upside, right? Pipeline is about managing what’s flowing into that commit or that forecast. So, tell me a little bit about your pipeline process.
Yes, so the pipeline process as you indicate is a key component to feed or execute what we need out of the forecasting process. From a process standpoint around pipeline, it’s straightforward as well, and I think it should be for any good company. We have a clearly defined opportunity owner, role, and responsibility is key in the pipeline management process. What is the individual role, what is the individual’s responsibility, and what do they need to know and understand about their pipeline and the health of that pipeline at any given moment in time? From there, that opportunity owner is responsible for the maintenance and the hygiene of those opportunities that make up their pipeline.
We’ve really focused on six or seven things that I believe matter the most from prior experience. I believe that when you start to ask for too much from that opportunity owner, it becomes unwieldy and very difficult to manage impacting that efficiency number that we were discussing earlier. So, keeping it simple, straightforward, and focusing on those things that matter most. Things such as the estimated revenue value, the estimated close date, next steps to when in the process, amongst many others. So clearly defined definitions, ownership, and responsibility.
Once that opportunity has been created, then the opportunity owner, based on his or her engagement with the customer, simply updates and provides status of those opportunities. They, in turn, inspect the pipeline that they’re responsible for, and that is the direct feed in assisting them to establish a commit forecast that ultimately, we align on as a sales team and ultimately commit and hopefully if we execute, deliver to the organization. So, it’s quite simple, Greg. And after having done this for many, many years such as yourself both in the tech segment and in other areas of the marketplace, I really think this is an area that becomes overly complex, too heavy, if you will, and it really should be straightforward so that alignment on a straightforward process begins with clearly defined roles, definitions, and the process to support the activity necessary to have a quality pipeline and ultimately a predictable forecast.
Fantastic. Talking about predictable forecast, when I asked you regarding selling time, you kind of told me where you were and where you wanted to go, and I appreciate that. I’m going to ask you the same question regarding forecast. What do you think the benchmark should be? What’s a realistic number to shoot for in terms of forecasting accuracy?
Forecasting accuracy, that’s something that we track quite extensively here at Renaissance and in most organizations I have been a part of. On a quarterly basis I believe best practice or leading practice would be plus or minus 3% on the number you commit to, with the number you deliver at the end of the period being measured. On an annualized basis, we would suggest that a plus or minus 5% to 7% range is appropriate for any world-class or best-in-class company.
Okay, and why the difference between quarterly and annually?
I think the two are quite different and individual, since really both the pipeline management process and the sales forecast process are the individual’s responsibility and really their knowledge and understanding of something that is further out on the horizon.
A deal 12 months out is much tighter, much more predictable, than a 90-day window or one a quarterly basis that a rep could possibly be expected to understand 12 or 18 months out on the horizon. That’s where predictive analytics comes into play because, if the pipeline management process is structured in such a way that you know combining history, you know combining specific elements or those data components that I touched on from an opportunity standpoint, you can become much more predictive on the out quarters, or a full-year basis then you can from reps input on anything longer than a 90-day window. So that’s how we’ve aligned, I believe that would be very much aligned with best practice, and something that I’ve seen work well throughout my career.
Yes. The sales forecast is like a weather forecast. The further out in the future, the less reliable they are, right?
Yes, I agree with you. Okay. All right, a plus or minus 3% in quarter, plus or minus 5 to 7% annually. Just one more question on forecasting. This is a philosophical debate that many of my clients have. If you call the number, let’s say, I’m going to do a million dollars this quarter. And at the beginning of the quarter you say it’s going to come from these 5 accounts. At the end of the quarter, if you hit the million dollars but maybe it comes from a different set of accounts, is that an accurate forecast?
I would suggest that it depends on who you’re asking. If you ask the sales rep, they would say absolutely. I achieved my commitment, I delivered what I said I would deliver. If you ask someone perhaps in my position or my peers within finance, they would suggest anything but an accurate forecast. I’m probably right in the middle from a sales operation standpoint. First and foremost, our job as a sales organization is to ensure that we achieve the commitment that we have signed up for. Delivering that million dollars in your example, that’s paramount. How we get there in terms of product mix, in terms of deal mix, those are areas that we can always improve upon, but I think first and foremost it’s delivering the number. It is a constant debate within most organizations.
All right, Todd, that was a fantastic demonstration on today’s topics on how to improve the efficiency of the sales team. You did several things in addition to that, so you added a lot of value. You know our firm prides itself on being a benchmarking organization and using best practices like the ones you shared with us today to help our clients make the number. And on behalf of the audience, you contributed back to our body of knowledge today and we all got a little bit smarter, so really a heartfelt thank you for you being unselfish in sharing your wisdom with us.
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