Web 2.0 and Sales Process Management

A White Paper Sponsored by Social Media Today LLC and Oracle Software

by

Dennis D. McDonald, Ph.D.

Alexandria, Virginia

Email: ddmcd@yahoo.com

Web site: http://www.ddmcd.com

April 8, 2009

Introduction

This report discusses how "web 2.0" systems and applications can support management of sales processes. Instead of focusing on specific technologies such as social networking, blogs, wikis, or other technologies, it focuses on business processes and addresses the following questions:

1. How satisfied are sales managers with the different processes currently involved in locating, managing, and closing sales?

2. What can this tell us about where Web 2.0 applications would provide the most benefit to the overall sales process?

Input to this report was provided by a special online survey (Appendix A) and by telephone interviews (Appendix B). Appendix C explains the project's organizing concepts. Appendix D provides definitions for "sales processes" and "web 2.0."

The project's findings include the following:

1. The most immediate perceived benefits of applying Web 2.0 techniques to sales are provided by improving the outcomes of prospecting and customer qualification.

2. When addressing Web 2.0 support for sales-related communication and collaboration, it' important to distinguish whether participants or processes being considered are internal or external to the sales team's organization.  For example, while involvement with the social and professional communities surrounding business prospects may improve market intelligence about business prospects, such communications are not as controllable as traditional one-to-one communications between buyer and sellers. Internally, collaboration that cuts across organizational boundaries might be impacted by existing organizational rivalries.

3. Some within-sales-force collaboration may be resisted by sales people if this raises fears of reduced competitiveness or shared commissions. To promote such collaboration it may be necessary to modify compensation plans to reward certain types of collaboration.

4. Sales process maturity may strongly influence adoption of Web 2.0 techniques. Well-defined and formalized processes, such as those that occur closer to the end of the sales cycle, benefit differently than activities that are less structured or performed independently by members of the sales team.

5. The lengthier and more complex the sales process, the more participants will be involved as the process evolves. Making information gathered at one stage available to other participants “downstream” will help ensure a smooth transition from sales to delivery and servicing of the customer. Organizational or departmental barriers that restrict collaboration across groups should not be allowed to disrupt the sales process and satisfaction of the customer.

Findings

Overview of Findings

Figure 1 shows an overview of the project's findings, divided by sales process (rows) and Web 2.0 implications (columns). 

"Needed Content" in Column 2 describes examples of some of the information content that is created or needed at that particular point in the sales process. For example, for "Prospecting," this includes "Information about prospects, market conditions, and sales opportunities."

"Collaboration and Communication" in Column 3 provides examples of the different activities performed at that point in the sales cycle that involve people sending and receiving information and working together. These activities (and the associated information content) differ by whether communication and collaboration occur externally within the sales team's company, or externally with the sales prospect and the sales prospect's own communities. Figure 1 also shows that collaboration and communication differ across the different sales processes, as do the types of information content that are relevant for each process.

Column 4, "Challenges & Opportunities," suggests some implications for managing each sales process in terms of both information content and the way that collaboration and communication can occur. Web 2.0 based systems have relevance for these processes since they impact how information is created and exchanged. Web 2.0 based systems also can support the formation of personal and professional relationships that can directly support the sales-related communication and collaboration that occur both internally and externally to the sales team's company.

Significantly, though, there are challenges that occur. These challenges, as suggested in Column 4, tend to be more related to business process changes than to specific uses of technology. For example, if there are organizational rivalries within a company that

Figure 1. Overview of Findings

impact the ease and spontaneity with which collaboration across organizational or departmental boundaries occurs, providing easy to use networks for building relationships or for collaborating and exchanging information may be insufficient to overcome such rivalries.

Also, reading down through Figure 1, we see examples where benefits occur to sharing information over time as more or different groups become involved in the sales process. For example, those responsible for planning and delivering the products or services that are sold by the sales team can benefit significantly from accessing detailed information that is gathered throughout the sales process.

One can argue that a system that makes it possible for people to locate, develop relationships with, and talk with people with specialized knowledge, no matter where they are located within a company, can provide significant sales related benefits, even if those sources have no officially designated sales responsibilities.

Overall Satisfaction with Sales Processes

In the online survey we asked respondents to rate their overall satisfaction with how well their sales team performs the processes of Prospecting, Qualifying, Pricing, Proposing, Negotiating, Closing, Delivering, and Servicing. The purpose of this question was to identify potential areas of opportunity for the application of “web 2.0” based tools. A 1 through 5 rating scale was used with 1 representing "very dissatisfied" and 5 representing "very satisfied."

Figure 2 displays data for the 299 respondents who answered this question. The average satisfaction rating, from a 1 (low) to 5 (high) scale, ranged from a low average of 2.95 (for Prospecting) to a high average of 3.78 (for Delivering). Figure 2 also shows that the three sales processes that have the lowest average satisfaction rating are Prospecting, Qualifying, and Closing. The highest average ratings occur for Delivering and Servicing.

Based on this we conclude that these respondents are, on average, more satisfied with how their  sales team actually delivers products or services to customers than they are with how well the critical process of prospecting is being performed.

This point, when discussed with sales managers in the telephone interviews, was not surprising. One interviewed manager said, "My sales people are always complaining about the quality of the leads they're given to go after!" 

Another interviewed manager, when asked about the influence of the size of the  sales team on satisfaction, said that, theoretically at least, the larger  sales team might have better support and as a result might be more likely to pursue higher quality leads which would lead to higher satisfaction with prospecting and qualifying.

Another interviewed manager commented that, "You always want to close more of your prospects no matter how many you get," and that this might explain with "closing" received a relatively lower score.

Figure 2. Overall Satisfaction with Sales Processes (chart)

One interviewed manager commented on the higher ratings for Delivering and Servicing. "That's to be expected," he said. "In our company the processes for doing these are very defined and structured. Our people are really good at doing these once the sales are closed."  Exploring this point further, this manager speculated that  sales teams -- even larger  sales teams -- tend to operate quite independently when prospecting and qualifying and that the processes and methods followed may vary widely by salesperson.

Another interviewed sales managers said the opposite about qualifying. "I'm very detailed with my salespeople about how to do qualifying. That's probably the area that's spelled out in most detail in our training and our processes." Still, he agreed with the overall lower satisfaction with prospecting and qualifying and that these were areas that would generally be thought of as needing support.

Size of Sales Team

Figure 3 shows that approximately 20 percent of online survey respondents reported that their  sales team to be made up of 11 or more sales people. A total of almost 15 percent reported a sales team of between 11 and 50, and six percent reported a sales team of over 100. 

Figure 3. Size of Sales Team Reporting in Online Survey

Impact of Size of Sales Team on Sales Process Satisfaction

The overall satisfaction scores from the online survey were examined by size of the sales team. The results were not conclusive as to the impact of sales team size on satisfaction with sales processes.

Figure 4 displays the average satisfaction ratings for sales processes overall subdivided into three sales team size categories: 1-10, 11-50, and over 50. These groups represent (see Figure 3) 79.3 percent, 12.7 percent, and 6.0 percent of online survey respondents, respectively. While the number of survey respondents with larger  sales teams than 10 is relatively small, based on an examination of Figure 4’s data it does not appear that there is a consistent relationship in the survey between the size of a  sales team and sales managers’ satisfaction with the  sales team's performance of key sales processes. (One interviewed sales manager said, half in jest, after looking at Figure 4, "No sales manager is ever satisfied with how well his team is prospecting!")

Figure 4. Overall Satisfaction with Sales Processes, by Size of Sales Team (chart)

Do these results mean that  sales team size does not have an impact on how satisfied sales managers are with how their  sales team operates? 

Not necessarily. It's possible that other factors impact satisfaction and these were explored in the interviews. Possible "intervening variables" were discussed in the telephone interviews.  One interviewed manager, upon examining the chart in Figure 5 in detail, wondered if smaller  sales teams tended to be more reliant upon their own efforts for prospecting and sales, while larger  sales teams were more likely to be supported by organized research or marketing departments.

While the questioning in the survey was not detailed enough to evaluate this, this type of distinction may be an important one for sales managers considering the use of Web 2.0 based support for the  sales team.  This point is also addressed in more detail in the "Discussion" portion of this report.

Industry

Figure 5 shows that the top three specified industry categories in which  sales teams spend most of their time were reported to be Consulting and Professional Services (23.2 percent of respondents), Media and Publishing (12.4 percent), and Software (10.7 percent). Together these three categories alone accounted for almost a half (46.4 percent) of all online survey respondents.

Given the manner in which this survey was publicized it is possible that (a) respondents in these categories are “over represented” in comparison with the general population of sales managers and (b) these particular industry respondents have a relatively higher rate of awareness concerning the topics covered by this survey.

Figure 5. Industry Focus

Satisfaction with how INFORMATION CONTENT, COLLABORATION, and COMMUNICATION support the sales process

The online survey asked three additional questions:

How satisfied are you with how well your  sales team creates and manages INFORMATION CONTENT in support of each of these sales processes?”

How satisfied are you with how well your  sales team COLLABORATES in support of each of these sales processes?”

How satisfied are you with how well your  sales team COMMUNICATES in support of each of these sales processes?”

Responses are displayed in Figures 6 and 7. Note along the bottom of Figure 6 how similar the average satisfaction ratings are for Information Content (3.24), Collaboration (3.30), and Communication (3.29). Keeping in mind that a score of 3 indicates “Neither Satisfied nor Dissatisfied” and 4 “Somewhat Satisfied,” it appears that, for the online survey's group of sales managers at least, these three functions are performing similarly within their  sales teams, with Information Content satisfaction scores being somewhat lower for six of the eight functions.  

Figure 6. Satisfaction with Sales Team Information Content, Collaboration, and Communication (table)

Could this mean that improving how "information content" related processes are handled is potentially a more immediate sales process application than either collaboration or communication? One interviewed manager, a former employee of an ERP system vendor, commented how inefficient email is for content related applications during the sales process. 

His own organization uses prospect-specific wikis for tracking communication with customers over time. He mentioned how a wiki was particularly useful when, while working through the different steps of the sales process, and as more people became involved in the sale, the wiki was especially useful for getting new staff (e.g., technical or engineering staff) "up to speed." This is something, he thought, that sole reliance on email was very inefficient

This is similar to what the author found in another research project that examined the use of blogs as project management tools; email was consistently cited as being an inefficient way to communicate content documents among a group of people sharing a common goal.

Figure 7 also shows an increase in sales manager satisfaction as we move from the left side  to the right side. Considering that the defined sales processes discussed in the survey follow a traditional “funnel” model, two interpretations of these data are the following:

1. Sales managers tend to be more satisfied with “post-sales” processes than they are with “pre-sales” processes.

2. Sales managers don’t make extremely strong satisfaction distinctions based on general “web 2.0” concepts and functions such as content creation, collaboration, and communication.

Figure 7. Satisfaction with Sales Team Information Content, Collaboration, and Communication, by Sales Process (chart)

Discussion

Opportunities

"Web 2.0" technologies and processes offer the following types of opportunities:

• Content can be easily created, copied, distributed, modified, or changed.

• A mix of textual, graphic, numeric, audio, and video information can be managed and exchanged.

• Networked collaboration technologies can reduce the inefficiencies of relying solely on email and face to face meetings for information exchange and collaboration.

• Web 2.0 related technologies make it possible to retrieve and manipulate sales-relevant content from existing corporate and public databases without direct involvement of programmers and technical support staff.

• Small groups can be formed, perform work collaboratively, and disbanded at will. Web 2.0 tools that support such "community building" are readily available, easy to use, and capable of supporting collaboration across existing geographic and organizational barriers.

• Sales people can engage with potential customers in professional and social networking settings that promote trust and the open sharing of information.

• Communication can take place in public or in a group situation where many different people have access to the same message.

• Many Web 2.0 tools offer the ability to generate “information feeds” that web users can subscribe to. These feeds provide a quick way for sales people to remain abreast of databases or web pages that change frequently.

Challenges

One way to look at web 2.0 approaches to managing information content is that they can shift more responsibility and control onto users for creating and communicating the information needed to get sales-related work done collaboratively. By giving system users more responsibility and freedom, those most directly in contact with customers and decision makers can manage the sale process more responsively and profitably.

The theory behind this is sound: When salespeople can pick and choose what information they want to see and subscribe to on a regular basis, whether it's from their parent company's CRM system, from a local area network database, from a commercial subscription service, or from the public "cloud," they can use Web 2.0 tools to select the information that makes the most sense to them and the tasks at hand.

The likelihood that this "self management of information content" will occur consistently might be in question, based on some of the interviews conducted for this project. Corporate support will be needed to set up and maintain specialized feeds, for example; this is where larger organizations may have an advantage in consistently applying Web 2.0 solutions than smaller ones when a variety of different systems exist that contain information of potential value to the sales person.

One interviewed manager, a technically sophisticated person, was aware of the technology and availability of RSS feed readers, social bookmarking, tagging, and Salesforce.com. He was candid when asked about the value of such features for improving prospecting and qualification: "I know about this stuff and how useful it can be," he said, "But it's on the edge of what concerns me most. I'd have to take time out to put together custom feeds and the like. How likely is it that busy salespeople will do that on their own when I'm flogging them to make appointments?"

Another interviewed manager acknowledged that salespeople can be a competitive, feisty bunch. Despite the value of "collaborating" in order to better understand and respond to a customer’s needs, for example, many salespeople, he said, are reluctant to share information about a sale with their peers if they think they might lose competitive advantage -- or a potential commission -- in the process. He said that you really need to modify how sales commissions are awarded and shared in order to reward collaboration. He commented, "They didn't like it when I convened a weekly meeting to report progress. It wasn't till we started rewarding them for collaborating and helping each other that they changed." 

In other words, providing the technology that supports collaboration is not sufficient. Salespeople need the skills, time, motivation, and support to customize and/or use Web 2.0 technologies.

Sales management may also have some concerns about "opening up" the sales process since that may also expose -- they think -- information that could provide competitive advantage to competitors. In public online forums surrounding product support, for example, negative as well as positive information can be spread easily about a product or service. Such a “lack of control” over some aspects of the sales process may cause some company executives (and sales people) to resist applying web 2.0 based systems and techniques. 

Yet, it can be these same public systems that can provide the “market intelligence” that is so valuable to effective prospecting; this is one reason, for example, that services are emerging to mine public systems such as Twitter for market intelligence based on what people are communicating.

One of the interviewed managers discussed communication via online systems in the context of selling to government agencies; he provided an interesting perspective. "In reality," he said, "making all procurement related information more accessible to vendors in a solicitation is good. But it's also possible to use formal systems to keep vendors at arms length."  When asked to explain this he said, "If you and all the other vendors are forced to submit questions and answers openly, that should, theoretically, level the playing field. But it also gives the agency the ability to not quite answer every question and be followed up."

He then emphasized, "There's no substitute for being able to sit across from a prospect, ask direct questions about the project budget, and watch their body language as they answer - or don't answer."

This sales manager seemed to be saying that the same online technologies that can be used to collaborate and share information can also, ironically, be used to reduce the amount and type of information that is actually conveyed to the sales person. 

That shouldn't surprise anyone, since technologies can be used in many different ways, even systems that are designed to support collaboration and information sharing. But it does point out the importance of the issue of "control" that inevitable arises when discussing Web 2.0 technologies. 

A detailed discussion of the control issue is beyond the scope of this report, but it is certainly relevant to how Web 2.0 applications are used in support of the sales process. 

As one of the interviewed managers said, as you move through the "sales funnel," the processes you follow become more and more defined and structured as you move towards a formally priced offer and delivery arrangements. Sometimes this formalization can be supported technologically, as when pricing templates, work flow management, and scheduling software are applied to trigger individual or collaborative messaging or tasks.

At other times, formalization may be more difficult to apply, especially early in the process when relationships and requirements are still being discovered, formed, and managed.

Not coincidentally, it is this “front end” of the sales process that provides significant opportunities for employing Web 2.0 technologies for forming and managing relationships with sales influencers and prospects as a direct input to prospecting and qualifying operations. 

Conclusions

We didn’t specifically ask in the online survey about “control” issues. We did attempt to segment the responses by potential influencing factors such as size of  sales team and industry.  These two factors did not seem to consistently influence either (a) satisfaction or dissatisfaction with parts of the sales process, or (b) how these factors might influence satisfaction with content creation, collaboration, or communication.  The following do, however, appear to be true:

1. There is more satisfaction with "back end" processes (such as Delivering and Servicing) than with “front end" sales processes (such as Prospecting and Qualifying).

2. There is some evidence that there is less sales management satisfaction overall with how content is created and shared, irrespective of where in the sales process that occurs, than with how communication and collaboration occur.

What can we then say about how “Web 2.0” based services can improve the sales process? Here are this author's conclusions:

• When points such as  sales team size, process formalization, and control are discussed in telephone interviews with sales managers, it became clear that where communication and collaboration take place -- internally or externally -- is an important factor to consider when implementing Web 2.0 based services. Systems will need to support this distinction. This distinction has been incorporated explicitly in Figure 1’s Overview of Findings.

• Sales people are willing to share information -- and collaborate -- with other members of the broadly defined "sales team" if they are not convinced that doing so will harm their earning potential. For example, technology based services such as collaboration networks, social bookmarking, or social tagging of public or private information will not be willingly adopted by sales people if collaboration is viewed by them as harmful. They need to be rewarded for collaborating.

• Prospecting and qualifying is helped when better information is made available to sales people about the sales prospect's business strategy, business requirements, organizational structure, market position, purchasing history, and purchasing plans. While Web 2.0 services can be used to improve access to such information both from internal and external sources, sales people will need help in configuring and maintaining such services for them to be used on a consistent and beneficial basis.

• The lengthier and more complex the sales process, the more participants will be involved as the process evolves. Making information gathered at one stage available to other participants “downstream” will help ensure a smooth transition from sales to delivery and servicing of the customer. Organizational or departmental barriers that restrict collaboration across groups should not be allowed to disrupt the sales process and satisfaction of the customer.

About the author: Dennis D. McDonald, Ph.D. is an Alexandria Virginia based management consultant. Dr. McDonald’s experience includes information policy and survey research, management of software and database product development, strategic planning for corporate IT services, business development and sales, and consulting company ownership and management. He can be reached by telephone at 703-549-1030 or by email at ddmcd@yahoo.com. His Twitter ID is @ddmcd. His web site is located at http://www.ddmcd.com.

Appendix A. Online Survey

The online survey was conducted using the SurveyMonkey service. The web address for the survey was released to the public and announced on February 10, 2009 and publicized through a combination of web site announcements (Social Media Today, The Customer Collective, Dennis McDonald's Web Site, Twitter, postings on selected LinkedIn groups related to sales and marketing), and emails distributed by Social Media Today LLC to its own distribution lists.

A total of 305 respondents answered at least one question in the survey. The survey was closed on Feb. 20, 2009 after 233 completed responses were received to all questions (actual response varied by question).

Since the survey was voluntary, responses may be skewed towards sales managers who are more experienced with using online tools. Readers of this report should take this potential source of bias into account when relating the findings to their own situations.

Email addresses were received as part of the survey from 160 respondents asking for further information about the survey's findings.

Appendix B. Telephone Interviews

Telephone interviews ranging from 45 minutes to 1.5 hours were conducted in March, 2009 with the following sales and marketing managers; all were provided access to the definitions and the online survey results in advance:

1. Peter Sashin, DuPont

2. Carlo Ross, New Target

3. Ryan Nichols, Appirio

4. S. David Wright, UTStarcom

5. Douglas Brockway, Overture Technologies

The author is very appreciative of the thoughts and ideas provided by everyone!

Appendix C. Organizing Concepts

Figure C-1 displays how concepts addressed in the project were organized. Blue text indicates concepts addressed primarily in the survey. Red text indicates concepts addressed primarily in the interviews and via the author's own experience.  

Figure C-1. Organizing Concepts

Appendix D. Definitions

Sales Processes

"Sales processes” were defined as follows in traditional "sales funnel" fashion; interviewed sales managers all agreed with the relevance of these general definitions even though they differed with details of how they implemented the processes within their own organizations:

• PROSPECTING: Prospecting for customers.

• QUALIFYING: Determining if prospects are qualified to be customers.

• PRICING: Developing a price for the products or services being sold.

• PROPOSING: Presenting an offer and pricing to the prospective customer.

• NEGOTIATING: Negotiating terms of the offer.

• CLOSING: Agreeing with the customer on final terms of the offer.

• DELIVERING: Delivering the products or services to the customer.

• SERVICING: Servicing the customer following the sale

Web 2.0

"Web 2.0" was defined as the application of modern web based techniques to simplify content creation, collaboration, and communication by users such as sales people and sales managers. These functional definitions were used since the survey was not designed as a study of technology but as a study of the processes and functions within an organization that can be supported by technology. The survey did not ask specific questions about blogs, wikis, social media, or social networking but focused on processes and functions associated with managing the sales process. Individual sales managers did, however, mention instances where tools such as blogs and wikis were used in support of the sales process.

The following definitions were used in the survey and were made available to those interviewed:

• Content is information created and transmitted via various media during the sales process. This includes letters, presentations, documentation, proposals, pricing sheets, sales collateral, advertisements, and all other media, published or private, that support the sales cycle from prospecting through the closing of a sales and its subsequent delivery and support.

• Collaboration means that different people involved in the sales cycle work together to achieve a common purpose. This includes sales people, sales managers and executives, technical support personnel assigned to the sales process, as well as customers and customer decision makers.

• Communication occurs when information is exchanged among the different participants in the sales process. Sometimes communication occurs on a one-way or broadcast fashion, as with advertising distributed via traditional media. Communication also occurs interactively and/or in real time via face to face meetings, emails, interactive web sites, voicemails, text messages, and telephone conversations.

All those interviewed about these definitions mentioned the need to distinguish between participants and communications as occurring either inside or outside the organization; this distinction has been incorporated into this report where appropriate.

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