CIO —

Almost all CRM systems are full of data that's been populated by your company's people. Sure, the notes and updates are about the customer relationship, but it's put in from your perspective and for your reasons, not the customer's. In many cases, the only information that has actually been put in the CRM system by the customer themselves is their name, e-mail address, and phone number.

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Inside the Sales Cycle

Why does this matter? Because the vendor-focused information in the CRM system can only indicate the state of play from your perspective: the action items done, the sales cycle steps in progress. The customer, however, is on a completely different schedule from you (they rarely have a need to close the deal by December 22), and their decision processes are working on a completely different plane. While your sales rep is worried about overcoming competitive objections or matching a feature, the customer is spending time trying to understand how any vendor's product would actually improve their business. The customer is trying to make the business case and understand the repercussions of a purchase that will make them more competitive, not you (the vendor).

This is most visible in the pipeline forecast. Almost all CRM systems have a "sales stage" field that indicates where the rep is in the sales cycle, and most have a "probability" field that is meant to indicate "likelihood of close." The first order of business is to have a serious review of the stages and associated probabilities, because most of the time they are bogus and much too easily gamed by the sales reps. This isn't a technology problem, it's just weak discipline. Get the sales leadership to define the entry and exit criteria for each sales stage. If you want to really tighten things up, take away the rep's ability to set the stage, and instead have it automatically set by responses to a survey form in the system (which enforces the entry and exit criteria).

Next, get your data analysts to look at the monthly pipeline data over the last year, to find out if "50 percent deals" close anywhere near 50 percent of the time. Expect the correlation to be highly skewed: reps are congenitally overoptimistic, and it's common to find that "90 percent deals" are only 60 percent likely to close. Adjust those percentages, both in your sales stage model and in the open opportunity records.

Now add the customer's perspective. They don't care about your sales cycle stages: they probably don't even know about them. Have marketing interview past prospects to find out what the major steps are in their decision process. Identify the entry and exit criteria for those steps, and add a new field in your CRM system's opportunity record to indicate "customer's decision phase." Use this as a source of customer intelligence as well as forecast accuracy.

But this, too, can be easily gamed. It's better set by the customer's behavior than by your reps. Doing this means tightly integrating your CRM system to your Web site and document management system. For example, when a contact who's known to be associated with an opportunity downloads a pricelist, this event sets the "comparison" stage of the customer's buying process.

Taking this further, using social network activity can help you understand a lot more about what your customer is thinking. Salesforce.com's integrations with Facebook and Twitter are a step in this direction, although marketers and sales people have a lot to learn before they can reliably interpret any buying signals from it.

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