Is Your Organisation Viable?: Customer Relationship Management Systems

Most senior executives will agree that sales and marketing are key functions in virtually all organisations. Without sales, organisations die. Most problems other than revenue problems can be viewed as luxuries of success and can often be solved by accelerating out of trouble - i.e. generating more revenue and thus funding solutions to non-revenue problems.

Most of those same senior executives will have invested a great deal of time and effort in systems and process projects in many organisational areas - finance, operations, human resource management, contact management, sales order processing, project management etc.. There is one area in which systematic approaches are rare and have had little impact on the way we work today - marketing and the generation of sales.

For all its importance, many organisations treat sales generation either too gingerly or too heavy-handedly. Sales generation often appears to be a mysterious process. In truth, because people sell to people, many aspects of sales generation are only partially analysable. On the other hand, expenditure on sales can be treated like any other investment.

In our view, systematic thinking often breaks down when you try to analyse sales and marketing as a simple input-process-output system. Traditional product sales methodologies can work well in environments where clients are similar and many, price lists hold firm, required content knowledge is minimal and client need is directly satisfied by the product. It is increasingly common, especially in service organisations, to find environments where sales are about solving a client's unique problem, not to push a product. Examples include consulting (in many forms), finance, professional services, outsourcing, facilities management, distribution and software development.

We prefer to look on the organisational world in terms of the viable systems model and make no exception for sales and marketing. With apologies to Professor Stafford Beer, whose seminal works on the viable systems model (Beer, Heart of Enterprise, 1979; Brain of the Firm 1981; Diagnosing the System for Organisations, 1985) go into far more detail than we can set out in this article, a viable system model is summarised in the following diagram and assessed in terms of sales and marketing below.

The essence of viable systems model thinking is that all the components of a system need to be working effectively together for a system to be viable.The absence of a component or disharmony between components does not guarantee failure, but it suggests that the system might lack longer term viability.

PPRISM - A Viable System for Sales and Marketing

People, Processes, Results and Improvement in Sales and Marketing, PPRISM, is Z/Yen's proven method of improving sales force and marketing effectiveness through looking at the total viable system. The starting point is the organisation's strategy and policies towards achieving that strategy. It is surprising (almost depressing) the number of organisations we see who have set out a form of marketing strategy but have no mechanisms at all for implementing the strategy in sales processes, measuring success or ensuring that the strategy is generating appropriate sales and returns. PPRISM helps organisations to track the effectiveness of strategic sales and marketing initiatives from the word "go".

Many organisations have the ability and good sense to track the revenue and profitability of their strategic sales and marketing initiatives, for example through their finance system. This doesn't tend to help much. Finance people mostly want and produce retrospective, definite numbers - they tend to use budgets for treasury and post mortem purposes. Sales and marketing people need forward looking ranges that reflect the uncertainty of their work and the timing of the critical decisions they need to make "on the fly". All too often, great battalions of finance line up against the sales and marketing war-horses to battle for the predictive high ground. The following dialog could come from many companies, but most likely one which is in the business of relatively high value, low volume sales:

SCROOGE (DIRECTOR OF FINANCE): How's the strategic sales initiative going?
PROF. LIGATE (DIRECTOR OF SALES): Great start. Fantastic feedback from the punters. Terrific possibilities on all fronts.
SCROOGE: OK, so how much net revenue should I put in the six month forecast then?
PROF. LIGATE: Well, that depends. I mean, there are loads of good leads out there, but these things take time to come through and revenues can be infuriatingly unpredictable.
SCROOGE: £1 Million? £10 Million? £50 Million? Give us a clue.
PROF. LIGATE: Well, it could be any of those. Or less, I mean its just possible that we get no new revenue at all in the next six months.
SCROOGE: I thought you said the initiative was going well.
PROF. LIGATE: It is going well. I mean we could generate a lot more revenue than the figures you just spouted. If we land the Gargantua plc account that would be a lot more than your £50 Million in just one hit. The Ginormo bid alone is worth £46 Million and we're down to a shortlist of three. It's all so uncertain.
SCROOGE: Just give me a figure.
PROF. LIGATE: It would be meaningless. I might as well pluck a number out of the air.
SCROOGE: I need a figure.
PROF. LIGATE: £23,457,868.
SCROOGE: Why £23,457,868?
PROF. LIGATE: I plucked a number out of the air. Go figure.

We sympathise with both of these characters. PPRISM can help with "feed-forward" prediction by reporting key information probabilistically at six key consistent stages of the sales process. The stages are set out in the table below. We colour code the stages to help sales people to describe pithily and consistently where they are in the sales process:

At each stage, sales people estimate ranged values for the possible sale (these tend to harden as the process proceeds), the margin anticipated, the duration of the contract and the probability of success. They also analyse the potential sale into strategic categories (e.g. market, product, source). Feedback enables sales people to co-ordinate their sales activity more effectively. PPRISM information also enables management to monitor and evaluate the effectiveness of their sales strategies and policies.

PPRISM Example

One PPRISM client was a large outsourcing supplier who needed to provide much better reporting of the true state of sales and needed to organise sales forces working centrally and locally. As their sales were an unusual mix of very large and very small assignments, PPRISM's probabilistic based reporting provided them with a step change improvement and led to the board understanding much better the dynamics of sales. Another PPRISM user was a large distribution company which had had several false starts in new markets and wanted the rigour PPRISM provides to allow them to treat sales opportunities as client problem solving projects without getting out of control.

Benefits of Viable Sales and Marketing Processes

Over and above the predictive aspects, the benefits of PPRISM are valuable. Some examples:

• you can see which business units are selling and which are not; · it is harder for sales people to avoid or delay their follow-up or targeting activities with a visible sales process such as PPRISM;
• senior management can monitor the sales process systematically, ensuring focus on key prospects of strategic importance;
• sharing information from an early stage increases the likelihood that enquiries, leads and proposals are dealt with on a timely basis (how many examples can you think of where invitations to tender languish on a vacant desk until its too late to respond?);
• unrealistic opportunities can be identified and qualified out of the system early, minimising time wasting;
• teams are better equipped to plan and prepare their pitches;
• sales people share knowledge with eachother more effectively, helping to improve performance;
• sales managers have improved controls over sales people;
• the cost of sales can be measured more effectively;
• sales (and pre sales) trends are tracked, enabling marketing to take appropriate action promptly to capitalise;
• PPRISM can even be an ISO9000 compliant approach to sales and marketing.

As with all systematic initiatives, there are also dangers. It is possible to neglect some of the more valuable aspects of PPRISM (e.g. the probabilistic prediction and sales tracking) and focus on the procedural aspects of the system. With such emphasis, PPRISM is at risk of seeming (or becoming) too bureaucratic. There is also a risk that PPRISM is not well received by the sales force unless those people feel that they individually get benefit from PPRISM. In our experience, PPRISM works best when linked with systems such as contact management systems, knowledge management systems, project management systems, enabling the sales people to get direct benefit quickly from improved information sharing.

A methodical approach to sales and marketing saves time and effort and achieves results. If you ignore ensuring that you have a viable system for sales and marketing, you could be ignoring your lifeblood. Increased revenue is the pot of gold at the end of PPRISM's rainbow.

Michael Mainelli and Ian Harris are directors of Z/Yen Limited. Z/Yen specialises in risk/reward management, an innovative approach to improving performance in strategy, systems, people and organisation. Z/Yen clients to date include blue chip companies in banking, technology, charities & sales/service companies.

[A version of this article originally appeared as "Is Your Organisation Viable? – Customer Relationship Management Systems", Conspectus, Prime Marketing Publications Ltd (October 1999) pages 26-27.]