Are you considering creating a sales enablement business case? This blog post will show you how I created justification for an enterprise-class deployment (4500 users) of sales enablement. Also, I am hosting a webinar with Mediafly on Oct 25th @ 11am MT. Please attend and register here. As such I updated this blog post to match what I have learned in the last 6 months.
Sales Enablement Business Case Basics
Any business case requires you to justify the expenditure on something, in this case, a sales enablement business case. There are generally two ways to show this justification, a reduction in cost or an increase in revenue. For this example, I focused on an increase in revenue but you very well could justify it with a reduction in cost. For instance, I saw a business case recently that did it all off saving rep 2.5 hours a week via Mediafly. Stats like that really speak to the value of sales enablement.
How does Sales Enablement Increase Revenue?
Sales enablement offer a variety of benefits for a B2B selling organization that can help increase revenue.
- More Efficient Selling – Any time spent doing anything other than selling is going to hurt a sales reps pipeline. Sales reps spend only a third of their time selling. If they aren’t out prospecting or closing business, they aren’t maximizing the use of their time. By using sales enablement, you enable sales reps to be more efficient. They spend less time looking for content. And their interactions with customers are streamlined, oh and ideally their interactions with customers are more efficient. This is core to my sales enablement business case.
- More Effective Selling – Not only do sales enablement make sales reps more efficient, but they also make them more effective. Sales enablement enable you to put the selling cycle more on rails and to make sure sales reps are using the most effective piece of content for each touch.
What Metrics Should you Examine in your Sales Enablement Business Case
In order to justify your investment, you need to look at a variety of metrics. In my business case, I primarily looked at opportunities but that isn’t the only method. Here are some other metrics to use to justify a business case for sales enablement. This list isn’t exhaustive by any means, but these pop to my mind as the top metrics.
MQL to SQL Conversion Rate
How many Marketing Qualified Leads to become Sales Qualified Leads. Basically, what is the effectiveness of your sales reps taking something from the marketing stage to the sales stage? This metric might not be so good if your marketing drops a lot of crap into the funnel. But it does represent a very important metric, how do your sales reps interact with customers at the start of the sales cycle, i.e. the customer’s first real human touch.
Average Sales Cycle
How long does it take to sell your B2B product? Is it 8 months? Or 4 months? Can you accelerate this? Slightly harder to model as while you get money faster, will your sales reps actually have more opportunities to work? But the velocity of your deals is something most sales orgs look at. And I definitely have seen that with multiple including the enterprise deployment I was responsible for.
Number of Opportunities
This measures both efficiency and effectiveness. Are your sales reps able to talk to a lot of customers, and are they effective in those conversations? This is what I went with my business case, as it is straightforward to measure and model.
Win Rate for Forecasted Opportunities
Did you know, according to CSO, this is under 50%? This means reps are not closing the deals they say they are closing. A small movement in this can actually drive lots of revenue. And sales enablement does make this change, as sales reps are more effective in those conversations and thus can close more deals. Now, measuring, tracking and modeling this is more advanced than space will allow here to discuss.
% Time Spent on Non-Selling Activities
If reps are inefficient, they are not working as many deals as they should. This metric could be huge! I saw a business case this week (hope to link to it later) where reps saved on average 2.5 hours per week in preparing for sales calls by using a sales enablement!
How to Justify the Value
I was put into a lucky position, our executives agreed to invest in a sales enablement platform pilot (1,000 users) without much math behind it. Our competitors were kicking the tires with iPad based selling and we needed to keep up. So they authorized a pilot of 1,000 users, with a promise for us to justify it for a further expansion. This may sound somewhat large for a pilot, but this is a large global multinational with 10,000s of sales reps. After the pilot (a year), our executives asked for justification. I was new to this, but I did some analysis on reps – looking at their pipeline and mapping it to sales enablement usage. I categorized them into four groups:
- No Sales Enablement Usage – Group 1
- Light Sales Enablement Usage – Group 2
- Average Sales Enablement Usage – Group 3
- High Sales Enablement Usage – Group 4
I then looked at two metrics: number of opportunities per rep and pipeline dollars per rep. The program was less than a year old when I started this, and since our sales cycle was close to a year, I felt it best not to look at revenue metrics.
What we noticed was that those who used sales enablement the most had the most opportunities – 23% more opportunities than those that didn’t use it (see graphic). For pipeline per rep, it was also compelling with all groups using sales enablement; showing 10-20% more pipeline dollars than those who didn’t use it.
Interestingly, we actually saw some regional variation. We rolled the program out to Europe and North America, and Europe saw more compelling numbers than North America. When I discussed this with my contacts in EMEA, they mentioned that tablet-based selling was HOT HOT HOT in continental Europe and that would account for the difference.
The math at showing the impact of opportunities is quite simple. You multiply the delta in opportunities by the average win rate and average deal size, and there you have the increased revenue. Even with a very low win rate, a small increase in opportunities can drive revenue.
In this example, we saw an increase in opportunities of 23% for our heavy users. Those heavy users represented about 25% of the 1000 reps. I am slightly hesitant to share the real number of opportunities, win rate or average deal size, but for math purposes let’s say 10% win rate (very low in the industry) and deal size of $100,000 and let’s say each rep had 10 opportunities. The increase in revenue would be in excess of $5M, which was a lot more than spent on sales enablement. Even if the deal size was $50,000, the win rate was 5% and the number of existing opportunities was 5, you are looking at almost $1.5M in additional revenue.
This justification was enough to expand our usage from 1,000 pilot users (it actually crept up to 1,200 based on user demand) to 4,500 users and an enterprise global deployment. Every field sales rep, across the globe, for four product lines, was provided an iPad and a license. It was also enough justification to get sales enablement training included in all of our global kickoffs. Considering how packed that agenda was, I felt like it was a huge win. It was fun to travel around the world and teach sales reps how to use an iPad and effectively change the way they present. You can read some tips about what I learned here.
I did realize that my justification might have been a bit too complex though, as it was difficult to explain the differences in the groups to senior executives, and in the end, my lines were arbitrary on usage. I knew I would need to refine this for the next go around.
Renewal Justification for Sales Enablement Business Case
Like many martech projects, there is continual justification required. So when the sales enablement service came up for renewal after 2 years, we were asked to again provide justification. Having done this once, it was a tad easier to complete the same justification.
I looked at more metrics this time (based on executive feedback) along with simplifying the groups of users. This time, we drew the line at average users and then compared below-average sales enablement users with above average sales enablement users. I felt this distinction would enable easier digestion from our management, plus after the expansion, most reps were using it so non-users didn’t exactly work.
The Results Are in Above Average Users Had
- 125% more booked revenue
- 66% more deals closed
- 45% more pipeline dollars
- 16% more opportunities
- 24% faster sales cycles
Again, modeling the increase in revenue is the same for opportunities. And while the number of opportunities was lower, a 16% increase in opportunities is going to drive a huge amount of revenue. Furthermore, the other metrics i.e. closing more deals and booked revenue are even easier to model.
For our presentation to management, we also included our sales reps satisfaction and quotes on usage in our presentation, to give the end user representation. I will write a blog post on what we heard from users, but it’s important to gauge their views on sales programs, I wrote about that here. Overall I felt this justification was pretty compelling. Obviously, our execs agreed as we did get a renewal for a year. One other thing we discovered in this justification research which was not included was that the reps that closed the most deals used sales enablement the most. There was a direct linear relationship– more content usage resulted in more deals closed.
The Causality Trap
Our executive management team in every analysis quickly pointed one thing out. How do you know sales enablement resulted in improved usage? Might it be that better reps use the everything available? And the answer to that is that we just don’t know. However, the differences were so compelling that it’s probably worth taking the risk.
My Lessons Learned
This was a relatively arduous process. It took me hundreds of hours to complete this sales enablement business case. In addition, I had to leverage specialty internal resources to complete it and I did learn a few things:
- Start measuring at the beginning. It would have been much easier to show the impact of sales enablement if I benchmarked performance prior to the rollout. This recognition was so big to me that I wrote a blog post about it.
- Continuous monitoring. Several of our sales enablement business cases became rush exercises as we were unprepared for an executive update. The updates we scheduled and prepared for weren’t an issue. But when asked to rapidly turn around justification at odd intervals, we often scrambled to complete. We learned to keep relatively up-to-date metrics on file to share when asked.
- Controlling for rep turnover. The reality is that most B2B sales organizations have high rep turnover, and our organization is no different. It would have been best to include only reps that had been with the organization for a year in the analysis, as in some orgs I saw rep attrition at 30%. It sells sales enablement short to measure performance without letting a rep complete onboarding process and give them time to complete a few sales.
- Simplification. It’s easy to be too into your project that you provide details and distinctions that are largely irrelevant to anyone but you. It’s best to simplify the sales enablement business case into simple terms and groupings. This way you don’t have to define things as you go. Chances are your executive team is not as deep in the metrics, or what sales enablement does as you are. So if you simply it greatly, it helps ease the process along.
- Keep the details in your back pocket. Another key element is to keep that presentation short and simple but has all the details handy, i.e. in the appendix.
I really enjoyed rolling out and making this sales enablement program a success.
If this topic of interest, I am pairing up with Mediafly to deliver a webinar on how to do exactly what I outline in this blog post – build a business case for sales enablement. Register here.
If this excited you, attend that webinar. Or reach out to me on my contact page.