You probably understand the importance of a clean CRM in driving efficient sales and growth. But what happens when your CRM system is not properly maintained and updated? The consequences can be severe and far-reaching, impacting not just your sales capacity but also your hiring and planning efforts.
The Ripple Effect of Poor CRM Hygiene
The effects of poor CRM hygiene can ripple through your sales organization. One of the most obvious problems is missed sales opportunities, either not spotting the opportunity to engage or losing touch with key prospects and customers.
Additionally, poor CRM hygiene can hamper sales team productivity - If sales reps are spending time searching for and updating incorrect or incomplete CRM data, it takes away from work that matters (and is actually engaging), reaching out to prospects and closing deals. It leads to a decline in sales productivity and ultimately, revenue.
But the effects of poor CRM hygiene go beyond just missed sales and reduced productivity, impacting any and all areas that rely on data to build a picture of either what is going on in the business or is projected to happen, to help make informed decisions about sales capacity and hiring.
The big miss - Forecasting
The process of predicting future revenue based on past performance and current market conditions, the Revenue Forecast is a critical part of running a commercial team, and is most susceptible to the effects of bad CRM hygiene.
Whether it be misrepresenting where and when a deal is about to land, not updating a contact with a recent conversation that would change the direction of an opportunity, or simply not closing down opportunities that are no longer live, the forecast is the culmination of CRM hygiene, good or bad within an organisation.
The challenge is that in many businesses, the data that goes into a forecast is leveraged beyond the picture of open business that is going to close, which is all that a forecast is: How much business do we have right now, and how much of it is going to translate to revenue.
Building plans and hiring around the pipeline building that is reported in the business, is a potentially risky affair, and one that is potentially tacking the end output (the plan) in the wrong way, and an approach that can (and does) lead to over- or under-hiring, as well as an imbalance in resources and capacity.
Moving from Revenue Forecasting to Revenue Projection: A More Robust Approach
Given the consequences of poor CRM hygiene, when approaching planning it's important to adopt a more robust approach to revenue prediction. Revenue Projection.
Revenue projection is a forward-looking approach that takes into account not just past performance and current market conditions, but also future trends and potential disruptions. It is a more holistic approach that allows businesses to anticipate and plan for future changes and opportunities.
Unlike revenue forecasting, which is largely based on historical data, revenue projection is based on a thorough analysis of current and future market conditions. It considers factors such as the competitive landscape, market demand, and potential new products or services. As a result, it is less susceptible to the effects of poor CRM hygiene and pipeline forecasting.
By moving from revenue forecasting to revenue projection, businesses can make more informed and accurate decisions about sales capacity and hiring. This can help ensure that they have the right resources in place to capitalize on new opportunities and drive growth.
Why is Revenue Projection more insulated from poor CRM Hygiene?
The approach to Revenue Projection is notably different from Forecasting, ignoring the open pipeline (which is susceptible to hygiene issues) and instead looking at cold hard closed facts.
Closed won / Closed lost deals only
Close rates by stage / funnel dropout
Deal length of closed won (typically more accurate than closed lost)
Average closed won deal size (ACV)
There’s a myriad of additional data that flows into it, but the fundamentals of what data a Revenue Projection is built around centre around those 4 main pillars, and when you dissect them there’s very little opportunity for poor hygiene to be present.
Closed won deals are typically closed the moment that they are won, and so the average deal lengths of these deals are reflective of reality, as is average deal size. Close rates could be an area for errors, but ultimately it’s only the ultimate funnel conversion rate from lead that matters - Where the in between is used to make business decisions the scale usually dictates that it’s more accurate also .
Revenue Projection ultimately offers the way out for businesses to build accurate hiring and capacity plans rooted in reality, leaving behind the ether of open business that floats around and is hard to understand, capture and at times report.
Instead of using AI and ML to unpack the forecasting trends of individual sales reps, in an attempt to reverse engineer out their errors, businesses need to start looking towards an approach that does away with the opportunity to introduce error in the first place. If businesses can get behind it, we should see GTM teams being built in far more sustainable and effective ways.
Here at Clevenue we're building the future approach to sales & commercial capacity planning. We believe that a revolution in how commercial functions are built can lead to a more sustainable & profitable businesses.
FAQ: Common Questions on CRM Hygiene and Its Impact on Sales Planning
Q: What is CRM hygiene?
A: CRM hygiene refers to the maintenance and upkeep of a CRM system. This includes ensuring that data is accurate, complete, and up-to-date. Poor CRM hygiene can lead to outdated or incorrect data, which can impact sales productivity and revenue.
Q: How does poor CRM hygiene impact sales capacity and hiring planning?
A: Poor CRM hygiene can lead to missed sales opportunities and reduced productivity, which can impact revenue. It can also affect revenue forecasting, leading to inaccurate projections and an imbalance in resources and capacity
Q: How can I improve CRM hygiene?
A: There are a few key steps you can take to improve CRM hygiene:
Regularly review and clean up your CRM data: This includes identifying and removing duplicate records, updating outdated information, and filling in any missing data.
Encourage your team to use the CRM consistently: This will help ensure that the data in your CRM is accurate and up-to-date.
Implement processes for data entry and management: This can include establishing clear guidelines for how data should be entered and who is responsible for maintaining it.
Use CRM integrations and automation tools: These tools can help streamline data management and reduce the risk of errors.
Q: How can revenue projection help with sales planning?
A: Revenue projection is a forward-looking approach that takes into account future market trends and potential disruptions. By considering these factors, businesses can anticipate and plan for changes and opportunities in the market. This can help inform decisions about sales capacity and hiring, as well as resource allocation and growth strategies.
Q: What are the key differences between revenue forecasting and revenue projection?
A: The main difference between revenue forecasting and revenue projection is their focus. Revenue forecasting is based on past performance and current market conditions, while revenue projection considers these factors as well as future trends and potential disruptions. As a result, revenue projection is a more holistic and forward-looking approach that allows businesses to anticipate and plan for future changes and opportunities.