CRM Dashboards are misleading
by Scott Annan on July 23rd, 2008
I recently watched a great keynote speech given by Malcom Gladwell at the New Yorker annual conference where he talked about “mismatches” in hiring people.
The core concept is that organizations determine specific skills that are important for a role, isolate those skills, and then evaluate candidates based on their ability for each skill. It all sounds so logical and obvious.
The problem, according to Gladwell, is that it doesn’t work.
He uses several examples spanning professional sports, lawyers, and teachers, and in every instance demonstrates that the candidates’ ability in isolated skills - vertical jump in basketball, mental acuity in football, college entrance scores for lawyers, level of scholastic achievement in teaching - are all poor predictors for determining if people will perform well in their job!
There is a fundamental problem with converting “people” into stats and using these stats to make decisions. It is logical but not always worthwhile.
Now think about how most companies use CRM analytics to determine “customer profiles” and predict future sales. Current CRM dashboards have detailed pie charts and graphs that isolate key information. But is it a reliable source for decision-making? Is it RIGHT?
I don’t think so (gasp!).
I think that CRM dashboards are misleading and setup sales people for failure, or worse, encourage them to “cheat the system”, making most CRM analytics nearly worthless.
There’s a need for CRM dashboards to provide real value to salespeople by helping them process a lot of data that helps them to manage the human side of business.
I think we have the solution.
Thanks to Jay Godse for sending me this video clip.
Graph from Graph Jam.
Tags: Analytics
July 24th, 2008 at 8:07 pm
Your application of the Gladwell video to your application domain is interesting…I have a couple of questions:
How do CRM systems encourage salespeople to cheat the system? (I am not a sales person, so this is for my edification).
What, specifically and in your opinion, is it about CRM dashaboards of common CRM products that provide misleading information?
How do CRM dashboards set sales people up to fail?
July 24th, 2008 at 8:27 pm
Its not so much the CRM systems that encourage salespeople to cheat the system, its the analytics - the predictors and charts that say how many contracts will be closed, by whom, and when.
The concept is that salespeople will update the various stages of a sale as it progresses through the “pipeline”. The management team is able to see how much sales they ought to do based on the amount of deals in the pipeline.
But, as salespeople know, negotiations and deals are not all linear and do not all move at the same pace. So, to avoid “missing targets” salespeople often underestimate the amount of business they are working on so that they are not held accountable for closing business that is in an early stage. Or they underrepresent the amount of the deal (for the same reason).
So salespeople do not always represent what they are actually working on.
BUT, and here’s the problem, even when they enter accurate information, not all sales transactions work the same way, so extrapolating total future sales based on a lot of early stage discussions is consistently incorrect.
I’m not saying its of no value, but its not as good a predictor as many companies expect, and shouldn’t be used as the “carrot and whip” for compensating salespeople.
July 24th, 2008 at 10:52 pm
Ahhh…I see…it has nothing to do with the technology and everything to do with measurement, inappropriate interpolation (pipeline-based prediction), and sales compensation that is not aligned with business interests (bonus proportional to numbers other than profits).
It is only natural for salespeople to sand-bag their numbers to defend themselves.