Thought Leader Interview

Jim Burleigh brings more than 22 years of software experience to Cloud9 from a broad range of disciplines: CRM, supply chain, database, and tools technologies. As CEO of SmartTurn, and a senior executive at RedPrairie, Navis and salesforce.com, Jim has a strong record of achievement as a Software-as-a-Service (SaaS) executive, strategist, and entrepreneur. Today Jim is CEO of Cloud9, a company dedicated to improving sales forecasting and pipeline management better. Good technology plus Jim’s intimate understanding of the sales process make this a company and a sector worth watching.

Denis Pombriant: Jim, you've been involved in the front office and sales technologies, among other things, for a long time. You were an early employee at Salesforce.com. But what's different today about sales in terms of the customer and the selling environment?

Jim Burleigh: Well, one of the major differences now is how much learning the customer wants to do and actually does do long before they talk to you. You see the impact of the whole social world out there. You see the ubiquity of the Internet manifesting itself. Any prospect that is going to make a purchase decision, and it’s very, very common, will educate themselves long before they talk to the sales rep and get the full court press.

So you have to really understand that when you're selling to people nowadays. You have to challenge your marketing department. It's their responsibility not just to generate leads, but to think about the prospect, all the way from initial exposure and experience all the way through to close. It's not necessarily realistic that the marketing department “close a customer,” but they need to think that way. Because the customer's direction and a heavy amount of their mindset is going to be made up by the time they talk to your sales rep for the first time.

DP: That's interesting and it drives the next question. There are many tools on the market today for selling, all promising to improve sales performance. Can they all be right? Are they all useful? Are some that are better than others?

JB: I think, overall, there are very useful tools, to varying degrees, for the individual sales rep. And absolutely none of them are useful for a sales manager. I've always thought that CRM as a category is unique because it is the only application I can think of where the target user it is specifically designed for absolutely doesn't want to use it, meaning the sales rep does not want to use a CRM system. The sales rep wants a contact manager something like ACT or Outlook or something on their iPhone or just something to keep track of their calendar, keep track of their contacts and maybe make a couple notes. Anything beyond that is for the institution. It's for corporate memory. It's for making sure people are following a process. It's making sure that knowledge didn't walk out the door. That's CRM.

Then we supplemented CRM with a lot of great extensions, whether it is to clean data, find more information about companies, about contacts, help generate leads. There are a number of things there. But again, it's all really at the sales-rep level.

But the sales manager does something completely different. Their job is to get more performance out of their team, and at whatever level you're talking about, first-level sales manager to area vice-president, all the way up to the vice-president of sales. They're trying to get more out of what they have, meaning they’re coaching people, they’re hiring people and firing people. They're looking for risk, for weak spots, for soft spots, blind spots in their deals, in their pipeline, et cetera. And they're trying to take corrective action on all those things. So that's really about knowledge, about pattern recognition, about finding those bits of risk and making decisions on them.

And I don't know of a single product on the market that does that, other than Cloud9, you know. So sales managers turn to spreadsheets, which ultimately are inadequate for what the sales manager needs.

DP: Now, a minute ago you mentioned the idea of institutional memory or corporate memory. And we were talking about CRM. But does CRM really provide you with the ability to have institutional memory? My experience with it is that you can put information into it, for sure, but very often there's only a field, and there’s no capability of tracking the history of the field. And as a result, when you make the change, it's like playing the movie “Groundhog Day.”

JB: You're absolutely right and there are actually two angles on that. Companies think that a CRM system is going to give them institutional memory and it does, but only to a very light degree.

There are two major problems. The first one is, like I said earlier, a sales rep, just by nature, doesn't want to use the CRM system. So they're going to do as little as possible with it and that will weaken your institutional memory. So you need to make sure that adoption is high and that the sales rep sees the value to their management and to the company or they see the necessity to their management and their company. Whether it’s a carrot or a stick — you decide — it’s about making sure that the sales rep enters the information, enters it completely, et cetera.

And the second thing's just a fundamental technology shortfall in CRM systems. Most CRM systems keep history on a very limited set of data so when you enter a new bit of information into a field, you generally override the old bit of information and it is gone. So when I say institutional memory, you have knowledge of the contact's name and his phone number, but if you look at something like the progression of his titles over time, or you look at the progression of details in a deal over time, you lose probably 98 percent of what was going on. And you won't have any opportunity to look back and see what your CRM system looked like last quarter at this time.

DP: Although I suppose if your salespeople are at all diligent, and they've been entering notes into the CRM system, you at least have notes that potentially could contain that information. But that information is not going to be machine readable.

JB: Yeah. That information is unstructured data. And it's machine readable, but not machine discernable. It doesn't mean anything to the machine. And you can't compare one person's notes to another person's notes. Maybe you could do a character count, but that's about as useful as it can get. And again, the vast majority of those data fields in a CRM system are overwritten, and you lose everything. So you know how it is right now, but you don't know how it looked yesterday.

DP: Exactly. So tell me this. We've seen a progression over time in pipeline management and in forecasting approaches from, say, spreadsheets and scraps of paper to printed reports, even some BI, (business intelligence), as well as specialized solutions like Cloud9. What have we learned as we've graduated from one solution type to the next?

JB: Well, actually, we haven't learned anything, and we haven't graduated in general! You know, if you look around the industry, I think the state of the art is still a spreadsheet. At Cloud9 we're pushing the envelope, we’re kind of creating the new category that we call intelligent sales forecasting. If not spreadsheets, you have the forecasting capabilities within most or all CRM systems and they’re an elegant way to record and regurgitate data but an absolute zero when it comes to helping you discern whether the information is good or bad.

So there is no support for helping the sales manager validate the forecast, make a decision and try to improve any output there. So they (are stuck) using spreadsheets. Spreadsheets are more flexible and nimble (than what CRM can do). Spreadsheets allow each of the sales managers involved in the process to have their own — and reps to have their own — private versions. And then people try and keep history in spreadsheets, maybe even BI, and try and do comparisons. But that’s a real basic and poor way to attempt to accomplish it.

DP: Okay. But what are sales managers trying to do?

JB: They're trying to marry the concepts of three things. They have an operational problem, which is the process of forecasting. They have a technology problem, which is that the line of business sales managers and sales executives want to have control of themselves. And then they want analytics. Well, analytics, by and large, has to be installed and configured by IT. There's some BI analytics that's in the cloud, but it still doesn't get you all the way there. You still need the analyst that understands schemas and all these sorts of things. And none of this is married with the process part of the problem. So, at the end of all that, sales managers have nothing and they turn back to spreadsheets.

DP: Would you say that most companies recognize that there's a problem, but that they don't know how to deal with it? Or are they oblivious to it? Do they believe that the spreadsheets that they're using are as good as it gets?

JB: You know, they don’t know that there’s a better way to do it. They thought, once upon a time, that their CRM system would do it. Then they figured out it didn’t and they fell back to spreadsheets. And it’s interesting because when you ask a very superficial question of, let's say, a sales executive, VP of sales, like, “Are you satisfied with your forecasting process,” most of them would say “Yes.” But ask them a different question. Let's say you ask them, “Do you think it's possible to improve your win rates? Do you think it's possible to improve your forecast accuracy? Would that be important?” And you'll get “Yes,” “Yes,” “Yes.” How could they be satisfied with their forecasting process, then? So they don't associate those problems that they're actually tying solve with the right technology to help with the decision process that they and their managers actually go through.

DP: I’ve seen research from Gartner and Forrester over the last several years that suggests that sales leaders’ most important issues are generating leads and reaching decision makers, but it seems like those issues are perennial. I've always heard that. In advocating better pipeline management and forecasting, it seems like Cloud9 is saying that sales-rep productivity is at least equally important. And you've touched on productivity already. Does an analytical approach to forecasting help in a situation like this?

JB:     Absolutely. I would take a slightly different approach to the data there. I would say that the most important thing that consistently drives a sales VP is to increase revenue, increase bookings. There are specific ways to do that. One is to add more feet on the street. Another way is to make the process more effective, meaning if you normally win four out of 10 deals, then what if you win four-and-a-half out of 10 deals or five deals out of 10? So that efficiency of your sales resources, whether it's a sales rep, your demo center, or your sales engineers, whatever it is — you apply those in the best way possible to get the most likely deals.

Think about what happens in a sales pipeline. You could roughly divide your sales pipeline into three categories. There are those deals that are progressing very well and match all the expected historical patterns of success. And they're very likely — they're high-probability deals. You’re going to win those deals. So you want to make sure you don’t over resource those deals. Everybody jumps on the bandwagon to go to a happy prospect but that's not useful. That's one category.

Another category is the other end of the spectrum, those deals that flat out are dogs. You know, they do not match the patterns of success. These things don’t look good at all. Those are deals that you’re going to lose and you want to make sure you recognize that so you’ll lose early or walk away.

So if you can take resources off the bad deals and you do not over resource the deals that are already really solid then you've got a little extra resource, some extra cycles to spend. If you apply those to the deals in the middle, the deals that are on the fence, that’s where you can have an upside outcome. You can apply resources appropriately there, nudge deals a little more towards the winning side of the ledger, win more of those and you increase your top line.

DP: Now, that's very interesting. As long as we're talking about research, I'm also aware that Ventana, is suggesting that, this year, sales analytics is the number-one priority for sales leaders. And I'm wondering, what does that say about the market? I'm sure you're happy about that.

JB: Absolutely! If you're a sales VP right now, you look at the macroeconomic environment. And it's not like the rising tide is going to float all boats out there. You can hope that your particular niche gets a little bit more growth than other folks’. But it's not going to be a banner year, just general macroeconomic growth. So, to grow, you have to do something a little better than what you were doing before. You have to improve. Which comes back to how do I understand what the pattern of success is. How do I do more of that? How do I understand what the pattern of failure is? How do I do less of that? And that’s where analytics comes in.

DP: I hear you. It's interesting, just as an aside that you talk about the macroeconomic idea. I fully agree, I think there are some books out that even talk about it and how this is — we're sort of entering a zero-sum era, not zero sum between a vendor and a customer, but zero sum between vendors. In other words, if the market's not expanding rapidly, then one vendor's going to do well, and it's going to come at the expense of another.

JB: Yeah. In simplistic terms, take whatever the market was in 2011. If 10 people were going to buy in 2011, 10 people are probably going to buy in 2012. Now if you had a 30 percent share in 2011, and you have a 30 percent share in 2012, you have zero growth. Unless that market grows, 10 people are going to buy in 2012 and if you want to win more and book more in 2012 than you did in 2011, you have to be better than the other guy.

DP: Well, you’ve got to work smarter, at least.

JB: You got it.

DP: Okay. One more question. Since you became CEO, your company's raised more money. You've made an important addition to the product line. You’ve added staff. You’ve conducted a very successful user-group meeting. I’m tired just thinking about all that. What's on your radar for the coming year?

JB: We’re going to continue growth in our staff. We have the major product announced that you’re talking about, our intelligent sales-forecasting product, coming out very shortly. That's the flagship product. There's a lot of advancement that we can do on that, ideas around guidance in forecasting and much more intelligent levels of learning and so forth there’s a lot to be done with that.

Then there are some phase-two processes where we can go beyond the “normal,” thought processes around forecasting and think about things like benchmarking, for instance. Benchmarking would be very interesting through collective knowledge, as opposed to knowledge coming just out of an individual company. That's one area.

At a very, very high level, there's a lot broader opportunity for what we do. It’s really marrying the idea of sales-performance management with analytics in the cloud together into one unified smart line of business application. Today we’re focused on that sales-performance management area. But what we do is a brand-new but generic kind of thought process. You can apply these things well outside of sales-performance management. So it's another interesting thing for us to think about, because it’s an interesting potential platform play as well.

DP: It sounds like this has the legs to grow into a complete platform or a sales operations system — don't let me put words in your mouth.

JB: Yeah. It's certainly a complete sales-operations system, well beyond forecasting and into everything from compensation to territory management to quota refinement, all those sorts of things. But it can also get out of the front office and get into other operational areas in the business.

DP: Okay. I'm out of questions. Thanks for speaking with me today.

JB: Thanks.