The Sales Force Automation Management Essay
Abstract: The use of Sales force automation (SFA) to support customer relationships have been on the increase, and it is the best example of technology application on business-customer relationship. SFA involves the application of information technology to support the sales function. SFA software
provides functionality that helps companies manage sales pipelines, track contacts and configure products, inter alia. Although there is a growing significance and potential of SFA, success rates for SFA implementations have been found to be quite low. The high failure rate of SFA clearly indicates that increased technology use does not always improve performance. The purpose of this paper is to identify the value drivers and critical success factors for successful implementation of technology enabled SFA.
twenty-first century sales forces use an impressive array of sales devices or technological tools to
carry out various important sales roles, including gathering market information,
gaining prospect trust, presenting their companies’ products and services, providing
customer service, and building long-term buyer-seller relationships. using the latest technology
makes the salesperson’s job easier (Colon, 1998), decreases costs (Taylor, 1993), enhances
communications (Thetgyt, 2000), reduces sales cycle time (Thetgyt, 2000), improves
organizational access to information (Leifer, 1999), and is essential for a sales organization to
develop sustainable advantages over competitors. Organizations that do not learn and adapt
to changing technology can face painful competition, but integrating technology can require
substantial re-thinking of the exact nature of customer relationships. For technology to enhance
competitiveness, it must deliver real value to customers in the service interaction, and customers
must like it. Thus, the impact of technology on customer satisfaction in the service interaction
is a critical area of research. SFA is an example of technology used on the customer interface,
where it can affect customer relationships. Successful application of SFA can potentially help
a company develop strategic advantage due to speed, improved accuracy, greater synergy, and
cost saving. If customer relationships are the key, service firms such as insurance companies
must understand how technology applications such as SFA affect the quality the relationships
with their customers. We consider SFA to be sales management systems, which implement
technology in order to serve salespeople and customers by enhancing efficiency of information
use in the sales process. SFA systems also allow information obtained from various sources
such as calls to 800 numbers, return of post cards requesting information, or through other
outside sources to be quickly distributed to sales people. One benefit of the information provided
through the SFA system, is that it can reduce the amount of time spent searching for potential
sales prospects. It also allows the sales person access to more information on prospective clients;
therefore, increasing the sales person’s ability to tailor the sales presentation to the individual
needs of each client.
Literature Review: The purpose of this research is to see which individual characteristics moderate the relationship between technology and sales performance. The context for most of the studies on SFA adoption has been developed countries. There are very few studies done in the context of developing economies. Thus, this research is an attempt to improve our understanding of the SFA in the context of a developing economy like India.
Since the early to mid-1980‘s (e.g. Klompmaker, 1980-81; Collins, 1984; Wedell and Hempeck, 1987a, 1987b) there has been small amount of research on the topic of SFA. Our analysis shows that the research output can be clustered into subsets that have attempted to answer just four research questions, as follows.
1. Why do organizations adopt SFA?
2. What are the organizational impacts of SFA?
3. What accounts for the success or failure of SFA projects?
4. What accounts for variance in salesperson adoption of SFA?
Siebel and Malone (1996), reported that economic returns from SFA are ‘immediate’, and that the business case for its implementation is ‘compelling’. Moriarty and Swartz (1989) claim that some SFA implementations have achieved return on investment in excess of 100%. However, a number of reports signal alarms about the outcomes of SFA implementations. Block et al (1996) found that 61% of all SFA implementations fail. Rivers and Dart (1999), Morgan and Inks (2001) and Schafer (1997) have also reported similar failure rates. Blodgett (1995-96) testifies to failure rates of 75% and Bush et al (2004) of up to 80%.
Research data suggest that efficiency gains are a primary motivation for investing in SFA. Erffmeyer and Johnson (2001) interviewed informants at 40 US manufacturers and service firms to discover their motivations for implementing SFA. The primary motivation was improved efficiency. Harris and Pike (1996) asserted that greater operational flexibility, better sales management, enhanced customer support, higher sales-force productivity, superior customer account management and improved communications between headquarters and the field were expected outcomes from SFA implementations. Ingram, LaForge and Leigh (2002) agree that many companies are turning to SFA to help them manage their customer relationships more efficiently. However, Erffmeyer and Johnson (2001) also observe that only ‘a limited number of respondents were able to offer details regarding formalized goals and objectives for SFA’. Wright and Donaldson (2002) identified four ‘quite strategic’ objectives for sales information systems applications – increased customer retention (mean score of 6.1 on a 7-point importance scale), enhanced customer relationships (6.1), increase customer acquisition (5.7) and integration to contact management (5.5). On further investigation, they suggest that the application of these systems reflects a ‘mailing-list mentality’. Like Erffmeyer and Johnson (2001), they also found little evidence of the sample companies actually measuring outcomes
in terms of these strategic objectives.
Kraemer and Danziger (1990) report that SFA implementations have both task and non-task outcomes. Most of the research performed on this topic has studied task-related outcomes. In an early study, Cronin and Davenport (1990) found a number of hard and soft outcomes were achieved. The harder outcomes were enhanced quality of customer communications, better time management, and improved knowledge management. Softer outcomes were classified as structural (rationalization of order processing, development of a ‘virtual office’ held on laptops), motivational (lower sales force attrition, improved image, better stress control) and cultural (the creation of an extended ‘invisible college’ of salespeople). Erffmeyer and Johnson (2001) identified improved access to information (60% of the sample), improved communication with customers (65%), a more efficient sales force (27%) and faster revenue generation (16%) as realized benefits from SFA. Wright and Donaldson
(2002) found that the biggest impact of sales information systems was in developing mailing
lists, producing sales reports, contact management and sales cycle tracking. Engle and Barnes’s (2000) investigation found a clear relationship between SFA adoption and salesperson performance. They computed that 16.4% of the variance in sales was explained by the use of SFA systems, but that the SFA project had a payback period at six to seven years. Ahearne and Schillewaert (2001) also found that use of SFA was associated with improvements in reps’ selling skills, knowledge and performance. Their research found positive correlations between SFA implementation and sales reps’ market knowledge, technical knowledge, targeting skills, adaptive selling and call productivity. Essentially sales reps with SFA support became more adaptable and productive. Sales reps’ use of SFA accounted for a small, yet significant portion (7%) of their sales performance. In a later study, Ahearne et al (2004) obtained objective measures of technology usage and performance. They found a curvilinear relationship between SFA usage, as measured by reps’ accessing of SFA screens over a three month period, and salesperson performance, as measured by sales against quota. The worst performing reps either had very little or a large amount of interaction with the SFA software.
Researchers have employed a number of different approaches to this question, using a variety of definitions of success, and have identified several variables or factors that are associated with SFA success or failure. Pullig et al (2002) found that five shared values were important correlates of SFA success: customer orientation, adaptive cultural norms, an information-sharing culture, entrepreneurial
values and high levels of interpersonal trust. Wright and Donaldson’s (2002) self-report data indicated that technical barriers were much less important than strategic and organizational barriers. For example, a shortage of IT specialists and a lack of board-level backing were highlighted as more significant barriers than having access to highly fragmented market and sales data. Bush et al (2005) set out to understand SFA outcomes by investigating ‘factors beyond those typically included in technology acceptance studies’. From semi-structured qualitative interviews with managers in 3 companies, they identified three major influences upon SFA outcomes: the degree of process change (from incremental to disruptive), the extent of salesperson buy-in and the perception of technology enablement (from low to high). In their sample buy-in by salespeople ranged from 50% to 70%, suggesting a good deal of disinterest or resistance. Speier and Venkatesh (2002) investigated two different firms where SFA technologies had been withdrawn following implementation. The research revealed that although the salespeople had been ‘fairly positive’ about the implementation of SFA at the outset, they turned against the system demonstrating their dissatisfaction with increased absenteeism and voluntary turnover. Sales performance did not increase following SFA implementation, principally because of the perceived lack of ‘professional fit’ between the SFA tools and the sales force. The sales team’s expectations of relative advantage to be delivered by the SFA
tools had been high, but their perceptions of its delivery were much lower. Six months after
implementation, organizational job commitment, job satisfaction, perceptions of salesperson organization fit, and perceptions of salesperson-job fit had also decreased significantly.
It has been observed that SFA adoption is a two-stage process (Parthasarathy and Sohi, 1997).
First the organization decides whether to adopt the technology; second, the sales-force decides
whether to use the technology. A number of researchers have attempted to ‘forward understanding of sales force acceptance of SFA’ (Morgan and Inks, 2001). As noted by Ahearne et al (2004), much of the research on this particular question has focused on technology adoption, rather than technology usage. One of the earliest studies was conducted by Keillor et al (1997) who found that there was considerable variance amongst salespeople in their attitude towards the use of SFA technologies. They found that younger sales reps were more positively inclined towards technology adoption. Ko and Dennis (2004) also suggest that SFA systems tend to store formal knowledge about products, customers, markets and competitors, and are therefore more likely to be of value to newer sales reps.
Robinson, Marshall and Stamps (2005) combined the Technology Acceptance Model (TAM)
(Davis 1986; Davis 1989) with the Theory of Reasoned Action (TRA) (Ajzen and Fishbein,1980) to identify the relationship between perceived usefulness, perceived ease of use, attitude towards using technology, and intention to use the technology. In addition, they tested the relationship between technology acceptance, adaptive selling practice, and job performance of field sales people. Analysis indicated that the attitude towards using technology is positively related to perceived usefulness and perceived ease of use, and the more positive the attitude toward using technology, the higher the intention to use the technology. They also found that although intention to use SFA tools is not directly related to better job performance, it is positively related to the adoption of adaptive selling practices by sales people, which, in turn, leads to better job performance. Jones et al’s (2002) longitudinal study examined actual usage of SFA technology also employed TAM and TRA. They found that 3 variables explained salesperson intention to use the technology – perceived usefulness
of the new system, attitude towards the technology and its perceived compatibility with the current system. However, actual use of the technology was shown to be strongly associated with the personal innovativeness of the sales person, attitude towards the technology and facilitating conditions. Schillewaert et al’s (2005) results reinforce the importance of perceived usefulness and ease of use as the main drivers of technology adoption in the sales force setting. Avlonitis and Panagopoulos (2005) deployed TAM in conjunction with the DeLone and McLean Information System Success Model (DMISSM) (DeLone and McLean, 2004) to explain the acceptance of CRM technology by sales people. Accurate expectations regarding system usage is the prime organizational factor positively associated with perceived ease of use, and sales people participation in system design and implementation is positively related to perceived usefulness of the technology. They also measure the impact of CRM technology on sales force performance and conclude that the higher the positive perceived usefulness of CRM technology, the better the sales performance. Other researchers have offered different explanations for variance is sales person adoption of SFA. Buehrer et al (2005) found that reps adopted SFA not only because of its promised ‘efficiency’ but also because they ‘had to’. Reps also reported that they would be more likely to use SFA if there was continuous or on-demand training. Erffmeyer and Johnson (2001) and Gohmann et al (2005) both identify improved productivity as a reason for SFA adoption by reps. Other researchers, however, have pointed out the negative outcomes for salespeople of adopting SFA. Rangarajan et al (2004) find that salespeople adopting SFA experience strong and stressful feelings of role ambiguity and role conflict. Speier and Venkatesh (2002) found that if the fit between SFA tools and reps’ roles is poor, the tools may fall into disuse.
What is SFA?
A number of deﬁnitions of SFA have been proposed in the academic literature:
• SFA systems utilize computerized hardware and software to provide automated collection,
assimilation, analysis and distribution of information to improve sales force productivity (Morgan and Inks 2001).
• SFA systems consist of centralized database systems that can be accessed though a modem by remote laptop computers using special SFA software so that a salesperson ... can get constantly refreshed information regarding various aspects of the job (Parthasarathy and Sohi 1997).
• SFA involves the application of technology to the selling function (Pullig et al. 2002).
• SFA supports the sales process by improving the speed and quality of information ﬂow
among the salesperson, customer and organization (Speier and Venkatesh 2002).
SFA can thus be characterized by, and deﬁned as, the application of information technology to support the sales function. Information technology, as noted by Morgan and Inks (2001), comprises both hardware and software. Hardware includes, but is not limited to, desktop, laptop and handheld devices. SFA software vendors can be classiﬁed in a number of ways. Some vendors are SFA specialists. They compete against customer relationship anagement (CRM) suite vendors who bundle SFA modules into packages that operate over the three front-ofﬁce areas of marketing, service and sales. Many of the vendors offering SFA as part of broader CRM suites started out as SFA specialists – Siebel and salesforce.com, for example. SFA applications are also offered by Enterprise suite vendors who offer a broader range of IT solutions to support business, including supply chain management (SCM), enterprise resource planning (ERP) and CRM. SFA provides a mechanism for collecting, storing, analysing and distributing customer related data to salespeople and managers. This generally includes both transactional and proﬁling data about customers, but might also extend to market data, competitor proﬁles, product libraries, pricing schedules and other information. This information can be signiﬁ-cant to the promotion of customer orientation (Lambe and Spekman 1997) and the development of long-term mutually beneﬁcial.
Why Do Organizations Adopt SFA?
Vendors and consultants claim a number of beneﬁts from SFA implementation, including accelerated cash-ﬂow, shorter sales cycles leading to faster inventory turnover, improved customer relations, improved salesperson productivity, accurate reporting, increased sales revenue, market share growth, higher win rates, reduced cost-of-sales, more closing opportunities and improved proﬁtability. These hard outcomes can be complemented by softer outcomes such as less rework, more timely information, and better quality management reports.3 Case histories published by vendors offer testimonials to SFA’s impacts. These beneﬁts appeal to differing SFA stakeholders:
Salespeople: shorter sales cycles, more closing opportunities, higher win rates.
• Sales managers: improved salesperson productivity, improved customer relations,
accurate reporting, reduced cost-of-sales
• Senior management: accelerated cash ﬂow, increased sales revenue, market share growth, improved proﬁtability
Research suggests that efﬁciency gains are a primary motivation for investing in SFA. Erffmeyer and Johnson (2001) interviewed informants at 40 US manufacturers and service ﬁrms to discover their motivations for implementing SFA. The primary motivation was improved efﬁciency. Harris and Pike (1996) reported that greater operational ﬂexibility, better sales management, enhanced. customer support, higher sales force productivity, superior customer account management and improved communications between headquarters and the ﬁeld were expected outcomes from SFA implementations. Ingram et al. (2002) agree that many companies are turning to SFA to help them manage their customer relationships more efﬁciently. However, Erffmeyer and Johnson (2001, 170) report that only ‘a limited number of respondents were able to offer details regarding formalized goals and objectives for SFA’. Wright and Donaldson (2002) identiﬁed four ‘quite strategic’ objectives for sales information systems applications – increased customer retention (mean score of 6.1 on a 7-point importance scale), enhanced customer relationships (6.1), increased customer acquisition (5.7) and integration to contact management (5.5). On further investigation, they suggest that the application of these systems reﬂects a ‘mailing-list mentality’. Like Erffmeyer and Johnson (2001), they also found little evidence of the sample companies actually measuring outcomes in terms of these strategic objectives.
% of sample reporting
Improve customer contact
What Accounts for the Success or Failure of SFA Projects?
We identiﬁed several variables or factors that are associated with SFA success or failure. Pullig et al. (2002) positioned their research on SFA effectiveness within the literature on innovation adoption. Their theoretical model proposed that the effectiveness of SFA implementation was related to organizational climate and shared values. They suggested that organizational climate would create the ‘enabling conditions’ necessary for successful implementation, and that commitment to effective implementation would be determined by the ﬁt between organizational members’ shared values and the characteristics of the SFA innovation. These hypotheses were tested and broadly supported by collecting data from 23 salespeople, sales managers and marketing managers. Among the important enabling conditions were training, encouragement, facilitative leadership and organizational support.
Five shared values emerged as important correlates of SFA success: customer orientation, adaptive cultural norms, an information sharing culture, entrepreneurial values and high levels of interpersonal trust. Wright and Donaldson (2002) conducted a factor analysis of the barriers to successful sales information system adoption. Their self report data indicated that technical barriers were much less important than strategic and organizational barriers. For example, a shortage of IT specialists and a lack of board-level backing were highlighted as more signiﬁcant barriers than having access to highly fragmented market and sales data. In a parallel study, the same authors (Donaldson and Wright 2004) investigated the barriers to adoption of SFA within the UK pharmaceutical industry. Technical issues such as data availability and highly fragmented systems were identiﬁed as important barriers to successful SFA implementation. Bush et al. (2005) set out to understand SFA outcomes by investigating ‘factors beyond those typically included in technology acceptance studies’. They conducted semi-structured qualitative interviews with managers in three companies. The data identiﬁed three major inﬂuences upon SFA outcomes: the degree of process change (from incremental to disruptive), the extent of salesperson buy-in and the perception of technology enablement (from low to high). In their sample, buy-in by salespeople ranged from 50% to 70%, suggesting a good deal of disinterest or resistance. Speier and Venkatesh (2002) investigated two different ﬁrms where SFA technologies had been withdrawn following implementation. They apply a multi-factorial model to explain success and/or failure, drawing on both prior learning about technology diffusion, and identity theory. Among the variables examined were individual characteristics such as age and sex, disposition towards technology, role perceptions and organizational attributes such as management support and user involvement. Measures were also taken of personal perceptions of technology with regard to any relative advantage that it might deliver, its visibility and image, its compatibility to job roles, its complexity and the demonstrability of results. Using a number of scales that had been validated in other contexts, they found that, although the salespeople had been ‘fairly positive’ about the implementation of SFA at the outset, they turned against the system, demonstrating their dissatisfaction with increased absenteeism and voluntary turnover. Sales performance did not increase following SFA implementation. The primary reason appeared to be the perceived lack of ‘professional ﬁt’ between the SFA tools and the sales force. The tools did not ‘play to the strengths’ of the salespeople. The sales team’s expectations of relative advantage to be delivered by the SFA tools had been high, but their perceptions of its delivery were much lower. Six months after implementation, organizational job commitment, job satisfaction, perceptions of salesperson– organization ﬁt, and perceptions of salesperson–job ﬁt had also decreased signiﬁcantly.
The application of sales force automation as active sales tool suggest that part of increase in sales
derives from more effective selling rather than increased sales productivity. SFA is a critical project that needs to be planned and executed properly. it is important to cleanse the data and to also give some indicator of the probability that a particular lead will result in a sale.The technology does contribute to the increase in sales but the cost of technology can be more than the contribution to profits from the increased sales. Eventually sales automation will bring benefits expected and contribute to efficiency and effectiveness of the sales effort. In the mean time , firms have to accept the risk that for a period of several years the improved sales will not always cover the increased costs of introducing sales automation. But to eschew the technology on this basis will be a big mistake- firms should still make the investment.