The Dogged Pursuit of Sales Leads at All Costs Does More Harm Than Good

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Jan 19, 2023, 07:00 ET

Creditsafe Study Finds 44% of US Sales Managers Would Still Pursue Prospects with Track Records of Late Payments & Poor Business Credit Scores

ALLENTOWN, Pa., Jan. 19, 2023 /PRNewswire/ -- Despite a rocky economic environment and the likelihood of a recession in 2023, nearly half (44%) of US sales managers are willing to throw caution to the wind and chase after risky prospects, which leads to dramatic loss in productivity and revenue growth. This revelation, among many others, comes from a new research study, "The Sales vs. Credit Control Battle," released today by Creditsafe, which examines the (mis)alignment between sales teams and credit control teams.

Every business counts on sales to stay competitive and grow. But not all prospects are worth pursuing. Customers with a track record of late payments and poor business credit scores are a prime example of this, as they lead to cash flow issues and make it difficult for businesses to meet their own financial responsibilities. Late payments and poor business credit scores are among the many financial, legal and compliance risks that credit control teams review and consider when approving or rejecting sales deals. Not only are these types of risks dangerous for the business, but they can also make it harder for sales teams to close deals and limit their earning potential. The data from our study supports this, with almost half (47%) of the respondents admitting that they have up to 10 sales deals rejected each month by the finance team because the prospects don't meet the company's credit policy.

Historically, sales teams have been laser-focused on targeting leads, closing deals and generating revenue for the business. This is what they're measured on and what impacts their earning potential. And they rely heavily on the data in CRM platforms to achieve these goals as that's where customer data sits – helping sales teams understand who their prospects are, how to contact them, what types of content they're engaging with and more.

According to Matthew Debbage, CEO of the Americas and Asia for Creditsafe, "While customer data is certainly important, it's only one side of the story told by the data typically pushed into CRM platforms. So, sales teams are getting a very limited data picture, leaving out critical information about the financial, legal and compliance risks potential and existing customers could pose to the business. Remember, this financial data is most often used in a company's credit policy and a deciding factor in approving or rejecting sales deals. While credit control teams have a clear understanding of credit risks, our study proves that sales teams don't. Even when salespeople are aware that their company has a credit policy, they rarely have a full understanding of what it entails, what red flags to look out for with prospects and what factors could cause their deals to be rejected."

Key findings from the study include:

Despite perceived importance, few salespeople rate CRM data quality as excellent: On the one hand, 49% of the surveyed sales managers believe that the quality of data in their CRM platform is very important in streamlining and improving their sales processes and performance. On top of that, another 44% believe it's important or somewhat important. Yet, 71% of the respondents said they're frustrated with the quality of CRM data in their organizations, citing issues with inaccurate information, duplicate records, outdated details and missing information.
Credit policy ignorance is not bliss: Is tension between sales and finance to blame: While 21% of the respondents said their company doesn't have a credit policy, 17% said they don't even know if there is one at their company. To make matters worse, 42% of the respondents admitted they have little to no understanding of their company's credit policy.
Two heads are better than one: The power of combining customer and financial data: Our study found that 63% of the respondents believe that having a tool to screen for credit risk would decrease the amount of sales deals rejected by the finance team.
Credit risk apathy is a serious business threat, costing over $4.8 million a year: For instance, over half (52%) of the respondents said they lose up to $200,000 a month because the finance team rejects their deals. If you estimate the costs for a smaller organization with a four-person sales team on the basis that half of the team loses $200,000 a month, that business could end up losing $4.8 million a year. This figure will increase exponentially with larger sales teams.

As our study reveals, poor data quality and misalignment between sales and credit control teams strongly influence how much risk businesses are exposed to and how much revenue could be lost each year. Matthew Debbage concluded, "I've always been of the mindset that two heads are better than one. By combining customer and financial data, not only will sales teams be more productive and improve the quality of interactions with prospects, but they'll also close more deals and drive revenue growth for the business. That's a win for both sales and credit control teams – and for businesses too."

To see how combining customer and financial data can help your sales team close more deals and improve your cash flow, get a free trial of the Creditsafe Business Intelligence Plus App for Salesforce. If you use a different CRM platform and want to integrate your customer and financial data, you can easily do so with Creditsafe's Open API.

About Creditsafe

Creditsafe, the global expert in credit monitoring and risk management, is the world's most used provider of business reports. Today, 110,000 customers globally depend on Creditsafe to make critical business decisions. Using real-time data from over 9,000 sources across 160+ countries, Creditsafe's mission is to help businesses mitigate financial, legal and compliance risks, while also empowering them to make more informed decisions. To learn more, visit www.creditsafe.com.

SOURCE Creditsafe