Sales groups and marketing groups are famously at loggerheads. The sales group claims the marketing group provides bad leads while marketing claims sales doesn’t follow-up on leads marketing gives them. Dig deeper and you sometimes discover disagreement about basic issues, such as the intended market and target customer.
Top executives find these disagreements profoundly frustrating. According to interviews of several thousand top executives conducted by the Business Performance Management (BPM) Forum and the CMO Council, only 53% of respondents say their sales and marketing organizations have “close and collaborative relationships” while only 7% believed the two groups “worked together very effectively.”
What’s fascinating about this diagnosis is that corporations have spent billions of dollars a year over the past three decades on a communications and application infrastructure that was largely intended to help internal groups in general (and sales and marketing in particular) work closely together.
Since massive doses of technology have not solved the problem, it’s reasonable to assume that it stems from something deeper than simple miscommunication. As with many long-standing disagreements, the real problem lies in differing views of the business world which makes communication on an issue almost impossible.
Once the relative roles of sales and marketing are mapped into the product maturation process, there still remains the problem of organizational silos. Experience shows sales and marketing that have completely separate management chains find it difficult to coordinate efforts.
The most practical approach is that proposed by Neil Rackham, which is to appoint a “Chief Revenue Officer” who heads up both the sales and marketing. This CRO can then deploy resources and coordinate efforts so the two groups work together.
Because a CRO is “above the fray”, they can help the teams resolve two key questions:
- What constitutes a valid sales opportunity? Ideally, an opportunity should be a sales lead the current sales team can easily convert to a customer. These leads should correspond to profiles that both marketing and sales have agreed upon. Without this basic agreement, marketing will generate sales leads that seem “hot”, but the current sales team can’t close and therefore ignore. This joint definition should continue to evolve and change to adapt to market changes and the maturation of the product category.
- Who’s responsible for that opportunity? Typically, a sales lead will begin in marketing, which nurtures that lead to the point where it’s clear that the lead is an actual opportunity. There should then be an agreed-upon collaborative and gradual handover of leads from the marketing to sales. Once sales accepts a lead as valid, they are responsible for closing it, but marketing is also measured on how many of their leads actually close.
A crucial part of this integration is making certain that the marketing group is goaled and compensated on its ability to help the sales group sell.
During the heyday of “strategic marketing”, this type of incentivizing was impossible because impact of marketing activities on the sales process was not possible to measure accurately. For example, before the Internet, advertising campaigns were conducted through mass media like newspapers, magazines, radio and television. An ad campaign was considered “successful” if sales went up during the campaign, even though the increase might have been the result of something different, such as word-of-mouth.
Today, almost every type of marketing activity can be measured on its impact on the sales process. It is now possible to track sales leads marketing has generated as they move through the sales process and to measure marketing efforts based upon sales leads generated by that activity. For example, the effectiveness of a booth at a trade show can now be measured based upon the eventual disposition of leads generated at that show.
Another way to measure marketing is by reduction of sales cycle time and therefore the overall cost of sales. Theoretically, using the metaphor of the sales process funnel, sales leads (prospects) enter into the top of the funnel and emerge at the end of the funnel as actual customers.
While the funnel metaphor is common, it can be misleading, because if you pour water into a funnel, all of the water comes out the bottom. That’s not the case with sales, because typically only some prospects that enter the “funnel” eventually emerge as customers. The rest are filtered out, which adds to the cost of sales, because the sales team ends up following up on leads that don’t pan out.
The difference between the top of the funnel and the bottom is the cost of sales. The bigger the difference (the more gradual the slope in the funnel), the more it costs for a firm to turn a prospect into a customer.
Many marketing groups wrongly think their job is to widen the top of the funnel through demand creation in hopes that a larger number of prospects will enter the funnel, with a corresponding increase in revenue. Widening the top simply adds to the cost of sales, because the sales group can close a finite amount of business.
Using this model, the most efficient sales process is not a funnel, but a pipe where every prospect that enters the “funnel” turns into a customer.
A marketing group can help a company achieve this idea, but only viewed as a measurable, tactical function rather than a strategic, un-measurable one. For example, a marketing group could shrink the size of the top hole by ensuring that the prospects entering the pipe are fully qualified in the sense that they’re relatively easy for the existing sales team to convert. This decreases the cost of sales, and increases profitability.
The marketing group can also help the sales group to become more effective by providing sales training, competitive data, solution-building tools, and so forth. All of these are tactical activities that can be shown to decrease the sales cycle time and the cost of sales.
 CMO Council. Closing the Gap: The Sales & Marketing Alignment Imperative. (2008)