Monday, December 15, 2014

Coverage Models for Marketing & Sales


“Make sales, not calls,” urged IBM’s Thomas Watson in 1933. “Calls which do not result in sales or in developing the prospect for future business are not productive and a waste of time.”
More than eighty years later, much of the effort invested today in sales and marketing remains of dubious quality. Companies tend to lack the discipline to allocate their precious resources properly. This impacts their ability to actually generate demand now and in the future.

When I look into the performance of a company, I always start with the effectiveness of the growth strategy and the associated alignment of marketing and sales resources to that strategy.
The two most common symptoms of stalled growth are:

1)    Misaligned marketing spend. The ratios of marketing people to marketing programs aren’t optimized around the ultimate goal of generating sales-ready leads. Resources are spread around with the hope that something sticks.

2)    Overly-complex coverage models. An effective coverage model needs to be deliberate about who should be hunting and where. Roles, compensation, and decision rights all need to be aligned to the overarching coverage strategy.

You would think that the allocation and measured returns on both marketing spend and sales coverage would garner some pretty significant focus and attention; in many cases, you’d be wrong.
It’s simply not sufficient to hire talented sales and marketing talent. Companies also must restructure their coverage model, which means defining and synchronizing sales roles differently. For example, you need to make explicit decisions around organizational roles, measures of performance, compensation structures, decision processes, and relative priorities.

Few metrics, few results
One of the more common situations I encounter is benign neglect of the measurement and refinement processes for these investments.  Account managers often get comfortable serving their customers. Hunters searching for new clients can tend to wander off the strategic roadmap and chase opportunities that are really not part of the plan.

Sadly, sometimes success can mask these problems.  A few years ago, a company was celebrating great sales performance, only to learn that the hunters were deviating from the prescribed playbook of offerings, and signing contracts for solutions that lacked conformance to the strategy. As a result, the quality of service delivered varied greatly and the profitability of the business suffered greatly.  Sales reps were paid for closing business that was, ultimately, deemed of bad quality.
At one firm, the preponderance of spend on account managers went to people who overtly denied that they were part of the sales community. In fact, these people tended to see themselves as protecting their clients from the sales activities of their own company.  Cross-selling services stalled because the gate-guards didn’t understand the nature of adjacent offerings. 

In the past, when companies had a series of individual product lines, their sales model could thrive as long as they had the right account coverage with a crisp pitch on features and functionality. Today, what’s required is assembling the right team of experts with relevant solution knowledge at the right time in the sales cycle. This means that coverage is a team sport, with great collaboration among the participants.
Remember that the marketing organization is part of the coverage team.  Resources spent on marketing programs need to be geared specifically around enabling sales. It is curious to me how often companies lack a closed-loop measurement process for marketing spend. In this age of measuring everything, you’d think that the marketing profession would embrace the opportunity to show return for their expertise.  Too often, I find that there is ignorance on the return for marketing expense.

Frame all of this by the fact that enterprise buyers are more sophisticated than ever before.  They are equipped with a plethora of new tools and resources to do their homework in advance of the first direct encounter with prospective providers. Services are bought these days more often than they are sold.  Most good sales people will tell you that they are dealing with prospects that have much greater awareness today than ever before. It’s rare that a sale is closed without the client conducting five or six separate tests of the merits of the purchase – all via social channels.
Complexity in today’s sales process is unavoidable.  Yet, poorly managed complexity can erode customer confidence. The key to success is to coordinate well your specialist roles.

When I get invited to look through the performance of a company, I always start with the coverage model for both marketing and sales investments.  At many large companies, these models have become more complex and less efficient, putting pressure on profit margins and placing drag on the growth engine.  Discipline and purposeful design are key to successful coverage models.

Peter Allen has many years of operating experience as a top executive of rapidly-growing multi-billion dollar companies and in assessing sales and marketing effectiveness. He is now a Boston-based Managing Director at Alvarez & Marsal.

Image: opensourceway/Flick

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