“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
