Are Sales And Marketing Bringing Home The Bacon?
by Alf Nucifora
Talk to most CEOs or successful entrepreneurs about EPS, ROI, or other traditional financial accountability measures and they'll respond with confidence and self-assurance faster than you can say EBITDA. Ask them how their marketing function is performing and their responses will indicate everything from the delusional to the blissfully ignorant state-of-mind.
At a time when revenue growth is the critical need, the CEO or principal of an entrepreneurial business must have a clear understanding of the effectiveness of the organization's sales and marketing (S&M) functions. Those, after all, are what primarily drive the revenue stream. Some CEOs think they know what's going on in S&M because "I talk to customers and I know what they want, probably better than my sales and marketing people do." In all likelihood they don't. More to the point, consulting audits often unearth common, mistaken management attitudes including insufficient differentiation between strategic marketing and simple marketing communications. Maintaining a current web site and distributing expensive sales collateral materials do not constitute a strategy.
Conversely, many CEOs will proudly take a hands-off attitude. They believe that their S&M functions are best managed by experienced practitioners who best know and understand the strange and idiosyncratic behavior of the S&M world and, therefore, don't require much senior management interference. After all, who better to run the asylum than the lunatics? Others will drive corporate strategy believing that all revenue shortfalls have an external cause and are not internally driven. When the economy is down, their first line of defense is to lay people off without any consideration given to carefully assessing the applicability of the current S&M functions to the times. Do we have our sales resources properly aligned? Is our marketing strategy appropriate for the environment and marketplace? Are our systems and operations obsessively focused on performance and results? Are people being monitored for accountability? These can be tough questions to ask with, in many cases, less than palatable results. Far easier to lop off a few heads. That should keep the Board happy.
What are the questions to ask?
According to Pat Horgan of Atlanta-based Paladin Associates, a sales and marketing consultancy specializing in performance assessment and improvement, the issues are basic and the questions simple:
1. Are our sales executives actually trained, professional managers, or just successful former salespeople?
2. Are S&M processes truly measurable in quantitative terms or subject to seat-of-the-pants review?
3. Is Sales on the same page with Marketing? Is one function dominating the other or not listening? And what about Operations, Manufacturing or Distribution? What do the disconnects between S&M and these departments cost the company?
4. Are our salespeople properly trained and capable of selling our offerings? Do they understand the various levels and influentials within the buyer organization and, as such, do they sell to the right people? Do they understand the competition?
5. Do our salespeople productively prospect and sell most of their time? What percentage of selling time is actually wasted on unproductive activity, administrative duties, etc.?
6. Can I see a detailed reporting of all aspects of sales performance? Is the data in a form where it can be easily accessed and regularly monitored?
7. Do compensation plans drive the desired sales behavior? In most cases, compensation plans can be picked apart by sales professionals who, like politicians, will zero in on any loophole blindfolded, e.g., chasing revenue and not margin.
8. Are the S&M functions truly customer-driven or are they influenced by internal considerations, e.g., the politics of the organization, the ego of the CEO?
9. Are the S&M functions positioned for economic turnaround? Smart organizations are always planning to be ahead of the curve. They know when to stop cutting cost and begin preemptive, aggressive marketing prior to the turnaround.
If these questions lead to troubling answers, the CEO or company head should immediately investigate and implement three remedial strategies:
1. Demand professional management and disciplined quantitative measurement of S&M expenditures, processes and results. Be firm and unyielding in this requirement.
2. Push the organization to be truly customer-driven. Mandate more customer contact by executives. It's time for the VPs to leave the 40th floor and meet more clients.
3. Consider hiring a professional third-party to conduct regular, thorough, independent S&M audits.
The mistakes that stand out
According to Horgan, the following were the top five common issues or concerns that surfaced during the extensive time he spent auditing S&M functions, primarily within the GE organization:
1. Strategic and tactical disconnects between Marketing, Sales and Operations, often at the executive level.
2. Lack of process, quantitative and data management techniques and measurement. Quite often, he found the top sales executives were former successful sales performers, but not trained managers.
3. Poor understanding of the sales cycle and defined sales "funnel" process, e.g., targeting, prospecting, length of sales cycle, follow-up, closing ratios, etc.
4. Salespeople who are unproductive… too few sales calls, not qualifying prospects, calling on the wrong people, not well trained, and spending too much time on non-selling activity.
5. Poor target marketing, segmentation and process selection (which normally goes hand-in-hand with little or no implementation of CRM).
For too long, marketing inefficiency has escaped "outing." It's an arcane science, they said, too slippery and too hard to corral and manage. Well that's no longer the case. It's time for marketing to face the inquisitors, just like everyone else.