Robert M. Peterson (Ph.D., University of Memphis)
Vijaykumar Krishnan (Ph.D., University of Cincinnati)
Geoffrey L. Gordon (Ph.D., University of Kentucky)
The conflict between the sales and marketing functions is cliché. Anecdotes regarding such conflicts abound with each side usually blaming the other for poor results. It is not rare that an organization rewards marketing managers based on gross profit margin, while simultaneously paying a sales commission solely based on unit sales.
The end goal, not only of relations between sales and marketing but of marketing strategy, is to achieve desired results. Often hampering this pursuit are the varying levels of tension existing between sales and marketing, bred by physical and philosophical separation and by poor communication. Indeed, there are numerous companies that have let relations degenerate to the point where the sales and marketing functions refuse to talk to each other. If not addressed, the situation can consume vast amounts of costs, time, and energy and lead to a culture of blame with each side saying the other is responsible for its own inefficiencies.
Essentially, the seeds of conflict are sewn into the organizational fabric given the corporate mandates for each entity.
Some research has found that sales and marketing alignment significantly impacts customer value and influences market-based outcomes. But empirically, little has been confirmed. However, with the data Collected from the 2010 Miller Heiman Sales Best Practices Study, this strategic relationship is placed under the microscope and the findings are astonishing. Not because sales and marketing should get along, but how powerful this relationship becomes when creating relationships, managing relationships, and exceeding revenue targets...or failing at each of these goals.
When investigating the influences of the sales-marketing alignment on business performance, the sales funnel process provides an ideal setting. Broadly speaking, revenue streams should depend both on continuously creating new opportunities (lead generation, lead conversion) and on growing business (new accounts, billing size, revenue) by retaining existing relationships (retention) through effective management.
A series of measures was developed and to understand the perceived alignment at sales-marketing interface and the subsequent performance outcomes. The data was divided into two groups via a median split on the question, “Sales and Marketing are aligned in what our customers want and need,” with those scoring high in one group and the low-scoring respondents in a separate group. Then t-tests were conducted to explore mean differences across performance metrics based on sales-marketing alignment.
The study results indicate resounding support for each of the sales funnel elements investigated. Perceived sales and marketing alignment led to significant differences between the groups that were in alignment vs. those who work in firms where the two functions are not aligned. Specifically, sales and marketing alignment led to:
1. Growth in number of qualified leads
2. Increases in lead conversion rates
3. Growth in new account acquisition
4. Growth in average account billing size
5. Revenue growth
6. Growth in customer retention rates
Employees, stakeholders, stockholders, and customers alike should all see the value delivered by positive cooperation between both integral parts of the corporate revenue team. Regarding lead generation and conversion, the study’s results show this is best accomplished by sales and marketing working in concert. To do anything less will harm the organization, including the ability to deliver superior customer value. Unproductive interaction generally results in dissatisfied customers and lost business. The marketing function in an aligned organization does not stop at lead generation for customer acquisition. Rather, when working together with the sales team, it continually strives to enhance the quality of customer relationships, increase contact density, and build contact authority inside the customer’s organization.
Additionally, the study results found positive outcomes for customer retention, growth in billing size, and revenue when alignment was evident. Firms who have open and constant; flows of information build trust within their interface and this, perhaps, is one of the keys in reaching performance goals versus one’s competition. When the two orientations do not mesh for improved client value, salespeople often harbor prejudice, disrespect, and distrust for marketers.
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