Avoiding the war, between Sales and Marketing
Posted on January 22nd, 2012 by Paul McArdle – No CommentsWe have no department for Sales and Marketing.
Though 2 very busy years has elapsed, not much has changed (in that respect) from when I drew this diagram back in early 2010:
It was obvious to us, then, that we first needed to overhaul our department for “Discerning, Developing and Delivering what the customer wants”.
This took some time, but we have done so (as such, that side of the organogram looks very different now). As alluded to here, we’re starting to see early signs that clients are being delighted with product upgrades again.
Given that we’re now gearing up to make our first hire at the top of our department for Sales & Marketing, it was a good coincidence that I happened upon the article “Ending the war between Sales and Marketing” published in HBR back in 2006.
In particular, I had to chuckle (and cringe a bit at some memories) when I read the following:
“When sales are disappointing, Marketing blames the sales force for its poor execution of an otherwise brilliant roll-out plan.”
[sounds like the situation Roger writes about]“… The Sales team, in turn, claims that Marketing sets prices too high and uses too much of the budget, which instead should go towards hiring more salespeople or paying the sales reps higher commissions.”
… and it goes on…
I guess most of us have been there.
The authors go on to suggest that the “solution” will vary, depending on a number of factors – including the age of the firm, the industry, and the level of tension.
The solution for us?
We’re at too early a stage in our company’s growth for there to be a fully fledged war going on between Sales and Marketing (given non-existent staffing), and we won’t grow our staffing levels at such a rapid pace that this will happen any time soon.
However it does seem that we can put a few things in place, first up, to reduce the risk of this happening at any stage – including the following:
1) Structure
The authors describe various approaches to resolving this potential conflict – with one option being integrating the two functions under a single person (they coin the term “Chief Revenue Officer”).
This is essentially what we’re going to do, though I had been thinking of the position as more General Manager for Sales & Marketing.
Interestingly, the article provides some words to explain what we have already done in creating Derrick’s department for Discerning, Developing and Delivering** what the customer wants:
** no, we did not hire Derrick for alliteration!
“There’s a strong case for splitting marketing into upstream (strategic) and downstream (tactical) groups:
Downstream marketers develop advertising and promotion campaigns, collateral material, case histories and sales tools. They help sales people develop and qualify leads….
Upstream marketers engage in customer sensing. That is, they monitor the voice of the customer and develop a long view of the company’s business opportunities and threats…”In essence, then, what we have already done is:
(a) Split marketing into these two groups; and
(b) Embedded aspects of “upstream marketing” within the Product Development team.
(c) What we have left to do now is embed “downstream marketing” within the Sales team.Of course, the Devils Advocate will note that this then just creates the potential for conflict between our teams for Product Development and Sales. This is something we’ll have to proactively manage, moving forwards…
2) The right metrics
The authors also note that it is vitally important (within this joint structure) to ensure that the right metrics are in place.
It currently seems to me that there are two key metrics that we need to be measuring the company-wide performance on the basis of both:
(a) Growth in annual recurrent revenues, with a big focus being on ensuring that the revenues are recurrent; and
(b) Some form of Customer Happiness Indicator that’s specifically tailored to our situation.
(c) In addition, I’ve also recently made a note about the need for an additional leading indicator – something to think about further…
3) The right compensation structure
Again, the authors stress that this is important.
I have been giving this a deal of thought over a long time period, with reference to our situation – and the way forward is still not 100% clear.
For a number of reasons, I would take a lot of convincing that we ever should be paying anyone (salespeople included) predominantly (or even significantly) on a commission-basis. Given our business model focuses on maintaining recurrent revenue, and reinvesting this in ongoing development, we need everyone focused on the same objective.
This is something I’ll look forward to progressing once we have our GM Sales & (downstream) Marketing onboard, and ready to start filling out their team.