On January 12, 2010 blog.marketo.com/blog/ posted ‘Sales and Marketing Alignment: Thought Leadership with Christine Crandell’:
“The next interview in the B2B Marketing thought leader interview series is with Christine Crandell, one of the most innovative thinkers I’ve met on the topics of sales and marketing alignment and marketing accountability. Christine sits on several advisory boards including Coupa and SDForum, and has held senior marketing positions at Egenera, Ariba, and many others. Her thoughts on organization and how marketing can earn credibility and “go toe-to-toe” with sales leadership are definitely worth reading.
1. How did you get into B2B marketing?
I got into marketing quite by accident. After I graduated with my Masters in Finance I joined PriceWaterhouse’s consulting group. One of the big projects I led was to analyze the shifts in professional services purchased by large USA businesses and correlate them with macro business trends and service provider skill competences. That started a decades-long fascination with why and how companies buy intangible, big ticket items. I made the official jump to Marketing at SAP when their revenue was under $20 million in the USA. I introduced an analytics-driven approach to demand generation, competitive intelligence and sales enablement which was implemented in USA, UK and Australia subsidiaries. After SAP, I led Oracle’s worldwide strategic marketing for applications. My experience at SAP and Oracle planted the seeds of curiosity as to why sales and marketing can’t seem to work as a team ….and how to fix that. And the rest is, as the saying goes, history.
2. Does sales and marketing alignment impact the Chief Marketing Officer’s role?
Telltale signs of misalignment can be seen in industry statistics for B2B sales: 80 percent of leads passed on to sales are dropped; 90 percent of marketing collateral is unused; and the total cost of winning a net new enterprise customer via direct sales carries a hefty price tag averaging $500,000. Even worse, fully 80 percent of enterprise technology deals won are not influenced by marketing at all. At the root of the alignment problem is the fact that marketing and sales have their own charters, planning time horizons, and compensation models.
The CMO needs to articulate a clear vision, supported by closed loop processes, on how marketing will outperform those industry statistics. This also means finding ways to maintain an equal footing with sales leadership. In many organizations, and with many CEOs, sales have a lot of influence. CMOs need to develop techniques for partnering with sales and have a strong grasp of the overall business in order to successfully go toe-to-toe with sales leadership, if necessary. (Check out the 5 strategies for navigating the new corporate landscape.) To achieve this, CMOs should adopt an analytical management model coupled with full transparency and shared performance metrics with sales. Depending on the marketing organization’s core competencies, this can require minor tweaking or a wholesale overhaul of the marketing organization to develop a healthy balance between brand management, revenue generation and market strategy.
3. What steps does a company go through to align sales & marketing?
There are 3 stages of alignment — Ambiguous, Structured, and Aligned — but companies need to first figure out what stage they are in before they can improve their alignment.
Ambiguous is the most conflict-riddled and unaligned stage. Both groups focus on their own tasks and are unaware of what the other is doing or trying to achieve. If there is any collaboration at all, it is ad hoc. To move to the Structured stage, both groups need to understand that theirs is not a zero-sum game. They need to define specific rules of engagement along with hand-off points for key tasks such as sales lead follow-up.
The Structured stage requires establishing the company’s investment rationale and each group’s performance metrics. This becomes easier if the head of sales and marketing are peers in title and reporting hierarchy. In the Structured stage sales and marketing establish precise boundaries and interaction points. Their communication becomes more disciplined with joint staff assignments. While Sales and marketing still focus on their own tasks they collaborate on such key activities such as agreeing on definitions for terms like “qualified lead.”
Before progressing to the Aligned stage, both groups must achieve significant transparency with one another and with the rest of the organization. This means clearly defining when, and with whom, to communicate on key actions. Marketing takes an active role in sales through customer visits, and supports the sales cycle with field marketing, sales enablement and customer advocacy.
4. Is technology an important part of the aligning sales and marketing?
Technology is a key enabler of alignment but it does not, in and of itself, produce alignment. The benefits of technology solutions are a single version of the truth, audit trail of the full life cycle of revenue generating activities and automation of routine activities and analyses. Establishing a single version of the truth removes the common debate between sales and marketing as to whose numbers are correct. Additionally, technology lays bare the ‘games’ both sales and marketing play to manage internal perceptions often to the unintentional detriment of the company and customers. By having a common target market/prospect database, automated lead management system, and SFA/CRM system, to name a few, both groups focus on improving lead quality, velocity, pipeline accuracy and reducing lead leakage. Marketing and sales operations’ analytics, based on data in common systems, provides greater transparency into what is really happening in the company and enables management to manage the business more effectively. That is assuming that the data going into these systems is accurate, processes have been defined and documented beforehand, and the systems are used.
5. Why tie marketing’s compensation to revenue?
Today, most Marketing compensation plans are comprised of a base salary and a performance bonus. However, in well-aligned companies performance bonuses are comprised of two elements; a quantified marketing-generated revenue objective and a longer-term qualitative marketing goal. Marketing team members need to recognize that directly producing revenue is a central part of their job, though not their only responsibilities. The Marketing roles which have the greatest direct impact on revenue are product marketing, sales/channel enablement, demand generation programs, field marketing and channel marketing and their compensation plans should reflect those responsibilities. As a result, performance plans should include metrics specific to that role and to each individual team members’ function in it. The metrics I use in developing performance plans are:
Qtr/Qtr and Yr/Yr
- Pipeline and close rate by product line
- Revenue booked
- Margin by product line
- New lead follow-up days outstanding by AE and territory
- Field-produced pipeline production
- Associated close rate by region
- Demand generation conversion ratios
- Marketing-produced pipeline production
- Percent of sales force current on training
- Role-based proficiency scores on key soft skills (i.e., discovery, negotiation, etc.)
- Response time to field requests
- Sales force satisfaction and effectiveness scores
- Renewal rates
- Customer satisfaction scores
- Percentage of customers serving as references and evangelists
Marketing’s contribution to revenue goals, as reflected in performance bonuses, should be both measurable and time bound. For example: “produce leads that result in $20M in Marketing-generated pipeline each quarter,” or “deliver sales training that shortens the new hire productivity ramp so they close their first sales opportunity within 90 days of hire date”.”