In business-to-business markets, collaboration between sales and marketing is a major challenge. The common perception of marketing, to some extent reinforced by the growth in Marketing Resource Management (MRM) applications, is that it’s a cost which, at best, generates leads for the sales force or, at worst, is the last frontier of untamed spend.
In B2B markets, in particular, a customer- and market-based strategy should underpin the collaborative roles of different resources. Sales and marketing consume significant resources but also need support. Finance, channels and IT also need to be brought into the picture€”collaborating toward common objectives in an optimal way. How might this be done?
Firms that make products traditionally use marketing to generate leads for the sales force to close. In this environment, where the firm makes and sells a wide portfolio of products and services, it is common to have a product marketing manager whose job it is to work out the best way to get the product to market and stimulate demand. Such individuals figure out what demand-generation activities they will perform. The goal is to spend the budget on time and be seen to be making a lot of noise in the market. Traceability of cause and effect is a bonus but often not required. Along come MRM systems to add a bit of accountability and help finance and management track spend and return on investment. Basic metrics might be number of campaigns, leads generated and, in slightly more accountable firms, what happened to them: How does the pipeline look and, ultimately, what revenue has been generated? If the results are good, everyone is a hero and both sales and marketing claim the major credit. If the results are disappointing, the blame game starts.
It was like this in IBM back in the early 1990s, until we suffered the shock of nearly going under. In the early 1990s, we were a product-led company and driven into departmental silos. Our resurrection came about in part through a market-led approach, which engendered a much higher degree of intelligent collaboration across departments.
When I helped HP design its closed-loop marketing processes while at KPMG Consulting, it was clear that the company wanted to increase accountability; improve collaboration between marketing and sales; and ensure that leads were properly followed up by its reseller channel. New metrics were established focusing on the ROI of campaigns and enhanced traceability of cause and effect, previously hidden in the fog of commercial war. What we designed was an MRM system, though we didn’t call it that then. While helpful, this is not enough to optimize sales and marketing resources and get them to collaborate effectively.
What was missing was a strategy to underpin resource deployment€”exactly what “collaboration” really means.
Resource optimization
Taking a market-based view to underpin the logic of resource deployment is a step forward from the classic views of marketing, which began with the Chartered Institute of Marketing’s drumbeat: “Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably.” It evolved to Peter Drucker’s view in 1973 that “marketing is so basic that it cannot be considered a separate function on a par with others.”
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The collaborative challenge It helps to visualize the different scenarios so that the purpose can be determined. In the diagram below are two axes. The vertical is transaction complexity, the customer view. The simple premise is that transaction complexity or simplicity affects how people like to buy. A commodity product is simple to understand, and price, convenience and brand are probable determinants of channel preferences. If it’s something difficult to understand or requires outside expertise, then the vendor’s credibility, experience and relationships are the likely determinants.
The horizontal axis refers to the specific goal of the business unit or organization:
This is the firm’s view. A B2B customer may buy a mixture of things€”some simple like PCs, print cartridges and commodity software applications€”and prefer to buy via the web; whereas, the same firm may be buying highly complex products that require some onsite expertise from the vendor or its partners. In each of the four quadrants, the roles of marketing and sales are different. On the left half of the diagram, the focus is on generating new business. However targeted, the net is cast wide. It’s a numbers game. On the right-hand side, relationship depth becomes far more significant, and it is here where not only collaboration is vital but also coordination. In mature organizations, relationship managers perform a vital role in gaining deep insights into their clients’ wants and needs and what impacts them€”and coordinating specialist sales resources. Marketing scans the horizon to provide valuable market-based insights to help determine new sources of value to develop and retain the customer. Segment marketing managers identify the trends and forces impacting firms within a specific segment, and they relay this to the relationship managers to help them understand their customers better and what offerings to recommend under what circumstances. Marketing also has a coordination role to play, ensuring that the right channels are in place and working together. |
Back in the late 1990s, at IBM, when growth was flat (see my 2002 paper,
Customer Resource Optimization
), we used a very simple matrix based on growth potential and share of wallet to determine optimum resource spend.
We also explored the behavioral aspects of customers€”where, how and why they would buy€”to provide guidance on what work these resources should do.
This helped us determine the best channels, and our route to market methodology helped us pin down exactly what activities different resources would perform across the complete sales cycle. We also quantified the anticipated results. So we knew what and how to deploy resources for the right results and of course what to track to see if it was working. But today, it’s even more complicated.
In the 21st century, broadband is everywhere and few of us are surprised anymore by what the Internet has to offer.
Consumers and business buyers are increasingly “net-savvy,” and their expectations are increasing, piling the pressure on marketing and sales. CRM thinking is also insinuating itself into our expectations, and the power has moved irreversibly to the buyer.
It is no longer enough to get sales and marketing to talk to each other. Increasingly how a firm touches its customers and markets is something of a logistical nightmare, beyond the scope of traditional marketing thinking or basic CRM.
To get this right, we need a deep understanding of what “collaborate” means in any given situation:
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What is the purpose?
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How does this affect roles?
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Which channels?
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How can we orchestrate it all?
Optimization, collaboration and coordination
To succeed in this multi-channel environment, it is not enough to deal with the business in a piece part way. If the firm is deliberate about which customers to acquire, retain and develop, then it needs to:
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Develop a customer portfolio strategy.
This provides the financial rationale for deployment of resources. Which customers do we wish to acquire, retain, develop to achieve the desired growth?
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Use simple visualisation techniques to help you understand what it means to collaborate.
What is the purpose and what is required of each resource?
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Take a step back and ensure that the different channels and routes to market are part of an integrated strategy.
Get these three things right, and the firm will succeed.
