There’s a lot of talk about aligning sales and marketing. I’ve given speeches on the topic and have written numerous posts. Company executives know it’s an issue, but what are the costs associated with misalignment?

If our car is out of alignment we know that the tires are going to wear out faster; we are more in danger of the car wandering out of our lane into on-coming traffic; the ride isn’t as smooth; and the car is harder to steer. We know the cost of replacing tires and in our mind we can calculate the risk of an accident. That’s pretty easy.

But, what is the cost if a company’s revenue engine is out of alignment? Believe me, it’s costing you more than a set of new tires.

I want to open this discussion up and let the ideas flow. I have a thesis. I think most companies have been driving in a misaligned state for so long they are settling for sub-par results and resigned to trying to solve the problem. Misalignment is the default situation in most B2B companies.

Here is an excellent reason why an outside executive serving in an interim manager capacity at your firm, or as a consultant is best able to get you out of the rut. They bring objectivity and the knowledge that there is indeed gold at the end of the rainbow.

What is the cost of misalignment? If, as business managers, we can’t put a number to the cost we’ll hesitate to invest in a solution, and that is the way it should be.

Here are a few areas in which misalignment is costing your company.

1. Low conversion rates – your proposal to close ratio is static or falling. Research has shown that misaligned companies have a lower conversion rate. What would be the impact if you reduced your cost of customer acquisition by 10% , 20% or more?

2. Missed revenue forecasts – unpleasant budget surprises at quarter end when actual sales are significantly below budget.

3. Lost customers – research has shown that misaligned companies are not as good at keeping and growing profitable customers. What is the lifetime value of a customer? If you lost 10% or 20% fewer customers each year what would than mean to the top line and bottom line?

4. Slow reaction to market dynamics – when marketing and sales have difficulty agreeing on direction and tactics there are delays in action; opportunities are missed. What is the value to you in beating the competition to a market opportunity?

5. Internal strife – It’s not fun or productive to work in a company in which marketing and sales are at odds (or at war). Soon egos and politics rule the decision making rather than a focus on progressing buyers through the sales funnel. The cost here, besides low productivity, is employee turnover. What are your recruitment and training costs in sales and marketing?

6. Do-overs – programs are often created and never implemented because there is disagreement about what should be done and how. What is the cost of programs that never see the light of day, or what is the cost of do-overs?

7. Loss of momentum – the most effective revenue generation plans are those that have coordinated strategies and tactics where sales and marketing are pulling forward together. A dog-sled team is a good metaphor. When the dogs are running out of step or in different directions the sled is not going to progress at optimum speed.

Those areas will give you a start. I’m sure I’ve overlooked a few. Once you’ve identified the cost areas you’re ready to get out your calculator and compute what the chaos is costing you.

Give it a shot. Bring out the calculator, look at your current financial statements and budget. Don’t be shocked if the total cost is 5% or more of your total sales and marketing budget.

Think small if you like. What would a 5% improvement in any area look like? Think big. What would a 20% improvement in any area look like? What would a 5% improvement in all areas look like?

I look forward to reading your comments and sharing more on this topic soon.

Chuck Besondy is a principal at One Accord Partners and is co-author of Leadership on Demand: How Smart CEO’s Tap Interim Management to Drive Revenue. You can read more about Interim Sales and Marketing Management by Chuck Besondy at his blog The Sales Funnel Fanatic.

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I was speaking with an executive the other day who repeated the concerns of her management team that their existing market was too small to sustain their growth.

Expanding into new markets may look enticing, but there are large risks and costs associated with this strategy. As it turned out in this case I was able to show the company that their market was large enough to provide growth opportunities for the next 3 years.

A little back of the envelope math indicated a bleak picture at first. Considering the size of their available market and their current conversion metrics for demand generation they simply couldn’t reach their revenue target. They were burning through too many prospective buyers and before long every prospective customer in the market will have been contacted and perhaps even placed into their sales funnel.

Their conversion rates were respectable, too. Only incremental improvement could be expected. It was when I asked about buyer recycling (lead recycling) that the answer started to emerge.

Many marketers and salespeople put all their energies into generating leads and working to progress these buyers through the funnel. But, a percentage of buyers always leak from the funnel at every stage. If your conversion rate at one stage in the funnel is 40%, this means 60% have leaked–they haven’t progressed. For whatever reason they weren’t willing or able to move to the next stage in the funnel at that time. Later a portion of these leaked buyers will be ready to re-engage with you (if you let them).

Sadly these buyers who leak for whatever reason are frequently forgotten by marketing and sales.

The company I was speaking to wasn’t actually ignoring their leaked buyers, but had a procedure in place to follow up with leaked buyers every 6 months. Ah-ha!

Using a sales funnel calculator from MathMarketing (click for lite version of this calculator) I was able to show the company that by recycling their leaked buyers at every stage after 4 weeks rather and after 24 weeks they’d need 7,000 fewer fresh names over a three year period.

This meant the market was large enough if they could execute effective marketing and sales strategies for recycling the leaked buyers back into the funnel–certainly a much easier and less risky proposition than expanding into new markets.

This article can also be viewed at Chuck Besondy’s blog, The Sales Funnel Fanatic.

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by Paul Travis, Interim Management Executive

I was reminded of the importance of packaging a few weeks back at the Pyramid Ale House in Seattle. As an alternative to coffeehouses, this place is one I find very convenient for “holding court” (serial meetings) in Seattle — how can you go wrong with free parking, wi-fi, and convenience to major highways?

Presuming the glass on the left were full with the same beverage, which would you reach for?

Nearly everyone I’ve asked has said the one on the right. Reasons: it looks more shapely; easier to hold; and by far the winner, there’s more beer.

Fact is, the glasses have identical capacity — 16 oz! (Out of disbelief, I tested — pouring from one to the other).

In the information-marketing world (books/tapes/etc) it is well known that a CD in a cardboard envelope tops out at about $19 whereas the same CD and a booklet in a plastic “folio” container can get as much as $49.

How much more could you charge for the beer on the right (well-marketed, of course)?

Remember, you can create value through differentiation within your own product line — most of which drops right to the bottom line.

So, how can you improve your packaging today?

Paul Travis is a veteran interim management executive with OneAccord who helps companies create screaming value propositions. He can be reached at Paul.Travis(at)oneaccordpartners.com or 206.910.2222. To learn more about Paul Travis, you can view his profile at OneAccord or his blog 2020 Marketing.

The famous McDonald’s restauranteur, Ray Croc, used to say “There is no competition”. What he meant was that we can’t blame others for our failure with customers (I would add children or spouses as well!)

Some years ago, Rockefeller Corporation did a study which asked, “Why do customers leave companies?” Their findings, in David Letterman bottom-up style:

• 1% – The customer dies.

• 3% – The customer moves away.

• 5% – The customer has a friend who provides the service.

• 9% – The customer is lost to a competitor.

• 14% – The customer is dissatisfied with the service.

• 68% – The customer believes you don’t care about them.

So what is the opportunity here? Just ask:

1. When was the last time you “touched” your best customers with a special VIP offer?

2. How about your “medium” customers with an up sell or a product line extension?

3. And rather than kick your worst customers to the curb, how can you monetize that relationship (and recoup your investment) by finding a strategic partner for whom those customers could be bright new sources of revenue?

As P.T. Barnum said, “There’s a customer born every minute”!

Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.

I am working with companies that are both forward-thinking and courageous to change around their economy rather than waiting for the rest of the water to float all the other boats.

• Look at how much time people are spending today keeping up with their own personal technology. Those who value their time/sanity/priorities will get help – not by wasting time going down to Geek Squad but with progressive personalized service like www.BluePhone.com which I helped launch for my client last year. This service is going to eclipse their first line of business, just watch.

• I wrote yesterday in my blog (www.60-Second-Marketing.com) about a deal automaker Hyundai just came out with: return your car within 12 months if you lose your job. They’re putting the ear to the ground, listening to the market conditions, and being more creative about serving the customer than any of our Big Three.

• NPR just featured a toy company that had 100 SKU’s (product offerings) at the $3.99 level. Their sales are up 60% over last year because, in this challenged economy, most everyone can still afford a few bucks for some fun!

Oh, your question was “when”. My current perspective is that everyone’s economy will change when they are ready.

Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.

by Jonathan Gilliam, Interim Sales Executive

I recently found myself on the receiving end of a pitch from a potential ‘referral-friend’ at a coffee shop and, though I liked the guys, they spent very little time getting to know me, instantly relegating them in my mind to “Vendor I Know” rather than a trusted advisor whom I would feel comfortable sending to my clients. They even sparked up some slides (Uh…more coffee please!?)

In fairness, they were new to networking and the “give-and-give” of modern business relationship-building. They just went at it as if they had a lot of information to spew and little time to spew it in.

Most successful executives understand the value of “karmatic goodness”. They tend to have highly evolved empathic skills and seek out ways to help others in business. Thus they are generally more successful than those who merely seek out opportunity. (Ironically, opportunists wind up with fewer opportunities.)

Before (or preferably, instead of) launching into a pitch, here are three good questions you should ask potential referral partners:

1: “How exactly do you provide value to your customers?”

2. “Who (title, company type) is your ideal target customer?”

3. “How can I help you?”

To step it up a notch, come up with one prospect/lead for the person and help make a meeting happen. Though it may feel funny at first to help business people when “they’ve never done anything for you”, but rest assured, more likely than not they will eagerly reciprocate if they know what’s good for them. Conversely, you are almost guaranteed a wasted meeting if you trust that just because someone knows who you are they will refer leads to you.

Nothing builds a relationship faster than true service coupled with energetic follow-through. Make serving others your number one priority and you will find karma to be very kind to your business.

Jonathan Gilliam is a interim sales executive for OneAccord and is based in the Austin area. Jonathan has a deep background in business development, market analysis, opportunity development, relationship management and C-level sales. Mr. Gilliam welcomes questions at 512.775.7566 or Jonathan.Gilliam(at)OneAccordCorp.com. Jonathan also blogs at Business Developments.

Photo by Ruth Bruin ]]> http://interimsales.net/building-good-business-karma-and-growing-referrals/feed/ 0 http://interimsales.net/deep-in-the-heart-of-the-sales-funnel/ http://interimsales.net/deep-in-the-heart-of-the-sales-funnel/#comments Sun, 01 Feb 2009 04:16:08 +0000 OneAccord http://interimsales.net/?p=98 Chuck Besondy is a principal at One Accord Partners and is co-author of Leadership on Demand: How Smart CEO’s Tap Interim Management to Drive Revenue. You can read more about Interim Sales and Marketing Management by Chuck Besondy at his blog One Riot-One Ranger.

When the going gets tough, the tough fine-tune their sales funnel processes for greater efficiency and effectiveness.

So many companies today find themselves trying desperately to succeed with fewer marketing and sales people and with less budget. I like to think of this situation as having to step into the OK Corral with only four bullets in my gun instead of six. Every bullet has to hit its mark. No room for waste or ineffectiveness.

Marketers and sales people realize this, but it does raise two questions:

1. What should we be doing more of?
2. What should we be doing less of?

If a company’s sales funnel has been designed around the buyers’ journey, and if both Sales and Marketing have aligned their strategies and tactics to this journey then they will find the answers to both questions in the metrics that result from a well managed sales funnel.

If there isn’t alignment around the buyers’ journey then sales and marketing are likely working at cross purposes to one another and there is an unacceptable level of trial and error in the tactics.

Research* has proven that companies who have aligned their marketing and sales activities to the buyer’s journey win 38% more of their proposals, lose 36% fewer customers each each year and grow 5.4 points of growth more than companies who aren’t aligned.

Not all sales funnel processes are equal. Most are too simplistic or are centered on the seller’s journey not the buyers’ journey. A rock-solid funnel model factors in lag, leakage, and recycling–there’s nothing “simple” about the dynamics of a funnel.

There is a way to mine the sales funnel expertise of major corporations around the world. You simply need to plug into the minds that developed the processes for these global brands and built the tools to support the processes. That is easy. The world’s leading authorities on sales funnel management and performance are at MathMarketing. They now offer black belt workshops that teach companies and marketers how to do this. Known as the Funnel Academy(tm), these workshops are now available in the U.S. CEO’s should make these programs mandatory for every B2B marketer and sales manager. For that matter the CEO’s should participate, too. This is the best B2B marketing training on the planet.

Contact me for additional information about Funnel Academy modules and schedule.

*Source: MathMarketing alignment benchmark study 2004/2005 : 1400 professionals : 84 countries

Chuck Besondy, Principal, OneAccord
512.692.9642
chuck.besondy(at)oneaccordpartners.com

Related to overseas jobs, companies in every product category must create products with the highest value to the customer.  With a global market, come global competitors.  Oversees companies have labor rates that are a fraction of domestic labor rates.  Domestic manufacturers can’t compete on price and overseas manufacturers have proposals into some or more of your customers…or they will soon. In addition, the internet allows proposals & RFP’s/RFQ’s to be done on-line; diagram’s, design plans, and architecture can be done over the internet rather in person.

The companies that are thriving are focused on their core competency. This trend began with large companies about 20 years ago as they looked to outsource non-competency areas, like the cafeteria to organizations such as Marriott. Another example is Boeing selling their floor panel & air duct plant in Spokane, Washington.  Boeing is a world class complex systems integrator applied to the most complex products today; commercial airplanes, space station, F18….. not floor panels and cockpits.  Carrying this trend forward, businesses are exploring every aspect of their work flow & looking at what aspects can be outsourced; with outsourcing comes a move from a fixed cost to a variable cost structure. Those new companies that are flourishing are those that are picking up small niche’ aspects of business & developing deep, best in class expertise.

Customers are doing both, in most cases; looking for the lowest cost and disposing of parts of their engineering & manufacturing processes.

This applies to how we sell to these companies and customers.  Their buying process is changing and therefore so must our selling process. As an example, it now becomes to important to consider such questions as:

How do we add value beyond the lowest cost?
Who is the customer?  For example, is it, “The company that bought the floor panel & air duct plant or is it Boeing?”
Whose contract do they buy from?
Should we become the outsourcer to the division to retain the business?
What is the competition doing to react to this?

This is the playing field and the winners will understand the buying process and create a new sales process to meet or exceed customer expectations, learning from their experiences to create a new sales process for the next time and the next customer.

The winner will not be the low cost supplier but the business that brings value in alignment with shifting trends.

Jeff Rogers is co-founder of OneAccord Principals, which helps companies grow revenues with interim executives that can serve your organization on a project, interim, or permanent basis. He has been involved in both sales and management development for the last 25 years and has taught every aspect of selling: prospecting, presentation, closing, and answering objections. You can contact Jeff at Jeff.Rogers(at)OneAccordPartners.com.

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by Sheri Osborn

What makes baseball a cultural phenomenon? Why do people get so fired up about their teams? Why do they sit for hours in the sun over a period of months and watch thousands of pitches and hundreds of hits when they know that only one team will win the World Series and the rest will not?

Maybe it’s the clarity of how the game is played. Clarity is something we don’t experience in very many areas in life. In baseball, both teams follow very precise rules. Hits and errors are tabulated. Having the best players at any position may or may not affect the outcome of a particular game. Who wins the World Series? Simple–the team that wins the most games. But to spectators and players alike, watching the game is thrilling and the winner celebrates for only a short time before preparing to start all over again the next season.

What if you could build the same kind of clarity that baseball enjoys into a business strategy? It definitely can be done, and it can impact your bottom line. Here’s how.

Step One: Define Your World Series

The first step in strategy development is to know the reward you are seeking and when it will be obtained. It may be a defined pile of money by a certain date or a specific stock price or it may be market leadership your category. Define a world series for your company so that your team will be working towards the same reward – focus.

Step Two: Define the External Game Structure

The baseball season doesn’t begin with the World Series, it begins with player recruiting and spring training. Next comes the seasons with many teams in the competition. Then playoffs determine who the best teams are. Lastly the World Series defines who wins the trophy.

For your market or markets, define the teams and players in your league. Analyze how the competition plays the game: their strengths, weaknesses, your own strengths and weaknesses. Review one game (one market segment or major industry) at a time. If this game was the World Series and they were the only opponent, who would win and why – analyze.

Step Three: Define the Scoring System

There are two scoring systems in baseball: one for collection of games as a whole and the other for individual play. The baseball season is composed of a fixed number of games. The four teams with the best of seven playoff games will make the semi-finals and the two that win there go to the final. Then only one wins the trophy.

In the business world, the market defines the season scoring system: stock price, revenue, profit margins. Many organizations consider “scoring” the business the territory of the CFO or CEO alone. But if you’re seeking a winning business strategy and organizational excellence, it pays to bring this scoring system to bear within each function of the organization. Players need to know how they contribute to the success of the organization in generating revenue, increasing profitability and if a public company, raising the stock price. Don’t be an organization that rewards the sales teams and the product teams and leaves the majority of the team to sit on the bench.

The individual “game” scoring system will prevent this. The team with the most runs wins. Simple? No. Underneath the team win/loss record there’s a game-scoring mechanism to measure the team’s performance and the individual’s performance. Just look at the number of statistics measured in MLB. Every strategy development effort should include the delineation of a strike, ball, out, base hit, RBI, home run or grand slam. Organizations often get caught up in one of two games here: “ship the product and collect the money” or “ferocious competitor” mode.

The dangers of not working through this portion of strategy are:

• Most employees won’t know how their own work advances the company effort
• The organization will miss the opportunity to know early enough in the game to adjust their strategy until it is too late to recover.
• The organization will miss the opportunity to reward your employees that indirectly help your organization succeed because no one knows what it means in their department to hit the home runs and grand slams.

Each department and individual employees should have clear guidance and specifics on how to score in the big game. Employees contribute so much of their lives to their work–help them know when they’re scoring runs, throwing strikes or getting outs for the team – measure the results.

Baseball is called America’s game. Something about the game causes people to root for their teams regardless of whether they win the season or finish last. Building this kind of loyalty into every function in your organization can transform your company into a competitive team playing at the top of its game.

So many areas of life are unclear. The clarity of baseball’s rules can give your people the expectation that hard work will be measured and rewarded, that everyone is playing by the same rules and that the team with the most runs at the end of the day wins. Clarity brings focus, and focus brings results. Who says business can’t be like a day at the park?

Image Source: Bob Jagendorf