By Henry Canaday Illustrations by Belle Mellor
They go together like franks and beans, like Abbot and Costello, very good collaboration between sales and marketing,” Eldh
like – well, like sales and marketing. Yeah, like that. Or they summarizes. “They had a significant advantage over organiza-
should. But then again, sometimes they lock horns. Or veer off in tions without formal collaboration.”
different directions. Or just fail to sync. Then it’s, ooops, did we Market changes require tighter collaboration. Sales cycles have
just give ourselves a huge black eye? grown about a fifth longer, according to Neeson. Buyers have become
Realigning sales and marketing to better support each other more pragmatic, and more managers are involved in major pur-
may have become a hot topic, but it doesn’t always work like the chasing decisions. Purchases of information technology now involve
textbook says it should. It appeals to all parties – at least in princi- business managers, not just CIOs.
ple. But then there’s the reality of the field. Ah, yes! the real world. Selling effectively in this new market cannot be done under the
According to two ex-Gartner Group researchers, the best com- old sales-marketing model, which Neeson depicts this way: “Mar-
panies have been realigning for profitable growth for years. What keting did strategy and branding, and sales developed leads into
the researchers call “managing demand through field marketing opportunities.” Now marketing must develop leads into true
2.0,” shows dramatic gains in 1) true opportunities per response opportunities before turning them over to sales.
to marketing campaigns, 2) increased sales productivity of reps, Trade-offs and sacrifices are involved. “Sales may have to give up
and 3) more control over the timing and volume of sales. some budget to marketing,” Neeson acknowledges. “Lead gener-
But true change comes with pain. Sales may have to shed budget ation is no longer tactical, but part of strategy.” Marketing man-
to marketing, marketing needs to become more accountable and agers become accountable for the quantity and quality of leads.
cede status to sales management, and reps may get higher quotas. The sales pipeline is no longer a simple pipeline, but a “water-
Rich Eldh comes from a sales background, while his partner fall,” as marketing campaigns attract responses, which turn
John Neeson worked chiefly in marketing. The two cofounders of into qualified opportunities and are passed to sales, which turns
SiriusDecisions studied the revenue growth of more than 200 them into closed business. SiriusDecisions found that best-prac-
companies that sell in business-to-business markets. “The big dif- tice companies average four-and-a-half times more opportuni-
ference is that organizations that had good top-line growth had ties given to salespeople, per initial response. “That is a huge
SAP’S 75 PERCENT SOLUTION
Heather Loisel spent ten years in sales and sales management These and other metrics become Key Performance Indicators
before moving to marketing. She now leads marketing at SAP, (KPIs) that give objectivity to weekly meetings of regional sales
the global provider of enterprise solutions for planning and and marketing managers and monthly reports to each region’s
managing employees, customer relationships, supply chains, general manager and to marketing’s own quarterly review.
and other resources. Metrics make marketing accountable, not for events or
Loisel headed North American field marketing in campaigns, but for measurable results that are directly
2006 when SAP confronted its challenge. “We had a linked to sales. Marketers can now know, just like sales-
hard time figuring out the connection between sales people, whether they are “a hero or a bum,” in Loisel’s
and marketing,” Loisel explains. “How does mar- words. The former salesperson thinks this is a very healthy
keting measure the leads it generates? Where awareness. SAP marketers now have their
do they go? What is their value?” bonuses tied to quantifiable results.
SAP decided it needed to manage leads bet- And marketing itself can be
ter from the point the lead came in through its judged and compared with other
nourishing and hand-off to sales and then its firms based on objective mea-
use of the lead by sales reps. SAP wanted a sures of the results its spending
system that would predict the revenues that achieves. SiriusDecisions data
would come from leads, measure the cost indicate that SAP compares
of generating them, and help assess the favorably with other large com-
value of marketing investment. panies and is, on certain mea-
Discussions were held between sales and sures, best in its class.
marketing about the definition of a lead Saving reps time in obtaining
suitable for passing to sales. They or qualifying leads was one clear
agreed on a definition involving the goal of the new alignment between
standard BANT criteria: budget, sales and marketing at SAP.
authority, need, and time frame. Sig- There has not yet been any shift
nificantly, the SAP executives also in resources from sales to mar-
agreed on a numerical target: keting, and Loisel declines to
75 percent of the predict one. But she says the
leads that market- question is under consideration.
ing offered to sales SAP’s satisfaction with the
would have to be new model is clear. Loisel was
acceptable to ac- recently promoted to her current
count executives, position, vice president global
who could reject, marketing operations. Although
within a limited time precise methods may differ, she
period, unsuitable ones. says other SAP regions outside
One part of the transition North America are also working
was relatively easy. SAP used toward streamlining their process-
its own CRM system to track es of passing leads from mar-
leads all the way from first keting to sales.
acquisition down the sales One overall trend is clear, in
pipeline. The entire transi- Loisel’s view. “Traditionally,
tion was accomplished in there has been no focus on
about one quarter. the ROI in marketing, and
The new system does there has been no way of opti-
all that SAP wants. SAP mizing this investment. Now, we
can measure the effec- have metrics to measure ROI, to evaluate how much we
tiveness of marketing spending in a should spend, and to optimize it.” The most important metric,
variety of ways at each step. Leads come in as “responses” or KPI, is the rate of accepted leads. “There has got to be an
through a variety of channels, such as direct campaigns, online outcome,” says Loisel.
advertising, and events. SAP can estimate the portions of the Measuring outcomes is especially important in the new era
target market that never respond, respond only once, or of what Loisel calls “fragmented markets.” “Customers want
respond more than once. you to provide something that is specific to them. It is no
Some portion of the responses is turned into Marketing longer enough to just read their annual reports. Now the cus-
Qualified Leads (MQLs), the next step in measurement. Then a tomer expects you to know their company, know their industry,
fraction of MQLs becomes Sales Qualified Leads (SQL). The tar- know their competitors, and understand their problems.” That
get for this fraction is 75 percent, a target SAP has so far been means both sales and marketing must target markets and
beating with a 77 percent rate. The rest of the system tracks prospects very specifically, and then be able to quantify both
SQLs by age within the sales force and, using average deal size, spending and results in detail.
estimates revenue flow. The new system contributes signifi- So far, the bottom line is robust. “SAP America had its biggest
cantly to managing SAP’s business, according to Loisel. year ever,” Loisel says. “We are a growth engine for the company.”
The sales pipeline is no longer
a simple pipeline, but a “waterfall.”
qcontinued from page 76 need the best information at each step keting re-nourishes any rejected leads.
potential for improvement,” Eldh stress- from presentations, white papers, and pro- Pragmatech expanded its marketing
es. posals,” explains CEO Brian Zanghi. So database, both in quantity and quality of
Under the old model, marketing was Pragmatech is helping with one part of the information. Zanghi’s target market
accountable for activities, such as conduct- new model, more professional sales. But includes 2,300 firms which have more
ing campaigns or executing trade shows. the firm also implemented the other part than $100 million in annual revenue in
Under field marketing 2.0, marketing is by transforming the relationship between one of three industry verticals. To reach
measured by numbers of opportunities its own sales and marketing departments. them all, he bought lists and built part-
and its ability to fill the downstream water- Two years ago, Pragmatech faced a nerships to do joint marketing.
fall and increase revenue. familiar problem. Reps wanted opportu- Next, Zanghi beefed up technology. Sales-
Marketing and sales must first agree on nities, not leads, and said marketing was force.com had been effective but lacked the
the definition of a qualified opportunity, not even providing enough leads. Market- marketing information system Zanghi
on the processes for handing opportuni- ing complained about the lack of follow-up wanted. He chose Eloqua for analytics and
ties to sales, and on systems that hand and feedback from reps. visibility into the marketing activities that
them off quickly and inexpensively. For six weeks starting in December 2005, prepare opportunities. Efficiency gains were
Then each department must restructure SiriusDecisions audited Pragmatech’s impressive. “We went from doing a couple
its activities. “Marketing must identify sales process, interviewing 30 people in of marketing campaigns per month to
where leads are in the buying cycle through sales and marketing and talking to cus- doing as many as we want each week.”
quick questions and analyzing behavior,” tomers. Eldh recommended that Prag- Pragmatech continues to refine its mar-
Eldh explains. Web visitors are analyzed by matech focus on defining opportunities, keting messages. “We need to understand
white papers downloaded, Webinars taken, strengthening its database, improving who the buyers are and why they buy, as
or Webpages viewed. Similar checks are marketing messages, and upgrading tech- efficiently as possible, then zero in on busi-
made for offline contacts. Marketing needs nology. Zanghi took six months to imple- ness problems and help them,” Zanghi
a database to aggregate these activities, plus ment the recommendations. explains. “We could not do it without tech-
rules to interpret them. Two weeks of discussion resulted in nology.” Fortunately, Pragmatech’s own
Reps must be able to exploit opportunities agreement on the definition of an opportu- software helps engage customers and
quickly. They must be more competent at nity. It must be in the target market, there assemble content tailored for each one.
their specialty, professional sales, and know must be executive sponsorship, there must Finally, Pragmatech hired a senior per-
customers and communication tools better. be a performance problem Pragmatech can son to be specifically responsible for sales
They must build and manage consistent solve, and budget and timing must be right. effectiveness. What had been a manageri-
presentations, using the best new tools. Pragmatech asks Web visitors five qual- al role devoted to administration, automa-
The potential gains are enormous. ifying questions. Marketing then nourish- tion, and forecasting was elevated to a
Eldh estimates that as much as 80 per- es leads into opportunities. These, along mandate to make salespeople more effec-
cent of responses to expensive marketing with the history of the relationship, are tive at their jobs.
campaigns are ignored by both sales and passed to reps on salesforce.com. Reps Zanghi is happy with the new model, start-
marketing. “The money spent and wast- accept or reject the opportunity in 48 ing with its control. “I can reach out for five
ed is ludicrous.” hours, but they must justify rejection. Mar- minutes every two weeks and ask a rep what
Eldh says marketing should usually fill
from 20 to 40 percent of the pipeline. The MORE OPPORTUNITIES PER INQUIRY
rest should come from current customers.
Marketing should forecast these opportuni- Best-practice companies focus on the “middle mile” of demand creation to
ties and help forecast sales. Marketing should improve lead development, save rep time, and get 4.5 more sales-qualified
know that X opportunities in one quarter leads per initial inquiry.
will turn into Y sales in that quarter and suc- Average Best-Practice
ceeding ones. Top management can then $1 Billion Company Companies
smooth out peaks and troughs in sales efforts
and revenue. The company can manipulate Marketing Qualified
controllable opportunities to balance uncon- Leads/Inquiry 5.1% 8.3%
trollable factors, such as seasonality.
One best-practice firm is Pragmatech Opportunities/
Software. The company sells a Web-based Marketing Qualified Lead 34% 92%
application that helps reps assemble just
the right information in large, complex Opportunities/Inquiry 1.7% 7.6%
sales. “Our clients typically have five to Source: SiriusDecisions study of 200+ companies.
seven steps in the sales process, and they
is up with a lead he has had for two days. in any business-to-business market. emerging Asia, and developed Asia. These
That changes the mind-set.” Technology has Autodesk had a much different challenge critical employees, including both Ameri-
made Pragmatech much more efficient. One in sales and marketing. With nearly $2 bil- cans and citizens of local markets, reside in
marketing person handles all logistics of lion in annual revenue, the company is the the regions and markets they serve.
Pragmatech’s more frequent marketing cam- world’s largest provider of design software. Three years ago, Autodesk established
paigns. And lead volume is up. Autodesk is now transitioning its customers four sales-execution teams, totaling 60 peo-
Eloqua lets Pragmatech see all contacts from two- to three-dimensional software in ple, located in the four sales regions. “Their
from the first time a lead enters the “water- order to “experience ideas before they are job is to tie the strengths of marketing and
fall.” “Before, we did not know much about real,” in the phrase of Mike Colombo, senior field sales together to generate demand,”
a lead other than maybe the date it came,” director of worldwide sales execution. Colombo explains. These specialists are
says Zanghi. The old system did not even But the company had its own transition not salespeople, but have a background in,
measure conversions from leads to oppor- to make: keeping two very different forms or thorough familiarity with, sales.
tunities. Now Zanghi tracks conversion of organizations aligned. Most of the Sales-execution teams represent field
rates, and they are rising. “The ultimate Autodesk’s 5,200 employees are organized marketers and reps to Autodesk’s operating
measure is revenue growth, and we have in divisions that serve customer segments divisions. Their purpose is to help build
seen a good trend there as well. such as manufacturing, architecture, con- strategies that are executable in the field.
“Start with the right people, get align- struction, infrastructure, media, and enter- They keep field reps and divisions syn-
ment between sales and marketing, and tainment. But customers are global, with chronized on four key elements of market-
have a well-thought-out business process,” sites in about 160 countries. So the 1,200 ing: analyzing where to go, planning how to
Zanghi advises. “You also need to exploit sales and marketing staff are organized geo- get there, executing the plan as efficiently as
technology and have dedicated executives.” graphically into four major regions: North possible, and measuring results to improve
Zanghi believes the new model can work America, Europe and the Middle East, the plan. Furthermore, “they connect peo-
ple with common vocabularies,” Colombo
SCHOOLS AND COMPANIES BEHIND THE CURVE stresses. That is no small task, as the field
teams speak many different languages.
Most universities still do not teach the latest models for aligning sales and No new systems or software were neces-
marketing, according to Follett Carter, formerly head of both sales and sary for this alignment. Colombo and his
marketing for The Gartner Group and now a lecturer at the University of execution specialists use the Web, Black-
Michigan’s Stephen Ross School of Business. Carter notes that only a few top berrys, and PCs to communicate, and reps
graduate schools, including Harvard, Northwestern, Stanford, and Michigan, use Salesforce.com. Colombo calls it “a high-
even teach professional sales today. And most marketing courses continue level, value-added interface. We need to be
to focus on the brand management, pricing, and strategic positioning crucial proactive beyond the next quarter to see
in consumer, not B-to-B, markets. opportunities for each division, to capture
That needs to change, Carter argues, as the best B-to-B firms require mar- these opportunities, and to drive demand.”
keting to play a tactical as well as strategic role in boosting sales. “Strategic Colombo says the system is scalable for
thinking is about where you want to position yourself in the marketplace three growth and can adapt for changing
years from now.” Carter explains. “Tactical thinking is about how you can get the requirements. For example, “we started
most productivity out of your reps by increasing their selling time.” He is starting out with ‘countrification’ of our products
to see a shift in courses as B-to-B firms recruit more actively from campuses. and now we are moving one step further
Smaller firms, with $50 to $200 million in annual revenue, are leading the to making products industry-specific.”
charge to more tactical marketing, according to Carter. These companies are And it will be far easier to reorganize the
young, nimble, and just trying to survive. They have to be more productive. But small sales-execution teams than to reor-
like colleges, giant firms often lag behind. Carter believes they too will have ganize the huge operating divisions or
to catch up. “CEOs are much more focused on the bottom line today, but the geographical teams they link together.
hurdle has been politics. Someone with responsibility must give up power.” Results appear solid so far. In the past
Culture change is required as well. “You get entirely different behavior if mar- three years, Autodesk revenues have
keting is concentrating on getting market share, rather than on the productivity averaged nearly 25 percent annual
of sales reps.” Carter says technology can help, but is not the critical element. growth. Colombo attributes this success
“Organizations could have done this before through manual methods. I do not to many factors besides sales. He will
think that has been the stumbling block,” he says. Some companies will need keep his execution teams focused on con-
better software to track the history of opportunities, but others will not. sistency of message, identifying key
Carter does not see Marketing 2.0 as requiring big changes in compen- issues on the horizon, and keeping lines
sation of marketing leaders, who will continue to receive salary plus bonus- of communication open. •
es. Sales reps will continue to be paid for performance, but their quotas may
increase. “If you invest $5 million so that marketing can give tactical leads
MORE ON THIS TOPIC
to reps and save them two days a week, this increases their selling time. I
think it would affect quotas.” Watch a short video on the
Hierarchies should also reflect the change. No longer will B-to-B sales chiefs keys to effective marketing
with Jeff Grill, VP marketing,
report to heads of marketing. The two positions will become more equal, as they Mimeo.com.
are already starting to become. B-to-B sales are much different than selling in www.sellingpower.com/video
consumer markets. Carter thinks both companies and educational institutions Search: Grill
will have to recognize that best-practice B-to-B sales are changing rapidly.
REPRINTED WITH PERMISSION FROM SELLING POWER SEPTEMBER 2007