Okay, you've decided to take the plunge and transform your traditional marketing and sales activities into a continuously improving, higher-performing revenue machine. Where do you start? The first step along that journey is to understand the different process components that go into creating revenue — what I will refer to here as the revenue cycle.1
If I had used the term “sales cycle,” most people would have a pretty clear picture of what I was talking about. The sales cycle represents the steps involved, and time required, for a salesperson to close a deal. Most business leaders would say that a sales cycle runs from the moment a salesperson begins to talk to a prospective buyer, to the day he or she finally closes the deal. Sales cycles are usually divided up into phases or steps often called “pipeline stages,” each of which has its own definition. Sales leaders use those definitions to assist in sales forecasting and deal management. There's a whole body of literature, as well as a bunch of sales methodologies, which have grown up around the concept of the sales cycle and pipeline stage management.
Most C-level executives spend an inordinate amount of time thinking and talking about sales cycles and how they impact their sales pipelines. No doubt these discussions help, to some extent, with improving sales effectiveness and forecast accuracy. But it's really difficult to think about any of these sales cycle methodologies as being a true business process — at least not in the sense that you would talk about a manufacturing quality process, or a supply chain inventory management process, or a finance team's quarterly close process. That's because most executives with revenue responsibility are conditioned to think about sales as an art.
The very idea of sales reps conforming to a disciplined process is one they're inclined to laugh off, especially in light of the lone-wolf personalities who populate their sales teams.
As a result, most companies treat the measurement, analysis, and continuous improvement of the sales process as a quixotic goal. To be sure, the sales department is very precisely measured, especially in terms of top line revenue production. But all too often, the seeming clarity of this ultimate measurement has dissuaded revenue leaders from looking very carefully inside the box of the sales process. You don't want to set formal performance goals for the intermediate stages of the sales process that might risk messing up the final result. And even the minority of revenue leaders who do look inside that sales box almost always miss the mark.
Revenue Revolutionaries
Jeff Ernst, Principal Analyst, Forrester Research, Inc.
Forrester Research is widely regarded for its expertise in sales and marketing. In its seminal report on sales and marketing alignment, Principal Analyst Jeff Ernst of Forrester captures perfectly both the problem and the solution. Here are a few key excerpts from the report, titled “B2B Marketing and Sales Alignment Starts with The Customer.”2
Sales and marketing leaders are going about it wrong. To overcome the obstacles to alignment, they need to challenge conventional wisdom. Rather than relying solely on the point-to-point integration approach where marketing and sales teams participate in each other's meetings, these two groups need to align their activities around a common design point, which is the buyer's needs and problem-solving process [
Figure 12.1
FIGURE 12.1 Marketing and Sales Align with Customers' Needs and How They Buy.
Source: Forrester Research, Inc. Used with permission.
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The report continues:
The gap between marketing and sales didn't get as much notice when the economy was booming and even mediocre players in sales were hitting their quotas. But now:
The CEO is demanding accountability. The challenges companies face in achieving revenue targets has made alignment between marketing and sales a high priority for the chief executive officer (CEO) (see Figure 12.2). There are fewer opportunities, and prospects have tighter budgets. So it's harder than ever to generate high-quality leads and advance them through the marketing and sales process. Senior executives are holding marketing leaders more accountable for contribution to pipeline and revenue.
FIGURE 12.2 Marketing and Sales Alignment Is a CEO Priority.
Source: Forrester Research, Inc. Used with permission.
Image may be NSFW.
Clik here to view.
B2B buyer behavior has changed. Buyers are often more than two-thirds of the way through their problem-solving cycle before they engage with a supplier's sales department. By the time they interact with salespeople, they demand more detailed information and expertise, which requires marketing and sales to deliver a well-orchestrated buyer experience.
The marketplace is getting more complex. At the same time, everything is becoming more complex — product portfolios, customer requirements, competitive alternatives, and ever-changing market dynamics. Salespeople need more help than ever to reach their quotas and perform effectively.
Jeff addresses some other inconvenient truths for marketing professionals separately in the 2011 Forrester Research report: “Thought Leadership: The Next Wave of Differentiation in B2B Marketing.”3 In it, he explains that marketing leaders looking for a sustainable way to differentiate their company and offerings in the marketplace need to embrace thought leadership marketing because of several factors they don't like to admit.
Buyers don't care about your product. When we asked business buyers what differentiates a vendor from its competition, the top three responses pertained to how the vendor solves the buyer's specific needs. Customers don't “buy” your product; they “buy into” your approach to solving their problem. Buyers seek out experts whose perspectives on the problems they face and approaches for solving them align with their own. Thought leadership puts your firm's points of view out there for prospects and customers to see.
Your products are commodities. Companies typically market the features and benefits of their products and services, but feature advantages can be quickly copied by competitors. Thought leadership marketing allows you to put bold, new ideas into the marketplace, which attracts buyers and creates an affinity with your firm, making it harder for competitors to gain mindshare.
Your salespeople get involved in deals when it is too late in the process. Sales leaders we talk with tell us that if one of their reps gets involved with a prospect after the request for proposal (RFP) is issued, they are usually too late, as another firm likely influenced the requirements to align with the strengths of their offerings. Marketing and sales teams need to engage buyers at the earliest points in their problem-solving process, when the need is identified. Thought leadership enables your salespeople to make the customer smarter, which increases your firm's presence as a potential solution provider.