IDC Analyst Connection: Coordinating Marketing and Sales across the Entire Revenue Cycle
Michael Gerard, Research Vice President for IDC’s CMO Advisory Practice and Executive Advisory Group, recently published an Analyst Connection sponsored by Marketo titled Coordinating Marketing and Sales Across the Entire Revenue Cycle. In this, Michael answers several questions about sales and marketing alignment. Here are some excerpts (or download the full PDF):
As B2B customers become more sophisticated and competition increases, the integration of marketing and sales becomes even more critical for meeting and exceeding market demands. However, companies of all sizes continue to struggle mightily with marketing and sales alignment. IDC research indicates that approximately 25% of sales’ time is spent on unproductive prospecting, even as 60 to 70% of sales representatives ignore marketing leads. In addition, IDC estimates that the annual performance cost per B2B sales representative as a result of poor engagement with prospects is $1 million.
On Marketing’s role in the revenue cycle:
Marketing plays a big role in selling to the enterprise: Marketing “owns” the relationship with the broader marketplace (such as influencers, analysts, and other members of the broader buying committee); marketing also owns the initial relationship with prospects up until sales engages with a limited and specific subset of prospects; and marketing continues to be a supporting player after the sales engagement via the Web site, branding, search, and other campaigns that touch prospects.
Where things go wrong:
It is the hand-off process between marketing and sales where many revenue opportunities are lost and prospects’ perceptions of the organization are damaged. Marketing leads may not be qualified properly, prospects’ information may not be communicated properly as the leads progress through the organization, and well-qualified leads may not receive the needed attention to optimize revenue opportunities.
What does coordination mean?
Marketing brings a longer-term view while sales brings an action-oriented view to the customer creation process, or revenue cycle. Both marketing and sales capabilities are important at every step of the revenue cycle, so the key is coordinating the activities between the disparate functions. This requires more than just tacking marketing onto the front of an existing sales process. True alignment requires coordinating marketing and sales activities, starting from the day you first make contact with a prospect as part of the initial education process through the sale and beyond to the customer relationship and ultimately customer advocacy.
The soft benefits of an integrated revenue cycle:
Coordinating marketing and sales across this full revenue cycle enables marketing resources to focus on building higher-quality relationships with prospects and ultimately higher-quality leads for sales. In turn, sales will be more efficient and effective because more time will be spent on productive targeting of and selling to those leads that are in the best position to buy. Prospects will receive more relevant communications and assets from marketing, fewer leads will be ignored, and more sales reps will achieve their quota. Ultimately, this can result in a single revenue cycle that effectively shortens sales cycles and increases top-line growth. For customers, there is greater satisfaction because prospects are not annoyed by unwanted or irrelevant sales calls.
The hard benefits:
Each year IDC evaluates the best-in-class tech marketing and sales organizations to determine excellence in go-to-market execution and effectiveness, plotting these findings in the IDC Marketing Performance Matrix. Companies exhibiting the strongest alignment between marketing and sales continue to appear in the upper right-hand quadrant (i.e., the marketing leadership quadrant) of this matrix, indicating greater market share, financial performance, and Wall Street recognition. The average company is spending $12,500 per rep per year on sales enablement and $9,100 per rep per year on training. Better teamwork and focus by sales and marketing on enablement, including better preparation of sales for lead follow-up, will improve sales productivity by $260,000 per rep per year.
IT infrastructure for lead management:
In IDC’s recent Technology Marketing and Sales Barometer study, both marketing and sales identified lead management as the area offering the greatest potential for improvement of the revenue cycle, with the highest priority for improvement in this area being better alignment of marketing and sales IT infrastructure.
Lead scoring and lead nurturing:
Deploying a lead scoring process will increase lead quality, enabling marketing and sales not only to better qualify and pursue “hot leads,” thereby increasing sales’ efficiency and effectiveness, but also to better align with customers’ needs in the buying process. Lead nurturing is also a “low-hanging fruit,” offering great return for organizations that improve this process. Lead nurturing is defined as the people, processes, and marketing activities that are specifically designed to “keep warm” and convert leads that are not “sales ready.” An effective lead nurturing process will ensure consistent and high-value communication with prospects to increase the depth of the relationship, whether the prospect is an existing marketing lead or a recycled lead from sales that was not yet ready for deal closure.
About the analyst: Michael Gerard joined IDC in 2003 to help establish IDC’s CMO Advisory Practice. As research vice president, he currently directs research operations and consulting engagements for the Executive Advisory Group (EAG), which includes the CMO Advisory, Sales Advisory, and Market Intelligence Practices.