The Smoking Gun of Alignment

There used to be a time, before the tech-bubble bust in early 2000, when the route to CEO was through the CMO’s office.  The belief was Marketing touched and coordinated all aspects of the business, knew how to build market share and understood how to read the tea leaves of emerging trends.  Post tech-bubble, the tables turned and the path to the CEO seat was through sales.  Board of directors and venture capitalists believed that Sales touched all aspects of the business, knew the numbers, how to drive revenue, and were on the frontlines of emerging trends.   Interestingly, both paths to CEO-ship have not proven to be sure-fire successes.  Tech company failures litter roadsides during both downturns unable to get their value proposition, go-to-market strategy and product roadmaps right, in the eyes of the buying customer. What does this have to do with aligning sales and marketing? It could just be the root cause – the smoking gun, so to speak.

I’ve been interviewing a growing number of Board members, CEOs, heads of sales and CMOs of large and small technology companies about sales and marketing alignment.  I’m looking for the smoking gun as to why it is so hard to keep these teams aligned.  There has to be a reason beyond “different cultures, time horizons, and skills”.   While my interviews are not done, some patterns are emerging.

  1. No one knows how to measure marketing.

Boards and CEO, regardless of their domain expertise, are puzzled as to how to measure marketing.  When asked what metrics they use the most frequent response is leads.  Yet when probed, it’s not really leads, it’s inquiries.   Both groups then lament on how marketing cannot produce quality “leads” and when asked how they fix the situation, the most frequent response is to replace the CMO. The response was the same for those CEOs that rose through sales as well as marketing ranks.

2.   SMB tech company marketers aren’t measuring the right things.

There is a big gap between large and small company marketers when it comes to understanding, measuring and managing marketing’s impact on pipeline, business and strategy.  Large company CMOs typically have a metrics-based operating mindset.  Each one knew, to the minute, what was happening to the pipeline, the funnel and how various marketing activities impact current and future revenue.  There were no differences between B2B and B2C large tech companies.   The same can’t be said for SMB tech marketers.

3.   Marketing doesn’t really have a seat at the Board table

Regardless of whether the company was large or small, CMOs have little to no exposure to Boards and are often left out of key strategic discussions.  Board members, on the other, drew a blank on what key questions to ask CMOs to evaluate marketing’s value add and contribution.   When pressed, marketing was described as a ‘black box’ and something companies are ‘suppose to have’. Which explains the zero sum marketing/sales budgeting situation prevalent in so many companies.

4.  Sales knows they are king of the hill.

In just about every case, the CEO and the board decides in favor of Sales.  Whether it’s taking funds from marketing to add more sales people, supporting some ‘creative’ sales models, letting sales dictate marketing programs, or letting sales get away with dysfunctional and organizationally destructive behavior – the CEO is betting his job, and bonus, on the sales leader.  No wonder alignment is hard to institutionalize.  In companies where there was alignment, it was the result of a partnership between sales and marketing leadership and grass roots adoption.

5.  Boards and CEOs could not define “sales and marketing alignment”

Everyone wanted it, felt they had some degree of it but darn if they could articulate what it meant. And that meant they could not quantify what lack of alignment was costing them in lost revenue, market share, customer dissatisfaction and bottom-line profit.

I’m not sure if I found the smoking gun but the powder burns are there and something is smoldering.   Bottom-line is that if companies are going to benefit from alignment, CEOs and Boards need to get with the program. They can no longer hide behind Sales, they have to educate themselves on how to measure marketing.

Comments (9)

  1. Candace Brown -
    March 20, 2010

    This is a very interesting article and surprising in that companies don’t seem to appreciate the complex role that marketing plays in the lifecycle of a company growth.

    Setting aside a true start-up with no customers for a second, SMB has the challenge of establishing itself as a company that is here to stay for the long-haul and therefore worth investing in through purchase of products and services. The most successful SMB organizations I worked with appreciate the fine art of public relations through media, educational seminars and key speaking engagements. Since SMB are usually establishing a greenfield niche with fewer competitors, their challenge is to create the story around the core value of the market need and technology trends. They also need to establish partner programs–either strategic alliances or strictly channel or distribution partners. These require special training programs that the sales people execute on to establish a relationship and lead-generation programs.

    Once a company becomes established, it is more about creating an efficient lead-machine for the territory reps..hopefully the territories were set-up based on clear analysis of existing and potential customers. I have found it more challenging in larger companies that assume that the marketing is about branding and less about creating leads for 100s of territory reps. I have had to do more work creating leads in a large company than in a smaller company. The larger companies provides many tools and services that the sales people can use but these are very time-consuming efforts for an A-type sales person. It is often more effective to work with a telemarketing team that is paired with the outside sales organization which creates a good harmony between inside and outside teams and creates a better model to service establishing customers that could lead to further business. Marketing typically is involved in telemarketing programs that assist in lead generation. With very large enterprise customers, marketing is around special or major events catering to elite customers and messages catering to different levels in the organization….CEO/COO/CMO versus CFO/IT folks. Smaller companies do not have the resources to do that type of marketing.

    In summary, if you could chart a life-cycle of a company, and then chart the variety of marketing activities that are possible, you will find there is a life-cycle to the marketing activities that tracks companies as they evolve in the market over a period of years and eventually a decade that is unique for SMB versus larger enterprises.

  2. Steve Parker -
    March 22, 2010

    This is an excellent start at trying to understand where all the misalignment stems from. I think there’s a further issue that clouds the role of marketing and connects your first and third points. Largely because of difficulties in measuring marketing–or at the very least in connecting it closely to revenue and profit–marketing typically has been viewed as a cost center. Sales on the other hand gets credit for bringing in the revenue which means the top line and in many cases also contributing to the bottom line. A cost center that’s viewed (rightly or wrongly) as unmeasurable or as a necessary evil has little reason to get a seat at the Board table. And this view is self-reinforcing. Lastly, there’s also the fact that only rarely does a CEO or Board member come from a marketing background. Although it may start out with smaller organizations, I think this is the year that Sales and Marketing will actually start cooperating as they realize they need each other to successfully navigate the new imperatives imposed by digital marketing and social media.

  3. Christine -
    March 24, 2010

    Steve, thanks for the post. Great point about #1 and 3 being linked, I hadn’t thought of that. At some level I hold marketing responsible for some of this situation. Marketers, as a whole, have tended to not talk about their results in terms the rest of the company understands. Hopefully, the new imperatives will motivate Sales to teach marketing about how to present the results and Marketing will help Sales be more successful. That doesn’t solve the Board/CEO problem though.

  4. Mark Fischer -
    March 26, 2010

    Living in both sides of this world for 15 years I have experienced the good, bad, and ugly of sales and marketing alignment. The good scenarios always involved a tight partnership between the two groups. When Sales fed marketing with field insights like trends, vertical movements, and product/service insights to Marketing, Marketing would respond with complimentary tactics and strategies.

    I believe your early findings are correct. Sales drive business and Marketing supports sales.

  5. Jeff Ogden -
    May 17, 2010

    Love this post and well said. CEO believe Sales delivers the goods and focus on sales. But it reality, most of the selling process has moved to marketing and without marketing sales starves.

    Marketing and sales alignment is critical today. Companies need to look at the entire revenue cycle, which is what Marketo espouses. If you look at the Revenue Cycle, you see where marketing and sales fit together.

    I’m glad I found your blog and look forward to more of your wisdom.

    Jeff Ogden, the Fearless Competitor
    President, Find New Customers
    http://www.findnewcustomers.net
    http://www.fearlesscompetitor.com
    @fearlesscomp

  6. Christopher Ryan -
    May 27, 2010

    Christine, thanks for the great article. In regards to your point #4 – sales does indeed know that it is “king of the hill” and often uses that leverage to make marketing do what is not in the company’s best interest. This is why I advocate creating a service level agreement (SLA), outlining exactly what marketing is supposed to deliver. An effective SLA is one of the best ways to achieve and maintain alignment between the marketing and sales organizations.

  7. Tom Grant -
    August 16, 2010

    Great post, overall. One of my favorite parts was this:

    “Marketing doesn’t really have a seat at the Board table

    “Regardless of whether the company was large or small, CMOs have little to no exposure to Boards and are often left out of key strategic discussions.”

    What a blown opportunity that is. You can argue over how strategic Sales is, or in what fashion, but Marketing will always be more strategic in critical ways. For example, who’s best positioned to do market opportunity assessments? And that’s just one of a bazillion examples of where the day-to-day work of Marketing implies a more strategic role.

    Very interesting point about SMBs, too.

  8. Todd Spare -
    January 30, 2011

    Great article !!!

    We are eharing more and more about a new position “Chief Revenue Officer” This position is the responsible for managing alignment, distributing the workload, calculating the ROI, etc. Sone view it as a replacement (consolidation) position for combining sales management and marketing management.

    I am not a fan of adding management layers, but this may be the only way to maintain the alignment process and strategy.

  9. Terry Meehan -
    April 19, 2011

    Great post!

    Having worked on both sides of the SMB / B2B aisle, I have come to appreciate the opportunities and challenges each organization offers the other and the 1 + 1 = 3 value when both are tactically and strategically aligned. And that means adopting the success formula of our bigger company brethren.

    The essential summary point of this article is true enough: that in the absence of clear data, Sales often defines Marketing’s value to the organization. That is, Marketing is helpful or unhelpful only if Sales says so.

    Most often, Sales is happiest when both organizations are focused on the Sales objective: revenue and quota. This means that to win Sales team confidence, it is incumbent upon Marketing to generate a healthy flow of sales – ready leads that can be measured in terms of Marketing’s contribution to the pipeline. This effort puts the burden on Marketing to not only focus on pipeline specific goals, but also on the means by which this effort can be quantified (which today’s technologies have brought within easy reach).

    In the SMB world, Sales and Marketing alignment is critical to a company’s success but given our hyper – competitive marketplace, the greater burden falls to Marketing to support Sales. But by winning over Sales, Marketing can get on with the other (sometimes) higher impact contributions that Marketing can make to the SMB’s revenue and share.

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