When trying to discover why our business is not growing as much, or as quickly, as we like, it is common to initially blame uncertain economic conditions or other factors outside of our control. If we look inward at the things we can control, we may point to low quality leads from marketing or undisciplined sales teams that fail to close. The real problem is not often siloed in either marketing or sales, but in how they work together.
Paying more attention to what happens, or does not happen, between the two teams will help leaders identify the real reasons for low and slow revenue growth. According to Sumit Mahajan, Chief Sales and Marketing Officer at Datamatics Business Solutions, the gap between sales and marketing is where most missed opportunities take root and closing that gap is the key to creating revenue.
Mahajan likes to apply the analogy of a relay race when describing the way marketing and sales should operate. Winning relay teams must pass a baton from one runner to another. If the baton is dropped the team is disqualified. If it is not passed with efficiency, the team loses time and falls behind their competitors. Think of the baton as a business opportunity, or lead.
Mahajan’s framework for marketing and sales interoperability has three features: establishing a common goal for sales and marketing, having one leader responsible for revenue growth, and measuring results for both effectiveness and efficiency.
Closing the Gap Between Sales and Marketing
The first feature is having a common goal for sales and marketing. It is common, says Mahajan, to define the purpose of marketing and sales teams differently. Marketing may see themselves as a lead generator and sales in turn believes that they are marketing’s client and are responsible for advancing a qualified lead to closed business. This naturally creates a gap over which a lead must be transferred. Mahajan says that this is where too many leads are lost, like a relay team dropping a baton and being disqualified from the race.
The solution, according to Mahajan, is that both marketing and sales, together are responsible for revenue growth. Marketing should understand “what they are driving in terms of sales revenue for the organization.” When thinking about it this way, leaders are better able to see the bigger picture—business outcomes—and ensure that leads are transitioned from marketing to sales in a collaborative way. He adds, a relay runner doesn’t walk off the track after they pass the baton to the next runner, they stay to encourage their teammates, see how the race ends, and celebrate the win.
In Mahajan’s organization, the head of marketing co-owns a revenue goal with the head of sales. Perhaps your company is doing well at retaining, and even upselling current clients, but is not gaining new clients. The marketing leader’s revenue goal may be tied to net new business, says Mahajan. The outcome is to help both marketing and sales have situational awareness of the entire business, rather than getting stuck in two siloes.
The Era of the Chief Revenue Officer
I still encounter many companies with chief marketing officers and chief sales officers, with their own teams operating in bureaucratic siloes all the way to the executive suite. This model is fading and being replaced by a single person responsible for both marketing and sales. Chief revenue, commercial, and growth officers are more common these days.
Regardless of title, having a single leader responsible for marketing and sales is a third important feature of Mahajan’s framework. This person is a member of the executive team, helps steer the company strategically, and is part of resource allocation discussions, all directly tied to revenue growth.
Mahajan believes that businesses can sometimes rely too much on cross-functional collaboration, especially when trying to operate strategically. For example, a common debate ensues when marketing wants resources for long-term, branding campaigns. Executives wanting to measure results find it difficult to invest in branding versus near-term, lead generation. However, a single executive leader responsible for both can provide the continuity for accurately measuring the results of both long-term and short-term marketing efforts.
This is a big, challenging role and a debate exists around the professional development path for this role. Do they come from sales or marketing? We’ll leave that for a future article.
And that takes us to the final feature of Mahajan’s path to greater revenue growth through marketing and sales interoperability, measuring results.
Measuring Results with a Progressive Scorecard
Mahajan uses what he refers to as a progressive scorecard. What does that mean exactly? It measures progress of course: the progress of the business to achieving their goals, the progress of a lead from marketing to closed sale, and the progress of a prospect through their buyer’s journey.
To understand Mahajan’s progressive scorecard, it’s helpful to understand how B2B companies have traditionally measured the results of marketing and sales. It is often narrowly focused on how much was spent on marketing, how many leads did it generate, and how many sales were closed. And there is often the sales attribution debate with both sales and marketing wanting to take credit.
Mahajan reminds us that businesses are not all the same and each company must determine how their buyers move through the sales process to determine appropriate milestones to be measured. Of course, the number of qualified leads generated, and closed sales are important. But he offers three, less traditional factors that he says are critical for businesses to accurately understand how revenue generation is going: customer lifetime value (LTV)1, customer acquisition cost2 (CAC), and time-to-close a sale.3
Tracking LTV, CAC, and time-to-close informs marketing plans, shapes budgets by tying them to outcomes, and helps revenue leaders determine if goals will be achieved and enables them to adjust to stay on track and meet the goals. If we only track sales, we’re tracking current status at best, but these are really lagging indicators of revenue growth. When sales are down, this leaves business leaders wondering what happened when it is too late to do anything about it.
The gap that exists between marketing and sales teams is crippling the revenue generating outcome of many businesses. Sales and marketing interoperability is the key to success. Better interoperability can be achieved by having a common revenue goal for both marketing and sales, establishing a single head of both marketing and sales, and measuring results using a progressive scorecard.
LTV is the total income a business can expect from a customer over the entire period of the relationship.
CAC is the sales, marketing, and any other business expenses like project management, proposal creation, facilities, demonstrations and more, needed to convince a customer to buy a product or service.
Time to close is just that, the time it takes to close a sale or the time a prospect takes to navigate their entire buyer’s journey.
Sumit Mahajan is the Chief Sales and Marketing Officer at Datamatics Business Solutions. He is a business leader with rich experience in leading high growth companies across diverse industries and markets. This includes leading global services focusing on B2B Demand Gen, Finance & Accounting, Research & Analytics, Procurement, Saas solutions and driving digital transformation through strategic goal setting and execution.
Datamatics Business Solutions Ltd. (DBSL), is a leader in providing B2B data, demand generation and business intelligence solutions, finance & accounting solutions for CPAs and enterprises. Datamatics delivers B2B sales & marketing solutions, business process transformation, and technology outsourcing solutions to Fortune 1000 clients across industries. We harness the power of advanced technologies and human ingenuity in perfect harmony to create state-of-the-art business solutions for our clients.