Three Questions to Align Your Strategy, Marketing and Sales
When the business strategy isn’t linked with sales and marketing, the result is that marketers and sellers end up working harder, not smarter. This has a multi-billion dollar impact. Most companies struggle with this according to the Frank Cespedes, author, and Senior Lecturer at Harvard Business School: “Selling [or marketing,] no matter how clever and creative, can’t generate good financial returns unless it’s connected to strategy.”
I met Frank while we both spoke at an event in Santiago, Chile. We had a memorable time sharing ideas and research. I thought Frank had a practical approach to aligning sales and marketing. So, I reached out to him and interviewed him about what he’s learned through his research for his most recent book Aligning Strategy and Sales.
[Editor’s Note: This interview was edited for length and grammar only.]
Brian Carroll: What inspired you to write about Aligning Strategy and Sales, which is the title of your new book?
Frank Cespedes: Despite decades of attention to so-called strategic planning, there is remarkably little research about how to link strategy with the nitty gritty of field execution, especially sales efforts [and marketing]. American companies annually spend about $900 billion every year on sales efforts. That’s not marketing, that’s sales, that’s compensation, the travel, incentives, the infrastructure, etc. and to put that in perspective, Brian, that figure is more than three times what they spend on all media, Super Bowls, everything. It’s more than about 40 times what they spend on digital marketing, and it’s more than 50 times what they currently spend on social media. This is a big, big gap.
Can you tell us more about your background and where all of this came from?
I was an academic at Harvard Business School for about 11 years working my way up the hierarchy and always was doing research in sales-related areas. My research started with distribution channels, B2B distribution channels, morphed into sales. Then I ran a business for 12 years. And then I came back and said, “I’m teaching strategy. I know something about sales. Let me see what people have written about it.”
What I found was this gap, so I figured two things. One is I don’t think the world needs another book about strategy, and I don’t think, to be blunt, the world needs yet another selling methodology, but there just isn’t much if anything about linking the two and that was the gap that I set out to address.
If you had only three questions you could ask to diagnose the strategy problem with sales and marketing with strategy, what would those be?
1. Do you have a strategy and can you articulate it?
Most companies, and most senior executives, confuse strategy with other important but separate things like vision or mission or purpose or values. Those are important things, but they are not the same as a strategy. A strategy at a minimum always has to pass the following three tests:
- External consistency: In other words, does our approach deal with the threats and the opportunities in the external market today, not yesterday?
- Internal consistency: How do we put things together in sales, in marketing, in operations so that two plus two equals at least four? It’s internally consistent but also if we have some kind of competitive advantage, it’s going to take longer to imitate us.
- Dynamic consistency: Every strategy has a sell by date. No strategy is forever. It’s very unlikely that any company is going to get an email from the marketplace that says it’s time to change. It’s not the responsibility of the business to be kind to any companies. It’s not the responsibility of the market to be kind to any company’s strategy. It’s the responsibility of managers to understand what’s going on in their market and adapt. That’s what I mean by dynamic consistency. If you have a strategy, you should be able to articulate it in 50 words or less.
2. Are we clear about the market segments where we do and don’t play and what are the buying processes?
In those areas where we choose to play, what is it that we do or can do that we believe [gives] us some advantage? You have to be clear about that if you’re going to do effective selling because where you play drives the buying processes that your sales people will encounter, and again this is central. Value is created or destroyed in actual interactions with customers and their buying processes.
3. Do we know what are the important sales tasks our salespeople must do to succeed in the marketplace?
Sales tasks are very actionable things. They ultimately tell us where we should and should not spend, money, time, effort, investments in what areas of the of the conversion process in the sales funnel.
So again, my three questions I think are relatively simple, but I believe that they’re fundamental. Do you have a strategy? Are we clear about where we play and not play in the buying processes in those areas where we play? And what are the important sales tasks?
What advice would you have for leaders who want to get better and understand how to align their sales marketing? Or to put it another way, what are your best tips for getting sales and marketing aligned around strategy?
Well, I think the questions I just articulated in answer to your earlier question are also relevant here because again there is no such thing as effective marketing or effective selling if it’s not connected to strategic goals and business objectives. And to be blunt, many, many marketing and sales managers [are] very often either unaware or indifferent to the strategic goals and objectives in their companies, and they got to speak up. They need a place at the table. But conversely, they have to be accountable for that. Let me just say one thing about marketing, one thing about sales.
[Editor’s Note: The figure “Seller’s Compass” helps explain the process of aligning sales, marketing, and strategy (used with permission).]
In marketing, I think your work [Lead Generation for the Complex Sale] is very relevant to lead generation. We all know the data. This data has been remarkably consistent for years, so there’s obviously something systemic going on just because marketing people want to be relevant. But we all know about what many people call the lead generation black hole. How many leads from marketing are actually used? Lots of money is currently wasted, and that’s the right verb. It’s wasted on social media and other chic tools, and many marketers are ironically proud of that. They’re proud of the lack of metrics currently. I wrote something about this last year in Harvard Business Review, “Is Social Media Actually Helping Your Company’s Bottom Line?” that gets us right back to one of the core aspects of marketing in many businesses, at least in relationship to sales, lead generation. To sum, what’s a good lead and are we clear about that?
On sales, I think what they need to talk about compensation and incentives. The data has been remarkably consistent, at least during my lifetime, that if you look at sales comp plans. According to the surveys, once we get beyond fixed salary, about 70% of sales comp plans base incentives on sales volume. In other words, based on [sales] volume regardless of the profit margin of that sale or the cost to serve that customer.
What that means, is that when you have an incentive system like that, either the implicit or very often explicit message to the sales force in a comp system is like is that any customer is a good customer. The message is a variation on the old biblical aphorism, “Go forth and multiply.” That’s what [salespeople] do. They go forth, and they bring back a diverse set of customers that have very, very different implications for product, for the selling cycle, for post-sale service, for capacity utilization and operations, for the cash flow profile of the company.
All of this flows ultimately in any business from what salespeople sell at what price and how fast. It really doesn’t matter what their strategy is. The de facto strategy of the company is those aggregate sales that are coming in. Why do we pay people the way we do, and do we understand the daily behavioral implications of our comp system?
Again, the most pressing things they need to talk about for [aligning] business strategy are those questions I mentioned earlier for marketing, lead generation and for sales. Again, I think there’re huge areas for improvement in all three of those topics.
You might also like:
Any Value Proposition Hinges on the Answer to One Question [From the Harvard Business Review]
Putting Sales at the Center of Strategy [From the Harvard Business Review]