7 Costs of Misalignment of Sales and Marketing

The misalignment of sales and marketing can prevent an organization from reaching it’s sales potential. Interim marketing executive Chuck Besondy, explains the top 7 costs of misalignment of sales and marketing.

There’s a lot of talk about aligning sales and marketing. I’ve given speeches on the topic and have written numerous posts. Company executives know it’s an issue, but what are the costs associated with misalignment?

If our car is out of alignment we know that the tires are going to wear out faster; we are more in danger of the car wandering out of our lane into on-coming traffic; the ride isn’t as smooth; and the car is harder to steer. We know the cost of replacing tires and in our mind we can calculate the risk of an accident. That’s pretty easy.

But, what is the cost if a company’s revenue engine is out of alignment? Believe me, it’s costing you more than a set of new tires.

I want to open this discussion up and let the ideas flow. I have a thesis. I think most companies have been driving in a misaligned state for so long they are settling for sub-par results and resigned to trying to solve the problem. Misalignment is the default situation in most B2B companies.

Here is an excellent reason why an outside executive serving in an interim manager capacity at your firm, or as a consultant is best able to get you out of the rut. They bring objectivity and the knowledge that there is indeed gold at the end of the rainbow.

What is the cost of misalignment? If, as business managers, we can’t put a number to the cost we’ll hesitate to invest in a solution, and that is the way it should be.

Here are a few areas in which misalignment is costing your company.

1. Low conversion rates – your proposal to close ratio is static or falling. Research has shown that misaligned companies have a lower conversion rate. What would be the impact if you reduced your cost of customer acquisition by 10% , 20% or more?

2. Missed revenue forecasts – unpleasant budget surprises at quarter end when actual sales are significantly below budget.

3. Lost customers – research has shown that misaligned companies are not as good at keeping and growing profitable customers. What is the lifetime value of a customer? If you lost 10% or 20% fewer customers each year what would than mean to the top line and bottom line?

4. Slow reaction to market dynamics – when marketing and sales have difficulty agreeing on direction and tactics there are delays in action; opportunities are missed. What is the value to you in beating the competition to a market opportunity?

5. Internal strife – It’s not fun or productive to work in a company in which marketing and sales are at odds (or at war). Soon egos and politics rule the decision making rather than a focus on progressing buyers through the sales funnel. The cost here, besides low productivity, is employee turnover. What are your recruitment and training costs in sales and marketing?

6. Do-overs – programs are often created and never implemented because there is disagreement about what should be done and how. What is the cost of programs that never see the light of day, or what is the cost of do-overs?

7. Loss of momentum – the most effective revenue generation plans are those that have coordinated strategies and tactics where sales and marketing are pulling forward together. A dog-sled team is a good metaphor. When the dogs are running out of step or in different directions the sled is not going to progress at optimum speed.

Those areas will give you a start. I’m sure I’ve overlooked a few. Once you’ve identified the cost areas you’re ready to get out your calculator and compute what the chaos is costing you.

Give it a shot. Bring out the calculator, look at your current financial statements and budget. Don’t be shocked if the total cost is 5% or more of your total sales and marketing budget.

Think small if you like. What would a 5% improvement in any area look like? Think big. What would a 20% improvement in any area look like? What would a 5% improvement in all areas look like?

I look forward to reading your comments and sharing more on this topic soon.

Chuck Besondy is a principal at One Accord Partners and is co-author of Leadership on Demand: How Smart CEO’s Tap Interim Management to Drive Revenue. You can read more about Interim Sales and Marketing Management by Chuck Besondy at his blog The Sales Funnel Fanatic.

Photo by woodsy

The Sales Funnel Pipeline: Grow Revenue From Funnel Leaks

Interim marketing executive, Chuck Besondy, explains how to take advantage of the opportunity of leads that leak from the sales funnel pipeline. This simple sales funnel step can significantly improve sales.

I was speaking with an executive the other day who repeated the concerns of her management team that their existing market was too small to sustain their growth.

Expanding into new markets may look enticing, but there are large risks and costs associated with this strategy. As it turned out in this case I was able to show the company that their market was large enough to provide growth opportunities for the next 3 years.

A little back of the envelope math indicated a bleak picture at first. Considering the size of their available market and their current conversion metrics for demand generation they simply couldn’t reach their revenue target. They were burning through too many prospective buyers and before long every prospective customer in the market will have been contacted and perhaps even placed into their sales funnel.

Their conversion rates were respectable, too. Only incremental improvement could be expected. It was when I asked about buyer recycling (lead recycling) that the answer started to emerge.

Many marketers and salespeople put all their energies into generating leads and working to progress these buyers through the funnel. But, a percentage of buyers always leak from the funnel at every stage. If your conversion rate at one stage in the funnel is 40%, this means 60% have leaked–they haven’t progressed. For whatever reason they weren’t willing or able to move to the next stage in the funnel at that time. Later a portion of these leaked buyers will be ready to re-engage with you (if you let them).

Sadly these buyers who leak for whatever reason are frequently forgotten by marketing and sales.

The company I was speaking to wasn’t actually ignoring their leaked buyers, but had a procedure in place to follow up with leaked buyers every 6 months. Ah-ha!

Using a sales funnel calculator from MathMarketing (click for lite version of this calculator) I was able to show the company that by recycling their leaked buyers at every stage after 4 weeks rather and after 24 weeks they’d need 7,000 fewer fresh names over a three year period.

This meant the market was large enough if they could execute effective marketing and sales strategies for recycling the leaked buyers back into the funnel–certainly a much easier and less risky proposition than expanding into new markets.

This article can also be viewed at Chuck Besondy’s blog, The Sales Funnel Fanatic.

Photo by steved