The Yin & Yang of Marketing & Sales—Part III

NoSpin Marketing

NoSpin Debunker #41: April 8, 2002

 

 

Organizing your Marketing & Sales Functions

 

I hope that you all enjoyed my spoof press release last week. As you can imagine, I’ve been pretty busy with my “new” clients, but I’m stealing some quality time to communicate with my most important constituency: my Debunker readers.

 

If you get a chance, you may want to do a quick review the last couple debunkers, the Yin & Yang of Marketing Parts I and Part II. In this Debunker series, we’ve been examining the relationship between Sales and Marketing in small and medium-sized businesses. In Part III of the Yin & Yang of Marketing & Sales, we’ll take a look at the best ways to organize your Marketing and Sales functions—always with an eye toward how to best increase revenues and profits.

 

In introduction to Part III, the results from two recent NoSpin polls yielded interesting results that are relevant to this week’s topic (although the number of respondents was relatively small). Please chime in on the current poll: How did your business do the 1^st quarter of 2002 compared to last year?  

 

How would you characterize your company’s balance between marketing and sales?

 

100% of respondents said “Dominated by Sales,” vs. “Dominated by Marketing” or “A good balance between Sales & Marketing.”

 

Organizationally, is Marketing most effective when it is?

 

• With Sales                                         41%
• Separate                                            29%
• With Product Management              19%
• Outsourced/other                              11%

 

So is there one best “NoSpin” way to organize your Marketing and Sales? I’m going to offer a few recommendations and helpful hints, but alas, there is no single best way. Here are four guidelines for small and medium-sized businesses (less than $500 million in revenues/year):

 

A word of reminder and caution: the “trick” in optimizing your company’s Marketing & Sales is about enabling a balance between these two very different but intertwined activities. They are BOTH about increasing revenues and profits for your business.  

 

1) Marketing is a required business function that should be separate from Sales

 

This recommendation coincides with the poll results which show that about 60% think believe that, organizationally, Marketing works better separate from Sales. I concur and recommend that Marketing be an autonomous business unit, part of Product Management, outsourced, or other. 

 

You readers might be thinking, wow, there’s a consistent theme in the last few debunkers about Marketing being all about selling. Then why not put Marketing and Sales under the same umbrella?

 

Marketing & Sales are already under the same company umbrella, but the wisdom in separating them, organizationally, goes back to the fact that Marketing and Selling are not the same thing and take different skills sets. They must co-exist and collaborate, but they are still quite different Yin & Yang functions-- maybe not male and female different—but different nonetheless. Even in small businesses Marketing and Sales are too much for one person to direct and be a “doer” hands-on doer. In Part IV, Jack Varney and I will talk more specifically about the division of labor between Marketing and Sales.

 

What happens in a majority of cases when Sales and Marketing is combined, is:

• Sales virtually always dominates in terms of responsibility, control, budget, salary, title, etc
• Even if the lead Sales person is a pretty good marketer (as well as sales person), he or she really doesn’t have the time or inclination to spend on Marketing—usually less than 20% of his or her time goes to Marketing.
• The word “Marketing” on his or her business card is often a sham in that very little Marketing really happens, but the company at least feels better that it’s “formalized.”
• If the Sales/Marketing head does hire a “Marketing” person(s) as part of the Sales/Marketing department, it’s often a very junior person(s) who is “promotions-centric” and handles some of the basics (which are important): logistics on tradeshows, newsletters, local PR, PowerPoint presentations and maybe other support functions. But there is no marketing leadership focused on strategy and overall key decisions about markets, competitors, products, product packaging, pricing and distribution.
• Marketing that occurs is often what I call “kamikaze” marketing. Every once and awhile a top-level manager says, “OK, it’s about time for some marketing” and pulls the trigger. But even if some decent dollars are thrown at a one-time, one-shot campaign, it’s usually fraught with problems: little planning or coordination of messages, no repetition, inappropriate vehicles used, little or no follow-up,  grandiose expectation, and too often minimal results--“proving” that marketing really doesn’t work that well (compared to Sales). 

 

On the other hand, if Marketing is NOT part of Sales it is much likely that your Marketing will be higher quality, more focused, more consistent, more regular, and more effective. And the free flow of ideas across Marketing and Sales functional areas will increase, not decrease, effectiveness of both—and lead to better results.

 

What are the other options for separating Marketing from Sales—wherein Marketing is not a completely separate organizational function:

 

1)     Marketing as part of Product Management/Development. This takes a multi-talented talented individual, but given that the top Marketing person needs to be involved with molding of products/services, packages and pricing, and the stories around these components, this approach makes a lot of sense for many companies.

2)     Outsourced Marketing. This can a good option, especially for smaller and younger companies that don’t have ability to recruit a top marketer, pay at the level required, and need more flexibility. More on marketing outsourcing in a future Debunker.

 

And yes, there is always an exceptional Sales and Marketing individual who can direct a joint Marketing & Sales organization while dividing his or her time appropriately and doing both jobs well--but these are rare birds. If you’ve got one like that, do everything you can to not lose him or her to the next free agent draft.

 

2) Your heads of  Marketing and Sales both need to report to the same top person, usually the CEO, and be at an equal level

 

This is where the rubber meets the road and usually a quick indicator (along with budget) about how serious your company is—or is not--about Marketing. Almost always the top Sales person is a VP or above level who reports to the CEO or COO. It needs to be the same with your lead Marketer, as well. Whereas the Sales (or Business Development) organization is likely going to be larger in terms of FTE’s--in terms of clout, the lead Marketer needs to be on par with the head of Sales.

 

Excuses for not putting the top Marketer on equal footing as Sales are many: “The CEO or COO already has too many direct reports,” “The Sales person or CEO has it handled,” “We can’t afford that level of person,” as well as others. All are pretty lame.

 

If you do have a separate Marketing function, but your lead marketer is a “manager” or a director” and your head Sales person is a VP or Executive VP, you’re usually kidding yourself that you have real Marketing organization. Inadvertently perhaps, you’ve set your Marketing up to be only a fraction as effective as it could be. If the lead Marketer can’t go toe to toe with the lead Sales person, then Marketing is really just a minor, support function for Sales.

 

3) Hire a lead Marketer early on—versus later on

 

At the beginning is when a really good Marketing strategist can be of incredible value: helping the company to understand markets, competitors, and hone product and service offerings to match needs out there. Otherwise, the Sales organization is entrenched as dominant from Day One, and Marketing is a second-class citizen from the get-go. 

 

Many companies, though, wait to consider hiring a “true” marketer with the typical rationales being: “We can’t afford it yet (to hire anyone),” or “we just aren’t ready to market yet.”  Another excuse that is less lame is that “we can’t find a good one.” Unquestionably, the quality of person is critical and that good marketers are much more difficult to find than good Sales folks. We’ll address the profile of a good lead marketer in a future debunker.

 

OK, if you’re already past the point of being a very young company, it’s time to make up for lost ground and make a lead Marketer your next hire with the full force and authority of the CEO behind such a move. But don’t just promote someone from inside who doesn’t have the right skill set. Then follow the other guidelines in this Debunker.

 

4) To get both Marketing and Sales on the same page, provide incentives to both on the basis of revenues/profits

 

Again, when a Company is says it is serious about both Marketing and Sales, here’s where the rubber really meets the road. The lead people for both functions (and others in their respective organizations) need to have a portion of their compensation “at risk”--with at least 10-40% of their respective packages depending on Sales/company profitability. 

 

You may be in an organization that pays its Sales person a salary only (which is strange at best), but assuming that you’re in the mainstream and pay some sort of salary and commission/bonus based on (Sales results) to your top Sales staff, there’s NO reason that a portion of your Marketing person(s) compensation should not be “at risk.” More than anything else this forces Marketing and Sales to collaborate, constructively, over time. These people don’t have to like each other or be buddies but they do have to work together to sell more products and services and create new revenues and profits for the company.

 

Compensation schemes don’t have to be exactly the same for Marketing and Sales, but the dollar potential should be comparable for both top people—or at least in the same ballpark. Businesses shouldn’t worry too much about the upside for these folks. In fact, do the opposite: make sure that if the company’s revenues go up that these key people get part of the action. So what if the Marketing and Sales people hit a home run and their annual compensation starts approaching the CEO’s, COO’s, and CFO’s?  Isn’t everyone benefiting? That should be the least of the company’s worries. Companies, though, tend to want it both ways—limit their “exposure” to upside in compensation and “penalize” these folks unless pretty outrageous numbers are hit. Frankly, that attitude is nonsensical.

 

Those are my four guidelines for organizing Marketing & Sales in small and medium-sized companies. If you didn’t get a chance to read about “The Best Web Site Planner” tool that I am now selling, please take a look. It’s a bargain and must-have marketing resource for any company that has a so-so web site and wants to turn it into a sales and marketing asset. Order it here.

 

Please let me know what YOU think about this debunker!

 

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Tom Ranseen                           NoSpin Marketing                             615.383.7157