Two functions in the firm are customer-facing and responsible for revenue generation: sales and marketing. Despite this shared perspective and common objective, in many organizations, there is tension between the marketing organization and the sales organization. In some cases, this tension may be healthy, but in other cases it is dysfunctional. The role of senior management is to manage this tension and ensure that it works to the advantage of the firm. Managing this organizational tension requires an understanding of how it arises in the first instance and how to direct it for positive results in the next. Such tension arises from three sources: organizational structure, differences in functional responsibilities, and differences in incentives.
In some firms sales is a part of the marketing organization. In such organizations, the sales organization is frequently relegated to the role of order taker rather than a strategic partner of the customer. In other organizations marketing reports to sales. In such organizations, marketing often just supports the sales force rather than focusing on developing long term strategies for customer retention and market development. In still other organizations marketing and sales are two parallel organizations that may or may work together. The wrong organization assures that neither the marketing organization nor sales force will perform a peak potential. In addition to the conflict arising from suboptimal organizational structure marketing and sales may clash over their roles in the larger organization. The role of sales is often defined as making the immediate sale rather than long-term business development. The role of marketing is frequently defined as managing the brand over the long term and developing new market opportunities. These marketing efforts, while important, are too often not linked to the immediate sales performance of the firm.
These differences in organizational structure and responsibilities are often reinforced by the incentive structures firms establish for each function.
Sales personnel and sales organizations are frequently rewarded based on immediate sales performance. Poorly structured sales incentives can create incentives for sales that are not in the best long-term interests of the customer or the firm and a sales force that relies heavily on price discounting to make sales. In contrast, the incentives for the marketing organizations are often not tied directly or indirectly to any financial performance metrics and marketing activities are viewed as a cost to be minimized. It is easy to see how marketing and sales organizations can be misaligned and in conflict. When there is misalignment even something as seemingly simple as the definition of a good prospect may be different. In the marketer’s view, a qualified prospect is someone who fits the target market, even if they are not an immediate buyer. But for sales, a qualified prospect is someone who is ready to purchase now. But such outcomes are not inevitable.
The key to avoiding dysfunctional outcomes and to optimizing the joint performance of marketing and sales is recognition that sales and marketing actually share a great deal in common that sets them apart from other parts of the organization. In all organizations, sales and marketing see the world from the outside-in. Both functions spend a great deal time with the most important people outside of the firm – customers. Both functions know that the only source of sales, and hence, the financial performance of the firm is customers. Each function has a strong motivation to build powerful customer-focused teams and to partner with one another to serve customers well in the short and long term. How does the firm turn these shared characteristics into advantage?
A good place to start is by ensuring that each function understands the other.
New hires in marketing should spend some time in the field with sales to get a first hand look at customers and the sales process. Such experience will also create an appreciation for how difficult the job of a sales person is. Sales personnel need to spend time in marketing to obtain an appreciation of the larger served market and how individual customers fit within the portfolio of customers and markets served by the firm. This experience can also help the salesperson recognize that some customers are more valuable than others, even if that value is not immediately realized, and that there are tools other than price that can help close a sale. Another successful approach is to ensure that marketing and sales work together rather than independently of one another to identify new customers, obtain repeat purchases from existing customers, and increase share of wallet by selling more things to existing customers.
Marketing, or at least the work of marketing, should prepare sales personnel for every sales call. Sales personnel need to provide feedback to marketing about what worked and did not work and why. The identity of the brand needs to be shared and articulated clearly by both functions. In short, there should be an on-going dialog between the two functions with each contributing based on its unique expertise and perspective. Such outcomes do not happen by accident. There are powerful forces in organizations that can pull functions apart. However, senior management (the CEO and C-Suite team) can overcome these forces and facilitate a powerful synergy between the firm’s consumer-centric organizations.
Contributed to Branding Strategy Insider by: Dr. David Stewart, Emeritus Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions.
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