The work Marketing and Sales teams do is deeply interconnected. They need to work together to co-create value for an enterprise. As a rule, though, they’re separate functions within an organization, and, when they do work together, they don’t always get along. Sales teams, tend to believe that marketers are out of touch with what’s really going on with customers and claim that Marketing uses too much of the budget, which should go toward hiring more salespeople or paying higher sales-commissions. Marketing believes the sales force is myopic—too focused on individual customer experiences, insufficiently aware of the larger market, and blind to the future. In short, each group often undervalues the other’s contributions.
This lack of alignment ends up hurting enterprise performance. Conversely, there is no question that, when Sales and Marketing work well together, the enterprise sees substantial improvement on performance metrics: Sales cycles are shorter, market-entry costs go down, and the cost of sales is lower.
At Zamstars, we are fortunate enough to closely look at the relationships between Sales and Marketing in different industries like a real-estate company, two IT-Product companies, an apparel company, a healthcare-services company, and a cement company. Our initial hypotheses:
Different Roles for Marketing
Before we look closely at the relationships between the two groups, we need to recognize that the nature of the marketing function varies significantly from company to company.
Most small businesses (and most businesses are small in India) don’t establish a formal marketing group at all. Their marketing ideas come from managers, the sales force or advertising agencies. Such businesses equate marketing with selling; they don’t conceive marketing as a strategic differentiator. We at Zamstars disagree with this thinking. With Social Media platforms – how far from the truth can this be?
Eventually, businesses add a marketing person (or persons) to help relieve the sales force of some chores. These new staff members conduct research to calibrate the size of the market, choose the best markets and channels, and determine potential buyers’ motives and influences. They work with outside agencies on advertising and promotions. They develop collateral materials to help the sales force attract customers and close sales. And, finally, they use direct mail, telemarketing, trade shows and the recent trend of Social Media – to find and qualify leads for the sales force. Both Sales and Marketing see the marketing group as an adjunct to the sales force at this stage, and the relationship between the functions is usually positive.
As companies become larger and more successful, executives recognize that there is more to marketing than setting the four P’s: product, pricing, place, and promotion. They determine that effective marketing calls for people skilled in segmentation, targeting, and positioning. Once companies hire marketers with those skills, Marketing becomes an independent player. It also starts to compete with Sales for control and funding. While the sales mission has not changed, the marketing mission has.
Once the marketing group tackles higher-level tasks like segmentation, it starts to work more closely with other departments, particularly Strategic Planning, Product Development, Finance, and Manufacturing. The company starts to think in terms of developing brands rather than products, and brand managers become powerful players in the organization. The marketing group is no longer a humble ancillary to the sales department.
Why Can’t They Just Get Along?
There are two sources of friction between Sales and Marketing. One is economic, and the other is cultural. The economic friction is generated by the need to divide the total budget granted by senior management to support Sales and Marketing. In fact, the sales force is apt to criticize how Marketing spends money on three of the four P’s—pricing, promotion, and product. Take pricing. The marketing group is under pressure to achieve revenue goals and wants the sales force to “sell the price” as opposed to “selling through price.” The salespeople usually favor lower prices because they can sell the product more easily and because low prices give them more room to negotiate. In addition, there are organizational tensions around pricing decisions. While Marketing is responsible for setting prices and establishing promotional pricing, Sales has the final say over transactional pricing.
Promotion costs, too, are a source of friction. The marketing group needs to spend money to generate customers’ awareness of, interest in, preference for, and desire for a product. But the sales force often views the large sums spent on promotion as a waste of money.
When marketers help set the other P, the product being launched, salespeople often complain that it lacks the features, style, or quality their customers want. That’s because the sales group’s view is shaped by the needs of their individual customers. The marketing team, however, is concerned about releasing products whose features have broad appeal and conform to perceived Enterprise Strategy.
The budget for both groups also reflects which department wields more power within the organization, a significant factor. Chief Executives tend to favor the sales groups when setting budgets. Sales as more tangible, with more short-run impact, and their contributions to the bottom line are also easier to judge than the marketers’ contributions.
The cultural conflict between Sales and Marketing is, if anything, even more entrenched than the economic conflict. This is true in part because the two functions attract different types of people who spend their time in very different ways. Marketers, unlike Sales are highly analytical, data oriented, and project focused. They’re all about building competitive advantage for the future. They judge their projects’ performance with a cold eye, and they’re ruthless with a failed initiative. However, that performance focus doesn’t always look like action to their colleagues in Sales because it all happens behind a desk rather than out in the field. Salespeople, in contrast, spend their time talking to existing and potential customers. They’re skilled relationship builders; they’re not only savvy about customers’ willingness to buy but also attuned to which product features will fly and which will die. They want to keep moving. They’re used to rejection, and it doesn’t depress them. They live for closing a sale.
If the organization doesn’t align its incentives carefully, the two groups also run into conflicts about seemingly simple things—for instance, which products to focus on selling. Salespeople may push products with lower margins that satisfy quota goals, while Marketing wants them to sell products with higher profit margins and more promising future. More broadly speaking, the two groups’ performance is judged very differently. Salespeople make a living by closing sales, full stop. It’s easy to see who (and what) is successful—almost immediately. But the marketing budget is devoted to programs, not people, and it takes much longer to know whether a program has helped create long-term competitive advantages for the organization.
Vish Sivaswamy
Coach @ Zamstars
Image credits – myonlinetoolbox.com & motivatedpublishingstudios.com
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