Imagine a world where 50 percent of your new business revenue comes from inbound lead conversion. Your prospects can find information on demand, and your customers’ online/offline experience is completely consistent. However, chances are, your organization does not resemble this picture, and is instead burning through millions in profitable revenue.
Research by the Miller Heiman Group suggests less than 30 percent of business to business (B2B) sales and marketing executives surveyed had a common definition of a lead, meaning their sales and marketing organizations are NOT aligned. If your sales and marketing functions are not aligned, odds are the rest of the customer facing teams aren’t in alignment – creating a significant impact on your bottom line.
Point B estimates that misalignment not only impacts net revenue but also drives up expenses. An aligned sales and marketing process could drive up to 10 percent in top line revenue and reduce SG&A operating expenses conservatively by 5 percent. Why the drastic shift?
To put this into perspective, a company with $500 million in top line revenue and SG&A at 25 percent the total impact would be:
Top Line Revenue
Expense Upside (5%)
Revenue Opportunity (10%)
The evolving buyer’s journey
Buyer expectations and demands have rapidly evolved. Recent research indicates the changing nature of how they want to engage with B2B brands:
- 67 percent of the buyer’s journey is now done digitally
- 80 percent of business decision makers prefer to get company information from a series of articles versus an advertisement.
- Only 2 percent of cold calls result in an appointment
- 82 percent of B2B decision makers think sales reps are unprepared.
As the research reveals, B2B buyers have different expectations as part of the buyer’s journey. Potential buyers don’t want to be sold, they want to be helped. They expect a combination of subject matter expert, industry expert, problem solver and concierge. As you consider these statistics, think about your own channels:
- Are your website and social channels allowing your prospects to find information easily or are you making them call you?
- Cold calling is really expensive and highly inefficient. If you are generating more than 15 percent of your new business revenue through pure cold calling or appointment setting your cost of sales is much higher than it needs to be.
Creating a customer-centric organization
Most organizations take a vendor-centric approach to sales and marketing, asking: “How do I optimize my sales and marketing processes?” They should instead evolve to become a customer-centric organization that asks: “How can I align the buying process for my potential customers?”
To become a customer-centric organization, we recommend a four-prong approach to driving alignment:
1. Customer Alignment. Any alignment work needs to start with the customer. You may think you understand your customer but if you don’t have conversations with them, you probably don’t.
- Conduct a customer experience analysis. Ask recent customers to describe their overall buying experience and onboarding process, from first engagement through delivery. The key is talk to them live and not through email or web surveys. You can use a third party to conduct the interviews or a neutral internal resource.
- Conduct won/loss analysis. Interview both new customers and prospects that didn’t buy from you. While the reasons they chose to buy from you may be surprising, the real insights lie in the reasons your prospects did not buy.
Impact: This work will drive top line revenue growth, but the customer experience
2. Messaging and Positioning Alignment. Ensure your go-to-market (GTM) messaging is consistent and aligned with what your customers and prospects are telling you.
- Value Driver Framework. Identify your differentiators and value drivers for each of your products or services based on input from the customer insight analysis, your leadership and frontline employees. This will become your alignment around messaging and positioning, and should be based on the value you are providing the customer with your offerings. It should also include competitive differentiation.
- Messaging and positioning audit. Examine your online and offline customer touchpoints to identify any inconsistencies when compared to the updated Value Driver Framework. If messaging and positioning are not consistent, customers are 15-25 percent less likely to buy from you.
Impact: This exercise will predominately drive top line revenue growth. It will improve your lead conversion rate and minimize dropout of prospects in the sales process.
3. Investment Analysis. Calculate each of these key metrics to understand if they align with your business model and identify areas of opportunity.
- Cost of Acquiring Customers (CAC). Many companies only calculate the cost of sale but fail to calculate the total cost to acquire a customer. This would include the demand generation portion of marketing, inbound and outbound lead gen reps plus sales reps. Don’t forget to include technology and leadership in these functions.
- Customer Lifetime Value (CLTV). This number will drive how much you can spend to acquire new customers (CAC). Depending on the financial goals of your company, it will help you identify areas to reduce acquisition costs and improve profit margins.
- Cost to Retain a Customer (CRC). Often, an overlooked key metric, this allows you to understand how much it costs to retain your customers. You should include onboarding, customer success/account management, customer service, leadership and technology in these calculations.
Impact: This area can have the greatest financial impact. The older, more mature your organization is, the more likely you are to have misalignment not only with process but operating budgets and shared objectives.
4. Process and Asset Alignment. Based on the results of the financial analysis, it will indicate where you may have too many assets and areas that are underutilized.
- Workflow alignment with the buyer journey. The execution begins by mapping your buyers’ journey, followed by aligning your internal workflows with the buyers’ journey. This will trigger the need to update business and technology requirements.
- Asset allocation and coverage models. Once you have updated your internal workflows determine whether you have the proper resource allocation in each of functional areas. We typically find with older and more mature B2B organizations they under resourced in demand generation and over resourced in the direct sales organization.
Impact: Execution is critical in this step. Too many companies will do the analysis but are unable to execute. The biggest stumbling block can be the functional silos that don’t want to cooperate. This has to be a top-down initiative that is driven by C-suite or the board of directors.
The Bottom Line
Failure to make aligning your GTM organization a strategic priority will have a negative impact on revenue and SG&A expense will continue to accelerate. Aligning your GTM organization will protect your market share and prevent newer competitors from invading your space.