This week Richard Eppel and I published a white paper to shed light on the impact that cross-functional processes and behaviors have on the efficiency and effectiveness of the sales team. “The Internal Forces that Empower or Impair Sales” helps the sales executive build a business case for improving culture and processes, including calculating the hard and soft costs associated with misalignment.
The timing of the white paper is not coincidental. The books just closed on the first quarter of 2011. How are you feeling about the company’s revenue performance? If you are responsible for the revenue number, either as the company’s head of sales or as its CEO, are you totally satisfied that your revenue engine operated at peak performance? Or, are you frustrated that the entire organization wasn’t more effective and efficient at creating revenue growth?
Did the VP of Sales have to spend more time campaigning inside the company for better processes and support than he or she spent in the field with prospects and customers? If so, this is a warning sign that departments upstream from Sales—Marketing, Product Development, Operations, and Accounting—are not well-aligned with Sales and with the customer.
If you sense that your revenue engine is under-performing and believe that aligning Marketing and Sales will lead to the necessary transformation you might next ask when is the best time to launch an alignment initiative.
Fair enough question and I’ll provide some ideas beyond the obvious answer of, “right now”!
Aligning the Marketing function and the Sales function to the buyers’ journey and to a single, measurable revenue-generation plan is frequently the transformation that leads to breakthroughs in revenue growth and revenue-generation efficiency. Here are several events that usually trigger a decision by top management to look for ways to improve the combined performance of Marketing and Sales.
Revenue growth has been stalled for 2 or more of the past 4 fiscal quarters.
Margin has been shrinking due to inefficiencies in the lead cycle and sales cycle.
New CEO, new head of Marketing or new head of Sales comes on board.
Forecast accuracy has become a joke.
A mature company in a mature market is running out of ideas to improve organic growth.
A company is entering a very new market, or launching a major new product line, or forming a new business unit.
Company embarks on new sales strategy such as adopting a 2-tier channel model versus a direct channel model.
A significant strategic relationship is formed with another company involving expectations of incremental revenue growth driven by collaborative marketing and sales.
It’s time for annual planning and budgeting.
A competitor is eating your lunch.
As I look back on the list it’s clear to me that if one isn’t experiencing at least two of the events on the list right now, you’re probably on sabbatical. Therefore, the point is clear: get the alignment initiative in motion right away. The sooner that you can close the gap between your company’s strategy and revenue results the better.
If your CEO, head of marketing, and head of sales can all agree that the following information is known than step to the head of the class. However, I suspect that you won’t pass the test, meaning your company is like 90% of other B2B companies that are:
Struggling to align marketing and sales,
Struggling to hit their revenue numbers,
Struggling to develop a believable plan and budget for 2010,
Struggling to achieve a comfortable level of transparency into the sales forecast.
Often you’ll know:
The size of your market
How much revenue you need to generate out of that market
But do you, or the team, know:
How many deals you need to close each month?
How many proposals that will take – for each month of 2010?
How about first meetings (you know the one, the “Hi, thanks for making the time, tell me about your business”)? How many do you need in month 1,2,3 and next year?
And how many leads will that take from Marketing, and how many must Sales generate itself?
How about the market? Do you know how much of that market you need, and whether (and how tightly) you can (or must) focus?
Does everyone in Sales, Marketing, Finance and Operations have the same view of these numbers? Or are there disconnects?
How do these planned numbers compare to your current numbers?
Which of these do you know, and which of them are gaps in the understanding of your funnel?
So, how well do you, and your team know all of the numbers, and what does the future hold?
You need to have a simple, single model of your demand for 2010 (and beyond), outlining
your total funnel – top to bottom.
If you’re wondering where the gaps are in your ability to plan and execute a revenue plan effectively contact me. As a certified Funnel Coach in North America for MathMarketing there are many ways I can be of service to you this year, and some are even free.
My colleagues at MathMarketing in Melbourne have a nice habit of hitting the nail on the head when it comes to discussing funnel management, revenue planning, and marketing training, which is why I boldly lifted the above (in italics) from their literature. Thank you, mates.
Do you have sufficient buyers in your funnel to achieve 2009 revenue objectives? What about your plans for 2010, 2011 and 2012? There’s a very insightful webinar on September 9 and September 10 you should consider. Plus if you attend the webinar I can offer you a free funnel audit. Details below.
Why not take just 45 minutes – in the comfort of your own office – to learn how to:
Predict – and change – the future using a simple model funnel
Use lead quality to increase profitability and marketing ROI
Use lead quality to drive your revenue objectives
Use predictive modeling to accurately forecast how many leads, meetings, proposals and deals you need to win
Use metrics to inform change
Hugh Macfarlane, MathMarketing
Jim Lenskold, Lenskold Group
9th September – US Eastern Time 3.30pm
10th September – Australian Eastern Standard Time 11.00am
Attend, and I’ll also offer you a free analysis of your current sales funnel. So, you get some action-packed insights PLUS some free consulting.
I’ll build a disarmingly clear model of your funnel that projects your growth over the next 3 years, based on your current effectiveness. The results will confront you, but also inform what you need to change if you want to see real results. We’ll present your funnel, our analysis and the identified gaps to you and your team so you can agree what needs to change.
Places are strictly limited – so please registerto reserve yours right away.
The revenue funnel isn’t the sole domain of sales or marketing. CFO’s should be as familiar with their company’s funnel structure and metrics as any sales executive or marketing executive. Here’s why.
Funnel modeling tools provide the best way for marketing, finance, and sales to talk the same language during planning and reporting.
The variables of the funnel make up the actual metrics of the revenue engine. These variables are the levers and dials over which management has control.
The funnel, over time, enables the sales forecast to be made with higher and higher degrees of accuracy.
Requests for more resources from Marketing and Sales can in part be justified or refused based on funnel economics
CFO’s should be trained in the use of sophisticated funnel modeling tools right along side their marketing and sales colleagues.
An excellent source of this training is the FunnelAcademy(tm), which includes comprehensive training on sizing a funnel and measuring progress. It also includes the most robust funnel modeling tool I’ve ever had the pleasure to use.
In case you didn’t notice your customers are buying differently today than they did last year. The differences could be subtle or obvious, but if you observe closely you’ll see that the process they follow to make a buying decision–the buyers’ journey’–has changed.
If your selling process and sales funnel structure haven’t adapted to the buyers’ journey the efficiency of your sales and marketing efforts will be down and so will the accuracy of your revenue forecast. This is what I call the new “Funnel Economics”.
Here are the major variables in a sales funnel (which I am now going to refer to as the revenue funnel because it should be co-owned by marketing and sales).
Stages of the buyers’ journey
Lag time between stages
Leakage rate at each stage
Advancement rate at each stage
Number of meetings required in each stage
Number of meetings that each sales person can expertly handle in a week
Number of available sales people
Average revenue per order
Any change to any of these variables has an impact on how many deals get closed in a period of time. The marketing and sales effort required to generate a level of revenue last year is very different from what it takes this year.
If you’re still trying to plan and forecast based on last year’s funnel structure, you’re not just flying blind you’re flying with the wrong instruments.
Reset your revenue funnel by analyzing and observing the customer’s current buying process and behaviors. Dial in the new metrics into your revenue funnel and monitor carefully over the next several months. The accuracy of your revenue projections will improve. What’s more, you’ll have a more realistic preview of what type and level of activities are necessary to achieve a certain revenue outcome.