Have you intentionally linked your b2b marketing, sales, and strategy?
If not, don’t worry. You’re in good company.
Most companies struggle with this according to the Frank Cespedes, author, and Senior Lecturer at Harvard Business School, “selling [or marketing,] no matter how clever and creative can’t generate good financial returns unless it’s connected to strategy.”
I met Frank while we both spoke at an event in Santiago, Chile. We had a memorable time sharing ideas, and research. I thought Frank had a practical approach to aligning sales and marketing. So, I reached out to him and interviewed him about what he’s learned through his research for his most recent book Aligning Strategy and Sales (Harvard Business Review Press).
Writers Note: I edited this interview for length and grammar only.
Brian: What inspired you to write about Aligning Strategy and Sales?
Frank: Despite decades of attention to so-called strategic planning, there is remarkably little research about how to link strategy with the nitty gritty of field execution especially sales efforts [and marketing].
American companies annually spend about $900 billion every year on sales efforts. That’s not marketing. That’s sales compensation, the travel and entertainment expenses, incentives, the infrastructure, etc. To put that in perspective, Brian, that amount is more than three times what companies spend on all media advertising– Super Bowls, everything else. It’s more than about 40 times what they spend on digital marketing and it’s more than 50 times what they currently spend on social media.
That’s a lot of managerial time and effort as well as money, and the reality is that sales forces are, by far, the biggest and most important part of strategy execution for most firms, especially in B2B markets.
How did you develop this idea?
I was an academic at Harvard Business School for about 11 years working my way up the hierarchy and always was doing research in sales related areas. My research started with distribution channels, B2B distribution channels, morphed into sales.
Then I ran a business for 12 years. And then I came back and said, ‘I’m teaching strategy. I know something about sales. Let me see what people have written about the connections between strategy and sales.’
What I found was a gap: lots of books and articles about strategy, and countless books and articles and training programs about selling, but virtually nothing about connecting these activities. So I figured two things.
The world does not need another book about strategy. And I don’t think, to be blunt, the world needs yet another selling methodology, but there just isn’t much if anything about linking the two and that was the gap that I set out to address, practically and based on the research about these topics, not one-off anecdotes.
Brian: If you had only three questions you could ask executives to diagnose sales and strategy alignment what would those be?
Question 1. Do you have a strategy and can you articulate it?
Most companies and most senior executives, confuse strategy with other important but separate things like vision or mission or purpose or values. Those are important, but they are not the same as a strategy.
A strategy at a minimum always has to pass the following three tests:
- External consistency. In other words, does our approach deal with the threats and the opportunities in the external market today, not yesterday?
- Internal consistency. How do we put things together in sales, in marketing, in operations so that two plus two equals at least four? It’s internally consistent but also if we have some competitive advantage, it’s going to take longer or cost more for competitors to imitate us.
- Dynamic consistency. Every strategy has a sell-by date. No strategy is forever. It’s very unlikely that any company is going to get an e-mail from the marketplace that says it’s time to change. And it’s not the responsibility of the market to be kind to any company and its strategy.
It’s the responsibility of managers to understand what’s going on in their market and adapt. That’s what I mean by dynamic consistency. If you have a strategy, you should be able to articulate its core components—Objectives, Scope, Advantage–in 50 words or less.
Question 2. Are we clear about the market segments where we do and don’t play and what are the buying processes?
These questions are fundamental to making decisions about Scope in any strategy. And in those areas where we choose to play what is it that we do or can do that, we believe us some advantage? You have to be clear about that if you’re going to do effective selling because where you play drives the buying processes that your sales people will encounter, and again this is central. Value is created or destroyed in actual interactions with customers and their buying processes, not in meetings or planning documents.
Question 3. Do we know what the important sales tasks our sales people must do to succeed in the marketplace are?
Sales tasks are very actionable things. They ultimately tell us where we should and should not spend, money, time, effort, investments in what areas of the of the conversion process in the sales funnel. And the critical tasks for any company are determined by their strategy and what that strategy means for the segments and buyers the sales force deals with; a generic selling methodology does NOT determine the tasks. This is important because, despite what most sales trainers still preach about selling and sales people, the fact is that the most important thing about selling is the buyer and their buying processes, not the personality or pitch of the seller.
I think my three questions are relatively simple, but I believe that they’re fundamental. Do you have a strategy? Are we clear about where we play and not play in the buying processes in those areas where we play? And what are the important sales tasks?
Brian: What are your best tips for getting sales and b2b marketing aligned around strategy?
Frank: Well, I think the questions I just articulated in answer to your earlier question are also relevant here because again there is no such thing as effective marketing or effective selling if it’s not connected to strategic goals and business objectives.
And many, many marketing and sales managers are very often either unaware or indifferent to the strategic and financial goals and objectives in their companies. They need to align with those goals and, conversely, they need to speak up and earn a place at the C-Suite table. Then, they have to be accountable.
Using the Seller’s Compass
Let me just say one thing about marketing, one thing about sales. The figure “Seller’s Compass” helps explain the process of aligning sales, marketing, and strategy (used with permission).
In marketing, I think your work [Lead Generation for the Complex Sale] is very relevant to lead generation. We all know the data. This data has been remarkably consistent for years, so there’s obviously something systemic going on what many people call the lead generation black hole.
How many leads from marketing are used? Lots of money is wasted, and that’s the right verb. It’s wasted on social media and other chic tools, and many marketers are ironically proud of that. They’re proud of the lack of metrics currently.
I wrote something about this last year in Harvard Business Review, Is Social Media Actually Helping Your Company’s Bottom Line? That gets us right back to one of the core aspects of marketing in many businesses, at least in relationship to sales and lead generation: what’s a good lead and are we clear about that? No company or marketing manager or sales manager can correctly answer that question independent of their firm’s business strategy.
That strategy helps to determine the necessary sales tasks (including relevant and efficient lead generation) and, as the “Seller’s Compass” figure indicates, the job in sales management is to get actual selling behaviors to align with required sales tasks.
Three Levers to Align B2B Selling Behaviors with Tasks
In turn, managers basically have three levers to do that: People (hiring, training, development), Sales Force Control Systems (including organization, metrics, and compensation plans), and Sales Force Environment (how sales managers manage and apply the control systems, including performance reviews and links with other functions in the company).
On sales, I think what they need to talk about compensation and incentives. The data has been remarkably consistent, at least during my lifetime. According to the surveys, once we get beyond fixed salary, about 70% of sales comp plans base incentives on sales volume. In other words, based on [sales] volume regardless of the profit margin of that sale or the cost to serve that customer.
When you have an incentive system like that, either the implicit or explicit message to the sales force is that any customer is a good customer. The message is a variation on the old biblical aphorism, “Go forth and multiply.” That’s what [sales] people do. They go forth, and they bring back a diverse set of customers that have very, very different implications for product, for the selling cycle, for post-sale service, for capacity utilization and operations, for the cash flow profile of the company.
All of this flows ultimately in any business from what sales people sell at what price and how fast. At some point, it doesn’t matter what senior executives think their strategy is. The de facto strategy of the company is those aggregate sales that are coming in. Conversely, those executives should continually ask, Why do we pay people the way we do and do we understand the daily behavioral implications of our comp system?
Again, companies spend massively more on Sales than Marketing and, as Mark Twain once said, “If you put a lot of eggs in one basket, then keep your eyes on that basket!” The most pressing things executives need to talk about for [aligning] business strategy with daily sales efforts are those questions I mentioned earlier and, in most firms, there are vast areas for improvement in all of those topics.