For the last decade, there have been countless conversations, articles, blogs, conferences and conversations about the need for Sales and Marketing to be in sync. In general, I believe this to be true. However, when it comes to the timeline for building a pipeline for a direct sales organization, Sales and Marketing need to be out of sync. Let me explain.
Sales and Marketing – People Get Sales
An organization’s expectation for Sales is clear and simple—make your number, each and every quarter. It’s critical for Sales to hit their bookings number as it is directly correlated to revenue and revenue drives profitability and profitability dictates expense levels for the organization, i.e., Marketing spend. The correlation of Sales to revenue and the time lag to generate revenue is pretty well understood by most organizations. However, the same cannot be said for an organization’s understanding of Marketing.
Sales and Marketing- The Huge Rub: The Planning Process
Most organizations have an annual planning process. In F500 companies the process may start about 9 months before the beginning of the next fiscal year and in some start-ups planning might occur in the first month of the new fiscal year. In both cases, the fundamental issue is that Sales targets for the new fiscal year and lead generation are lumped together in the same planning horizon. If the average sales cycle is a day then there is not really an issue. If, the average sales cycle is 6 – 12 months, there is a huge issue and the need for Sales and Marketing to be out of sync, from a planning perspective, arises.
Sales and Marketing – Laying the Process out Graphically
For discussion purposes, let’s assume the average sales cycle is 7 months from the time the Sales organization receives a qualified opportunity (a qualified opportunity is defined here to be one that meets mutually agreed upon criteria between Sales & Marketing and it includes a Sales rep having spoken to the prospect to verify key qualification criteria). The graphic below depicts the Marketing & Sales Timeline from a signed contract to a marketing response to reveal elapsed time.
But Wait, More Time is Needed
The time to create an integrated demand creation plan plan has not been accounted for in the above model. In order to build a plan that is based on reverse engineering revenue goals it requires assumptions around bookings targets, the average selling price, the average sales cycle, geographical splits, product splits, new license revenue, maintenance revenue, installed base revenue and the number of sales reps for the time period twelve months forward. Then, the demand creation strategy must be conceived and the corresponding programs can be developed. Most likely, external resources (vendors, consultants, agencies) will be leveraged and that will require time to create budgets and to schedule resources. The net is that building this plan will require 30 – 90 days, in addition to the 9 months outlined above.
Marketing Needs a One Year Runway
With that said, it is clear that it will take approximately 10 – 12 months for Marketing to build a plan that will create a response that will yield a closed deal. Typically, more than 50% of marketing sourced opportunity will come from these types of programs and require this type of planning horizon. There will be blue birds that fall into the pipeline and close but that is not something an organization should plan the business around. Also, there are some demand creation vehicles that do not require 30 – 90 days of planning to execute and can uncover a qualified opportunity quicker. However, these programs are best left for very skilled Marketeers and the price point of these vehicles is high.
In short, when the organization is looking for Marketing to build the Sales pipeline in Q4, the Marketing strategy and program execution should have started on day 1 of Q1, if not Q4 of the prior year. Typically, Sales organizations are focused on the current and next quarter–not all Sales organizations operate this way but many do. Hence, even if Marketing and Sales are focused on the same goal (bookings), each organization has a different mindset and expectation when it comes to execution. It is the issue of elapsed time and nurturing that requires Marketing and Sales organizations to be out of sync, from a planning point of view. In order to drive long-term success, Marketing needs to educate the organization and drive the planning process, formally or informally, as it will impact the success of the function and the organization.
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