Professional Documents
Culture Documents
should go toward hiring more salespeople or paying the • Companies can take practical steps to move the two
sales reps higher commissions. More broadly, sales depart- functions into a more productive relationship, once
ments tend to believe that marketers are out of touch they’ve established where the groups are starting from.
with what’s really going on with customers. Marketing be-
lieves the sales force is myopic–too focused on individual
customer experiences, insufficiently aware of the larger Different Roles for Marketing
B
market, and blind to the future. In short, each group often efore we look closely at the relationship between
undervalues the other’s contributions. the two groups, we need to recognize that the na-
This lack of alignment ends up hurting corporate per- ture of the marketing function varies significantly
formance. Time and again, during research and consult- from company to company.
ing assignments, we’ve seen both groups stumble (and Most small businesses (and most businesses are small)
the organization suffer) because they were out of sync. don’t establish a formal marketing group at all. Their mar-
Conversely, there is no question that, when Sales and Mar- keting ideas come from managers, the sales force, or an
keting work well together, companies see substantial im- advertising agency. Such businesses equate marketing
provement on important performance metrics: Sales cy- with selling; they don’t conceive of marketing as a broader
cles are shorter, market-entry costs go down, and the cost way to position their firms.
of sales is lower. That’s what happened when IBM inte- Eventually, successful small businesses add a marketing
grated its sales and marketing groups to create a new func- person (or persons) to help relieve the sales force of some
tion called Channel Enablement. Before the groups were chores. These new staff members conduct research to cal-
integrated, IBM senior executives Anil Menon and Dan ibrate the size of the market, choose the best markets and
Pelino told us, Sales and Marketing operated independent channels, and determine potential buyers’ motives and in-
of one another. Salespeople worried only about fulfilling fluences. They work with outside agencies on advertising
product demand, not creating it. Marketers failed to link and promotions. They develop collateral materials to help
advertising dollars spent to actual sales made, so Sales ob- the sales force attract customers and close sales. And,
viously couldn’t see the value of marketing efforts. And, finally, they use direct mail, telemarketing, and trade
because the groups were poorly coordinated, Marketing’s shows to find and qualify leads for the sales force. Both
new product announcements often came at a time when Sales and Marketing see the marketing group as an ad-
Sales was not prepared to capitalize on them. junct to the sales force at this stage, and the relationship
Curious about this kind of disconnect between Sales between the functions is usually positive.
and Marketing, we conducted a study to identify best As companies become larger and more successful, exec-
practices that could help enhance the joint performance utives recognize that there is more to marketing than set-
and overall contributions of these two functions. We in- ting the four P’s: product, pricing, place, and promotion.
terviewed pairs of chief marketing officers and sales vice They determine that effective marketing calls for people
presidents to capture their perspectives. We looked in skilled in segmentation, targeting, and positioning. Once
depth at the relationship between Sales and Marketing companies hire marketers with those skills, Marketing
in a heavy equipment company, a materials company, becomes an independent player. It also starts to compete
a financial services firm, a medical systems company, an with Sales for funding. While the sales mission has not
energy company, an insurance company, two high-tech changed, the marketing mission has. Disagreements arise.
electronic products companies, and an airline. Among our Each function takes on tasks it believes the other should
findings: be doing but isn’t. All too often, organizations find that
• The marketing function takes different forms in differ- they have a marketing function inside Sales, and a sales
ent companies at different product life-cycle stages – function inside Marketing. At this stage, the salespeople
all of which can deeply affect the relationship between wish that the marketers would worry about future oppor-
Sales and Marketing. tunities (long-term strategy) and leave the current oppor-
• The strains between Sales and Marketing fall into two tunities (individual and group sales) to them.
main categories: economic and cultural. Once the marketing group tackles higher-level tasks
• It’s not difficult for companies to assess the quality of like segmentation, it starts to work more closely with
the working relationship between Sales and Marketing. other departments, particularly Strategic Planning,
(This article includes a diagnostic tool for doing so.) Product Development, Finance, and Manufacturing. The
Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at Northwestern University’s
Kellogg School of Management in Evanston, Illinois. This is his 11th article for HBR. Neil Rackham is a visiting professor at
the University of Portsmouth in England, the author of Spin Selling (McGraw-Hill, 1988), and a coauthor of Rethinking the
Sales Force (McGraw-Hill, 1999). Suj Krishnaswamy (sujk@stinsights.com) is the founder and a principal of Stinsights
(www.stinsights.com), a Chicago-based business strategy and market research firm specializing in sales–marketing interface.
company starts to think in terms of developing brands cause the sales group’s worldview is shaped by the needs
rather than products, and brand managers become pow- of its individual customers. The marketing team, how-
erful players in the organization. The marketing group ever, is concerned about releasing products whose fea-
is no longer a humble ancillary to the sales department. tures have broad appeal.
It sets its sights much higher: The marketers believe it’s The budget for both groups also reflects which depart-
essential to transform the organization into a “marketing- ment wields more power within the organization, a signif-
led” company. As they introduce this rhetoric, others in icant factor. CEOs tend to favor the sales group when set-
the firm–including the sales group–question whether the ting budgets. One chief executive told us, “Why should
marketers have the competencies, experience, and under- I invest in more marketing when I can get better results
standing to lead the organization. by hiring more salespeople?”CEOs often see sales as more
While Marketing increases its influence within sepa-
rate business units, it rarely becomes a major force at the
corporate level. There are exceptions: Citigroup, Coca-
Cola, General Electric, IBM, and Microsoft each have a
marketing head at the corporate level. And Marketing is
more apt to drive company strategy in major packaged-
goods companies such as General Mills, Kraft, and Proc-
ter & Gamble. Even then, though, during economic
downturns, Marketing is more closely questioned – and
its workforce more likely to be cut – than Sales.
T
here 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 se-
nior 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, promo-
tion, 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 nego-
tiate. In addition, there are organizational tensions
around pricing decisions. While Marketing is responsi-
july–august 2006 71
SPECIAL DOUBLE ISSUE: SALES
G
iven the potential economic and cultural con- boundaries between the two exist, but they’re flexible.
flicts, one would expect some strains to develop The groups engage in joint planning and training. The
between the two groups. And, indeed, some level sales group understands and uses marketing terminology
of dysfunction usually does exist, even in cases such as “value proposition” and “brand image.” Marketers
where the heads of Sales and Marketing are friendly. The confer with salespeople on important accounts. They play
sales and marketing departments in the companies we a role in transactional, or commodity, sales as well.
studied exhibit four types of relationships. The relation- Integrated. When Sales and Marketing are fully inte-
ships change as the companies’ marketing and sales func- grated, boundaries become blurred. Both groups redesign
tions mature – the groups move from being unaligned the relationship to share structures, systems, and rewards.
(and often conflicted) to being fully integrated (and usu- Marketing – and to a lesser degree Sales – begins to focus
ally conflict-free) – though we’ve seen only a few cases on strategic, forward-thinking types of tasks (market sens-
where the two functions are fully integrated. ing, for instance) and sometimes splits into upstream and
Undefined. When the relationship is undefined, Sales downstream groups. Marketers are deeply embedded in
and Marketing have grown independently; each is preoc- the management of key accounts. The two groups develop
cupied largely with its own tasks and agendas. Each group and implement shared metrics. Budgeting becomes more
doesn’t know much about what the other is up to – until flexible and less contentious. A “rise or fall together” cul-
a conflict arises. Meetings between the two, which are ad ture develops.
hoc, are likely to be devoted to conflict resolution rather We designed an assessment tool that can help organi-
than proactive cooperation. zations gauge the relationship between their sales and
Defined. In a defined relationship, the two groups set marketing departments. (See the exhibit “How Well Do
up processes – and rules – to prevent disputes. There’s a Sales and Marketing Work Together?”) We originally
“good fences make good neighbors”orientation; the mar- developed this instrument to help us understand what
keters and salespeople know who is supposed to do what, we were seeing in our research, but the executives we
and they stick to their own tasks for the most part. The were studying quickly appropriated it for their own use.
groups start to build a common language in potentially Without an objective tool of this kind, it’s very difficult
contentious areas, such as “How do we define a lead?” for managers to judge their cultures and their working
Meetings become more reflective; people raise questions environments.
Strongly Strongly
Disagree Disagree Neither Agree Agree
1 2 3 4 5
+ + + + = Total
july–august 2006 73
SPECIAL DOUBLE ISSUE: SALES
O
nce an organization understands the nature of manager whenever the sales opportunity is above $2 mil-
the relationship between its marketing and sales lion,” or “We will not go to print on any marketing collat-
groups, senior managers may wish to create a eral until salespeople have reviewed it,”or “Marketing will
stronger alignment between the two. (It’s not al- be invited to the top ten critical account reviews.” Busi-
ways necessary, however. The exhibit “Do We Need to Be nesses also need to establish an up-to-date, user-friendly
More Aligned?”can help organizations decide whether to “who to call” database. People get frustrated – and they
make a change.) waste time – searching in the wrong places for help.
Moving from undefined to defined. If the business Create joint assignments; rotate jobs. As your functions
unit or company is small, members of Sales and Market- become better aligned, it’s important to create opportu-
ing may enjoy good, informal relationships that needn’t nities for marketers and salespeople to work together.
be disturbed. This is especially true if Marketing’s role is This will make them more familiar with each other’s ways
primarily to support the sales force. However, senior man- of thinking and acting. It’s useful for marketers, particu-
agers should intervene if conflicts arise regularly. As we larly brand managers and researchers, to occasionally go
noted earlier, this generally happens because the groups along on sales calls. They should get involved with devel-
are competing for scarce resources and because their re- oping alternate solutions for customers, early in the sales
spective roles haven’t been clearly defined. At this stage, process. And they should also sit in on important account-
managers need to create clear rules of engagement, in- planning sessions. Salespeople, in turn, should help to
cluding handoff points for important tasks like following develop marketing plans and should sit in on product-
up on sales leads. planning reviews. They should preview ad and sales-
Moving from defined to aligned. The defined state can promotion campaigns. They should share their deep
be comfortable for both parties. “It may not be perfect,” knowledge about customers’ purchasing habits. Jointly,
one VP of sales told us,“but it’s a whole lot better than it marketers and salespeople should generate a playbook
was.” Staying at this level won’t work, though, if your in- for expanding business with the top ten accounts in each
dustry is changing in significant ways. If the market is be- market segment. They should also plan events and confer-
coming commoditized, for example, a traditional sales force ences together.
may become costly. Or if the market is moving toward cus- Appoint a liaison from Marketing to work with the sales
tomization, the sales force will need to upgrade its skills. force. The liaison needs to be someone both groups trust.
The heads of Sales and Marketing may want to build He or she helps to resolve conflicts and shares with each
a more aligned relationship and jointly add new skills. To group the tacit knowledge from the other group. It’s im-
move from a defined relationship to an aligned one: portant not to micromanage the liaison’s activities. One of
Encourage disciplined communication. When it comes the Marketing respondents in our study described the li-
to improving relations between any two functions, the aison’s role this way: “This is a person who lives with the
first step inevitably involves improving communication. sales force. He goes to the staff meetings, he goes to the
But it’s not as simple as just increasing communication be- client meetings, and he goes to the client strategy meet-
tween two groups. More communication is expensive. It ings. He doesn’t develop product; he comes back and says,
eats up time, and it prolongs decision making. We advo- ‘Here’s what this market needs. Here’s what’s emerging,’
cate instead for more disciplined communication. Hold and then he works hand in hand with the salesperson and
regular meetings between Sales and Marketing (at least the key customer to develop products.”
quarterly, perhaps bimonthly or monthly). Make sure Colocate marketers and salespeople. It’s an old and sim-
that major opportunities, as well as any problems, are on ple truth that when people are physically close, they will
the agenda. Focus the discussions on action items that interact more often and are more likely to work well to-
will resolve problems, and perhaps even create opportu- gether. One bank we studied located its sales and market-
nities, by the next meeting. Salespeople and marketers ing functions in an empty shopping mall: Different
need to know when and with whom they should commu- groups and teams within Sales and Marketing were each
allocated a storefront. Particularly in the early stages of ple have an incentive to spend their precious time sharing
moving functions toward a more closely aligned relation- customer information with Marketing. They have quotas
ship, this kind of proximity is a big advantage. Most com- to reach, after all, and limited time in which to meet and
panies, though, centralize their marketing function, while sell to customers. To more closely align Sales and Market-
the members of their sales group remain geographically ing, senior managers need to ensure that the sales force’s
dispersed. Such organizations need to work harder to fa- experience can be tapped with a minimum of disruption.
cilitate communication between Sales and Marketing and For instance, Marketing can ask the Sales VP to summa-
to create shared work. rize any sales force insights for the month or the quarter.
Improve sales force feedback. Marketers commonly Or Marketing can design shorter information forms, re-
complain that salespeople are too busy to share their ex- view call reports and CRM data independently, or pay
periences, ideas, and insights. Indeed, very few salespeo- salespeople to make themselves available to interviewers
Don’t make any The company is small. The company’s products The company lacks a culture
changes if… and services are fairly cut- of shared responsibility.
The company has good and-dried.
informal relationships. Sales and Marketing report
Traditional marketing and separately.
Marketing is still a sales sales roles work in this
support function. market. The sales cycle is fairly short.
Tighten the Conflicts are evident between Even with careful definition A common process or
relationship the two functions. of roles, there’s duplication of business funnel can be
effort between the functions; created for managing
july–august 2006 75
SPECIAL DOUBLE ISSUE: SALES
from the marketing group and to summarize what their changing the culture to support integration. The best ex-
sales colleagues are thinking about. amples of integration we found were in companies that
Moving from aligned to integrated. Most organiza- already emphasized shared responsibility and disciplined
tions will function well when Sales and Marketing are planning; that were metrics driven; that tied rewards to
aligned. This is especially true if the sales cycle is rela- results; and that were managed through systems and pro-
tively short, the sales process is fairly straightforward, and cesses. To move from an aligned relationship to an inte-
the company doesn’t have a strong culture of shared re- grated one:
sponsibility. In complicated or quickly changing situa- Appoint a chief revenue (or customer) officer. The main
tions, there are good reasons to move Sales and Market- rationale for integrating Sales and Marketing is that the
ing into an integrated relationship. (The exhibit “Sales two functions have a common goal: the generation of
and Marketing Integration Checklist” outlines the issues profitable and increasing revenue. It is logical to put both
you’ll want to think through.) This means integrating functions under one C-level executive. Companies such as
such straightforward activities as planning, target setting, Campbell’s Soup, Coca-Cola, and FedEx have a chief rev-
customer assessment, and value-proposition develop- enue officer (CRO) who is responsible for planning for
ment. It’s tougher, though, to integrate the two groups’ and delivering the revenue needed to meet corporate ob-
processes and systems; these must be replaced with com- jectives. The CRO needs control over the forces affecting
mon processes, metrics, and reward systems. Organiza- revenue – specifically, marketing, sales, service, and pric-
tions need to develop shared databases, as well as mecha- ing. This manager could also be called the chief customer
nisms for continuous improvement. Hardest of all is officer (CCO), a title used in such companies as Kellogg;
Jointly involve Sales and Implement systems to Emphasize shared Split Marketing into
Marketing in product track and manage Sales responsibility for upstream and down-
planning and in setting and Marketing’s joint results between the stream teams.
sales targets. activities. different divisions of
the organization. Hire a chief revenue
Jointly involve Sales Utilize and regularly up- officer.
and Marketing in gener- date shared databases. Emphasize metrics.
ating value propositions
for different market Establish common met- Tie rewards to results.
segments. rics for evaluating the
overall success of Sales Enforce divisions’ con-
Jointly involve Sales and and Marketing efforts. formity to systems and
Marketing in assessing processes.
customer needs. Create reward systems
to laud successful efforts
Jointly involve Sales and by Sales and Marketing.
Marketing in signing off
on advertising materials. Mandate that teams
from Sales and Market-
Jointly involve Sales and ing meet periodically
Marketing in analyzing to review and improve
the top opportunities by relations.
segment.
Require Sales and Mar-
keting heads to attend
each other’s budget
reviews with the CEO.
its own funnel for the selling tasks that happen during SALES
the first two steps. (These include prospecting, defining customer
needs, preparing and presenting proposals, negotiating loyalty
contracts, and implementing the sale.) Apart from some
lead generation in the prospecting stage, Marketing all customer
advocacy
too often plays no role in these tasks.
Sears, Roebuck; and United Air Lines. The CCO may be tem and into sales forecasting and account-review pro-
more of a customer ombudsman or customer advocate in cesses–form an increasingly important backbone for sales
some companies; but the title can also signal an execu- management. Unfortunately, Marketing often plays no
tive’s broader responsibility for revenue management. role in these processes. Some companies in our study, how-
Define the steps in the marketing and sales funnels. Sales ever, have integrated Marketing into the sales funnel. Dur-
and Marketing are responsible for a sequence of activi- ing prospecting and qualifying, for instance, Marketing
ties and events (sometimes called a funnel) that leads cus- helps Sales to create common standards for leads and op-
tomers toward purchases and, hopefully, ongoing rela- portunities. During the needs-definition stage, Marketing
tionships. Such funnels can be described from the helps Sales develop value propositions. In the solution-
customer’s perspective or from the seller’s perspective. development phase, Marketing provides “solution collat-
july–august 2006 77
SPECIAL DOUBLE ISSUE: SALES
case histories, and sales tools. They help salespeople de- the number of new market segments they discover? The
velop and qualify leads. The downstream team uses market metrics will vary according to the type of marketing job.
research and feedback from the sales reps to help sell exist- Senior managers need to establish different measures for
ing products in new market segments, to create new mes- brand managers, market researchers, marketing informa-
sages, and to design better sales tools. Upstream marketers tion systems managers, advertising managers, sales pro-
engage in customer sensing. That is, they monitor the voice motion managers, market segment managers, and prod-
of the customer and develop a long view of the company’s uct managers. It’s easier to construct a set of metrics if the
business opportunities and threats. The upstream team marketers’ purposes and tasks are clearly outlined. Still,
shares its insights with senior managers and product devel- given that upstream marketers are more engaged in sow-
opers – and it participates in product development. ing the seeds for a better future than in helping to reap
Set shared revenue targets and reward systems. The inte- the current harvest, the metrics used to judge their perfor-
grated organization will not succeed unless Sales and mance necessarily become softer and more judgmental.
Marketing share responsibility for revenue objectives. Obviously, the difference between judging current and
One marketing manager told us, “I’m going to use what- future outcomes makes it more complicated for compa-
ever tools I need to make sure Sales is effective, because, nies to develop common metrics for Sales and Marketing.
at the end of the day, I’m judged on that sales target as Upstream marketers in particular need to be assessed
well.” One of the barriers to shared objectives, however, is according to what they deliver over a longer period.
the thorny issue of shared rewards. Salespeople histori- Salespeople, meanwhile, are in the business of converting
cally work on commission, and marketers don’t. To suc- potential demand into today’s sales. As the working rela-
cessfully integrate the two functions, management will tionship between Sales and Marketing becomes more in-
need to review the overall compensation policy. teractive and interdependent, the integrated organization
Integrate Sales and Marketing metrics. The need for will continue to wrestle with this difficult, but surely not
common metrics becomes critical as Marketing becomes insurmountable, problem.
more embedded in the sales process and as Sales plays •••
a more active role in Marketing. “In order to be the Senior managers often describe the working relation-
customer-intimate company we are,” says Larry Norman, ship between Sales and Marketing as unsatisfactory. The
president of Financial Markets Group, part of the Aegon two functions, they say, undercommunicate, underper-
USA operating companies,“we need to be metrics driven form, and overcomplain. Not every company will want
and have metrics in place that track both sales and mar- to – or should – upgrade from defined to aligned relation-
keting performance.” On a macro level, companies like ships or from aligned to integrated relationships. But
General Electric have “the number” – the sales goal to every company can and should improve the relationship
which both Sales and Marketing commit. There is no es- between Sales and Marketing. Carefully planned en-
caping the fact that, however well integrated Sales and hancements will bring salespeople’s intimate knowledge
Marketing are, the company will also want to develop of your customers into the company’s core. These im-
metrics to measure and reward each group appropriately. provements will also help you serve customers better now
Sales metrics are easier to define and track. Some of the and will help you build better products for the future.
most common measures are percent of sales quota They will help your company marry softer, relationship-
achieved, number of new customers, number of sales clos- building skills with harder, analytic skills. They will force
ings, average gross profit per customer, and sales expense your organization to closely consider how it rewards peo-
to total sales. When downstream marketers become em- ple and whether those reward systems apply fairly across
bedded in the sales process – for example, as members of functions. Best of all, these improvements will boost both
critical account teams–it’s only logical to measure and re- your top-line and bottom-line growth.
ward their performance using sales metrics. But then how
should the company evaluate its upstream marketers? On Reprint R0607E; HBR OnPoint 1014
the basis of the accuracy of their product forecasting, or To order, see page 191.