When Sales and Marketing departments work well together, companies reportedly see substantial improvements in their performance metrics. Sales cycles are shorter, market entry costs go down and the costs of sales are lower. In short, they make more money.

These are just some of the benefits of an integrated sales and marketing approach outlined by Philip Kotler, Neil Rackham and Suj Krishnaswamy in the special edition of Harvard Business Review dedicated to sales (July-August 2006).

Conversely, when sales and marketing teams are not in alignment, companies may run into conflict over which products to push and when to launch new products. Sales may wish to push products with lower margins that are easier to sell, while Marketing wants them to promote products with longer lead times but higher profit margins.

And then the blame game starts.

Often the trouble starts because sales and marketing compete for the same budget dollar. Salespeople find it easier to demonstrate a return on investment as they can often prove how much revenue they make on each sale.

Marketing can’t produce these short-term metrics as it takes much longer to know whether a marketing program has helped create a long-term competitive advantage.

David Corkindale, professor of marketing management, University of South Australia, says Sales often questions how Marketing can justify its existence if it can’t demonstrate its worth. This is a valid question, he says.

The issue is further complicated as the role of sales and marketing have changed dramatically over the last 15 years, particularly in larger companies. Small-to-medium sized companies often don’t differentiate between sales and marketing and the sales function usually dominates.

As companies grow in size, they separate the marketing from the sales functions and split it into two roles—strategic and support. The support function consists of providing collateral, such as brochures and website content, and undertaking direct mail and telemarketing.

Marketing’s strategic role involves studying market trends and identifying longer-term sales opportunities. Over the last 15 years, the power of strategic marketing has increased as many companies have moved beyond the traditional four Ps (product, pricing, place and promotion) to look more closely at segmentation, targeting and positioning.

“It’s easier to appreciate the value of the support function,” says Corkindale, “but more difficult to prove the value of strategy which may identify long-term opportunities in new areas that take three years to become profitable.

“The issue is short-term versus long-term returns. Often companies need an act of faith to appreciate strategic marketing’s worth.”

This is one reason why marketing and marketing spend is often cut first in hard times.

In the United States, Blackfriars Communications’ second annual sizing of the US marketing market found that 2006 marketing spending dropped to 4.7 per cent of business revenues this year, from 8.9 per cent last year. The survey attributed this fall to poor weather and rising petrol prices.

Changing sales roles
Strategic marketing’s increase in power has come at the same time as the role of Sales is changing.

“Sales often happen without salespeople these days,” says Corkindale. “We don’t require salespeople in a supermarket or electrical retailer.” And a lot of sales take place online or through call centres.”

In the FMCG (fast-moving consumer goods) industry, another change has been the power shift to a new ‘customer’—the big players, such as Coles and Woolworths.

Bill Corbett, Brookcar Consulting, works both in Australia and internationally in FMCG . He says that companies selling to supermarkets have had to reorganise their selling and marketing approach.

“There is an oversupply of most goods, which means large customers have choice and they want to deal with suppliers on a national basis. Accounts are now much more complex and involve overlapping account teams.

“There’s now a need to establish long-term relationships so identifying how an account manager is performing is no longer as straight-forward.”

One way Sales and Marketing have learnt to adapt to these new customers is through forming a new division—trade marketing. Its role is to crunch numbers and identify trends. Trade marketing, usually, but not always, sits under Sales.

Cultural clashes
As well as the tension caused by fighting for budget and adapting to changing roles, cultural differences can also create friction between sales and marketing. “Several marketing people go straight from university into junior brand positions,” says Corbett, “and so have very little experience with the customers.”

Sales and marketing also attract different types of people. “Marketers have traditionally had more formal education and spend their time behind a desk. Sales are in the field, talking to people. They are skilled relationship builders and are used to rejection.

“A lot of marketing people don’t get out into stores enough,” he says, “giving the excuse that they ‘don’t have enough time’.”

Some companies insist marketing staff have sales experience before they move into marketing. Corbett agrees this is a good idea. “I think people make better marketers if they have had sales experience and direct contact with customers.

“They can observe the way consumers shop rather than rely on data research. They can also appreciate the realities of what works and doesn’t work in stores.”

Ken Grant, associate professor, Department of Marketing, Monash University, has researched variables that impact the relationships between sales and marketing. His research looked at both employees and management’s level of satisfaction with their relationship, the level of trust and cooperation between them, and the perceived importance and overall understanding of the relationship.

For employees, level of trust scored the lowest, but in terms of communication, the study found that completeness and accuracy of communication were not as important as adequacy, credibility and timeliness. “We also found,” says Grant, “that the level of encouragement to interact, the friendliness or atmosphere in cross-functional teams did not have a significant impact on the relationship.”

From management’s perspective, the study found that negative interdepartmental conflict was the most significant predictor of a poor relationship. On the other hand, a market orientation was found to build trust and managers believed that if employees felt valued they placed more importance on the relationship.

“Factors not found to have a significant impact on the relationship included the organisational commitment of employees, management style and the setting of clear objectives.”

And the solution is?
As Kotler and other experts say, every company can and should improve the relationship between sales and marketing to “boost both your top-line and bottom-line growth”.

One popular solution, says Grant, is to form cross-functional teams made up of representatives from sales and marketing.

“Predictors of good relationships in these teams are the level of communication and formal team structures,” he says.

“Sales and marketing will always be separate functions, but you can get a closeness if cross-functional teams work together. Marketing people don’t necessarily make good sales people, but they do need an understanding of sales. And vice versa for sales people.”

One of the problems Corbett sees time and time again is that companies restructure too often. Sales and marketing usually have different reporting hierarchies within an organisation and Corbett says one way of improving communication would be for sales and marketing to be accountable to the same person.

“But more importantly,” he says, “I would like to see companies develop sound strategy and stick with it, rather than read the latest fad and jump on the bandwagon.”

This article first appeared in The Weekend Australian, 28–29 October 2006.

You are welcome to use parts or all of this article, but please acknowledge Mary Morel and include a link to http://www.themfactor.com.au

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